PEP, July-August 2008: Union saves their home from foreclosure

DC 37’s MEHP has helped 8,000 members cope with outrageous housing costs, facilitated $300 million in mortgages and averted more than 100 foreclosures.

By DIANE S. WILLIAMS

Eight years ago, Oswaldo and Roxanne Roper renovated the modest Jamaica, Queens, home they had inherited from relatives. But as payments for their home repair loan ballooned to $2,100 a month, it became hard for the two city employees to meet their monthly mortgage payments, pay utility bills and support two growing teenagers.

Foreclosure notices flooded their mailbox. The two Juvenile Justice Counselors in Local 1457 were in grave danger of losing their home.

“First I had congestive heart failure and went out on disability. Then my husband was injured on the job. Our incomes changed,” said Roxanne Roper. To beat back foreclosure the Ropers refinanced through a mortgage broker, but the adjustable-rate mortgage they had signed for soon escalated to 10.5 percent.

“I knew better than to agree to an ARM, but I had misplaced the paperwork and the broker claimed he had our signature on the documents,” she said. “We were at his mercy.”

The Ropers believe they were victims of predatory lenders. They are not alone.

Working people are facing foreclosures at alarming rates across the country, and communities of color are stricken the hardest. RealtyTrac, an online real estate information site, says that since the sub-prime meltdown, 1 in every 617 households has been foreclosed nationwide. Queens has the highest rate of foreclosures in New York City with 1 in 622 households in foreclosure.

For the Ropers, savings held foreclosure at bay. But when they went to refinance through another broker, they were offered a loan with $18,000 in related costs. Then they read about the union’s housing program in the Public Employee Press.

Meeting the challenge
“A number of homeowners with ARMs have seen their payments rise by hundreds of dollars a month, but many have come to the DC 37 Municipal Employees Housing Program and received help with restructuring their loan payments at affordable rates,” said Henry Garrido, assistant to the associate director, who runs the union’s program.

Although the broker would not release their case, eventually the Ropers refinanced with a fixed-rate 6 percent interest loan through GMAC that is backed by the Federal Housing Administration. GMAC is one of several banks that participate in DC 37’s MEHP.

As the most comprehensive union housing initiative in the nation, DC 37’s Municipal Employees Housing Program has helped more than 8,000 DC 37 members, arranged $1 million in housing grants and facilitated $300 million in home mortgage loans. The averageDC 37 member in MEHP has qualified for about $20,000 in mortgage assistance and grants toward down payment and closing costs. The program has obtained refinancing for 120 members whose homes were in danger of being foreclosed.

“Our housing program is helping members meet the challenge of finding decent and affordable homes in one of the most expensive cities in the world,” said DC 37 Executive Director Lillian Roberts. “We dared to dream outside the box to help our members find a solution to the affordable housing crisis. We developed a program that has far exceeded our expectations. I am pleased that so many of our members are using the union’s program as a key to achieving their dream of home ownership.”

Affordable housing
In operation since 2006, MEHP offers a full-service, union-run affordable housing program with a wide range of services: home purchases, credit counseling and repair, foreclosure prevention, mortgage loans, refinancing, reverse mortgages, apartment rentals offered through HPD lottery, Section 8 vouchers, FirstHome grants of up to $24,000, and services for city workers and their families who are homeless.

Through MEHP, union members get a 5 percent set-aside lottery preference for rental apartments, and grants and mortgage assistance to purchase condominiums, co-operative apartments and one- to four-family houses in New York’s five boroughs.

Because of the residency requirements many DC 37 members must meet and the soaring cost of housing in the five boroughs, in 2006 Roberts wrote Mayor Michael R. Bloomberg and met with Housing Commissioner Shaun Donovan in an effort to obtain better opportunities for affordable housing for active and retired union members.

MEHP — a unique partnership between DC 37, the city Housing Preservation and Development Dept. and Neighborhood Housing Services, a nonprofit home-ownership organization — grew out of this initiative and since 2006 has been opening the doors to affordable housing for hard-pressed union members.

MEHP also offers new construction loans to purchase land with as little as 5 percent down at an adjustable rate to build a first or second home; these can be converted to permanent, fixed-rate mortgages once construction is complete. With just one closing fee, union members save thousands of dollars. This differs from the requirements of most banks, which levy two separate closing fees.

Avoid foreclosure
“The Ropers qualified for a regular FHA loan and were perfect candidates because they were not late. They were doing the best they could in a very bad loan,” said GMAC loan officer Kate Aldinger. “We were able to reduce their mortgage payment by $500, a significant amount.” For people who are late or in a foreclosure situation, or just in trouble, Aldinger recommends the FHA Secure initiative, a temporary program designed by HUD to give borrowers the help they need before they lose their homes to foreclosure.

Borrowers who become delinquent when an interest rate change goes into effect can refinance their adjustable-rate mortgages to fixed-rate loans backed by the Federal Housing Administration through participating banks, Garrido explained.

To qualify for the MEHP mortgage refinance, applicants must demonstrate that prior to the reset or adjustment of their ARM loan, they were paying their mortgage on time, and they must have at least 3 percent equity in the home. In some cases, an eligible borrower may be permitted to include past-due mortgage payments in the new FHA loan, subject to FHA underwriting guidelines. These fixed-rate loans do not emphasize the borrower’s FICO score.

“To date, all members who participate in MEHP have paid their monthly mortgage payments on time,” Garrido said.

“I feel like I can breathe and save a little,” said a grateful Roxanne Roper. “Thanks to the union, we have a more affordable mortgage that gives us much more breathing room.”

DC 37 housing fair
On June 25 (after this issue of PEP went to press), MEHP was to hold another housing fair where DC 37 members could obtain information on and apply for mortgages or refinancing through a dozen banks, apply for housing grants, learn of available rental and co-op apartments, condominiums, and private homes from realtors and meet home inspectors and insurers.

For more information, call MEHP at 212-815-1814. DC 37 members who may be victims of predatory lending should also contact DC 37’s Municipal Employees Legal Service at 212-815-1800 for legal counsel.