Hare seeks foreclosure freeze

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By Doug Schorpp | Wednesday, January 23, 2008 12:59 AM CST | () comments

U.S. Rep. Phil Hare, D-Ill., wants to see a 90-day freeze on foreclosure proceedings in an effort to help people hang onto their homes.

He is especially interested in helping borrowers whose home loans fall into the subprime category, or those whose poor credit scores did not allow them to qualify for prime market rates.

Hare said the 90-day period could help those on the brink work out refinancing or other means of saving their investments.

“During that time, it would be an opportunity to work with people on the verge of losing their homes, to give them time to renegotiate at interest rates they can afford,” he said Tuesday morning during a news conference at the Rock Island Library.

He was joined by Brian Hollenback, executive director of Rock Island Economic Growth Corp., and Lisa Ahern, program support specialist for the corporation. She also leads two other Quad-City initiatives: the Quad-City Reinvestment Coalition and QC DollarWise.

QC DollarWise works with organizations that counsel individuals as they move toward greater financial independence. It is not a direct provider of financial education.

Hollenback said 10 years ago, Rock Island Economic Growth Corp. started a homebuyer assistance program that provides strong education and assistance before and after someone buys a home. He said in the past decade, of the 400 homes purchased through the program, only two have ended up in foreclosure and one of those involved the death of a spouse.

That is a good success rate, he said, adding that there still is a big need

“Currently, when a mortgage becomes 90 days delinquent, that is when the legal fees begin,” he said. “We are looking for an additional 90 days before legal fees are there. That gives enough time to place the loan in an appropriate mortgage product.”

Hollenback used the example of an adjustable rate mortgage, where rate increases create “payment shock.” A person might have been able to make a monthly $700 mortgage payment, but if that suddenly jumps to $1,100, the borrower cannot afford it. The additional 90 days would allow the homeowner more time to either refinance at a more reasonable rate or place the home on the market and hopefully be able to sell it.

Ahern said there has been much discussion about the subprime and predatory lending and subsequent foreclosures. But now, she added, is the “time to do something.”

Tim Schlittner, communications director for Hare, said a 90-day moratorium has been discussed in Congress but there currently is no legislation being proposed. However, he said the moratorium “could get tucked” into President Bush’s economic stimulus bills.

Doug Schorpp can be contacted at (563) 383-2292 or dschorpp@qctimes.com. Comment on this story at qctimes.com.