For immediate release – Thursday, March 18, 2010.
Contact Bob Brammer – 515-281-6699, Rbrammer@ag.state.ia.us.
Miller: Fund Iowa Mortgage Help Hotline
Des Moines, Iowa. The Iowa Mortgage Help Hotline, which has helped thousands of Iowans facing foreclosure, will be closed as early as June if funds can’t be found to keep it operating, Attorney General Tom Miller said Thursday.
“The Hotline is working,” Miller said, “but it must be funded if it is to continue to help Iowans save their homes. It would be unconscionable for us as a society to bail out Wall Street and then fail to give basic assistance to everyday Iowans at risk of losing their homes.”
Miller urged the Legislature to authorize the Iowa Finance Authority to use existing money already in the Housing Trust Fund (Project-based Housing program) to provide a short-term lifeline for the Hotline. “This simple measure has been in the hopper all session, but it needs to be approved before lawmakers go home,” he said.
“Iowans’ homes are at stake,” Miller said. “More than five percent of Iowa mortgages are 90 days or more past due or in the foreclosure process. That’s almost 20,000 families. We can save some of those homes, but we need to keep the Hotline going.”
Miller also said he is asking the Governor and Legislature to search for additional resources to fund what he called “a crucial, tested, successful program.” He also said he has asked Congressional and Administration officials for any possible federal assistance to keep the program alive.
The federal grant that supplies most of the funding for IMH has been cut, Miller said, despite the fact that the need for foreclosure counseling and mediation remains very strong. “Less federal money is available and more agencies are seeking the money nationwide. The result is that IMH has seen its federal grant award cut by 58%, and this cut has put in jeopardy the very existence of IMH,” he said.
“Iowa was one of the first states to launch a foreclosure-prevention program, and Iowa’s program now is regarded as one of the most effective in the country, due in part to its unique state-wide partnership. In fact, Freddie Mac has recognized Iowa Mortgage Help as one of the country’s best foreclosure prevention programs,” he said.
“This is important to Iowa families who are in trouble, and it is important to all our communities and the economy in general,” Miller said, citing a study showing that every foreclosure reduces the value of neighboring homes within a city block by one percent. Miller also said vacant foreclosed homes become magnets for crime and vandalism, and they reduce property tax collections for local government.
“We still are encouraging Iowans to contact the Hotline if they are at risk of foreclosure,” Miller said. The toll-free number is 877-622-4866, and the web site is www.IowaMortgageHelp.com.
“I fought to start the Hotline and I’m fighting to keep it alive,” Miller said.
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Background and detail: The Iowa Mortgage Help financial situation:
The IMH Hotline operates on a mixture of state, federal and private funding. It now appears that funding will run out in June, based on the expected amount of federal funding to be provided in the next round of funding, which will be announced in April. It is estimated that about $750,000 to $1 million is needed to sustain the program through the end of this year, when the next round of federal funding may be available. (Expenditures vary because they depend on the number of homeowners who apply for help.)
Miller said IMH is working to make up the gap from at least four sources: State legislative action to authorize using money in the Iowa Finance Authority Housing Trust Fund (Project-based Housing program); any other state funds that could be allocated by the Governor and Legislature; federal funds; and any other sources.
The A.G.’s Office dedicates two investigators and an attorney to foreclosure-prevention and mortgage enforcement, as well as work by Attorney General Tom Miller and other top attorneys in the office. The office also deploys a staff person to assist the Hotline and coordinate Hotline work with the Attorney General’s Office.
History of the Iowa Mortgage Help Hotline:
The Iowa Attorney General’s Office formed a partnership with the Iowa Mediation Service in September 2007 to start the Iowa Foreclosure Hotline. In early 2008, a federal grant became available for foreclosure counseling. As a result, a new partnership was formed between the Iowa Finance Authority, the Iowa Attorney General’s Office, Iowa Mediation Service, Iowa Legal Aid, local housing counseling non-profits located throughout the state, and their umbrella organization, the Iowa Home Ownership Education Project, or IHOEP.
The new partnership dramatically expanded foreclosure prevention services offered to Iowans, and was named Iowa Mortgage Help, or IMH. IMH officially began on March 1, 2008, with the award of the first round of federal funding. Approximately 20 Iowans a day open a formal application with IMH. Since its inception, more than 9,000 Iowans have opened applications with IMH. [Go to chart showing increase in applications received per week by Iowa Mortgage Help.]
Most clients who have worked with Iowa Mediation Service and the Hotline reported positive outcomes, including: 29% had a modification or other loss-mitigation solution that saved their home, 32% are still in negotiations; 23% received mortgage counseling only; and 15% had a negative outcome, such as loss of home or bankruptcy, or they withdrew from counseling. [Go to Dale Headrick message about how the Hotline helped save their Des Moines-area home.]
Miller said Iowa’s foreclosure rates are improving compared to the rest of the nation, “and a big part of that is due to the Hotline.” According to the MBA, as of the 4th Quarter of ‘07, Iowa ranked 21st lowest in the percentage of all loans starting into foreclosure. By the most recent report, 4th Quarter ‘09, Iowa had improved to rank 10th best (10th lowest in percentage of loans starting foreclosure), mostly following smaller states such as VT, ND, SD, WY, MT, AK. Iowa’s percentage of loans starting foreclosure is just 62% of the national average.
How does the Iowa Mortgage Help Hotline work?
IMH provides foreclosure counseling, intervention, and legal services for Iowans facing foreclosure. Most important, the service provides negotiation and mediation services with lenders in order to modify the terms of mortgages and make them more affordable, so families can stay in their homes. All IMH services are provided at no cost to the borrower.
Iowans may enter the IMH system in several ways: through a toll-free Hotline at 877-622-4866, through the website (www.IowaMortgageHelp.com), or by going in person to one of the housing counseling agencies located throughout the state and listed at the web site.
Hotline calls are answered at Iowa Mediation Service in West Des Moines, where operators gather basic data and refer cases to one of the local housing counseling agencies. The certified counselors then gather more in-depth financial information from the borrower, including developing a budget. Most borrowers are then referred on to Iowa Mediation Service which attempts to negotiate a loan modification or other loss mitigation solution with the borrower’s mortgage servicer or lender. In situations where the home cannot be saved, IMS works with the lender to provide a “soft landing” for the home owner. Finally, because foreclosure is a judicial process in Iowa, borrowers in foreclosure are referred to Iowa Legal Aid, which helps guide the borrowers through this complex process.