Public Employee Press

Municipal Employees Housing Program
Foreclosure crisis

Union saves members’ homes

DC 37 housing program now includes refinancing

By DIANE S. WILLIAMS

Annette Baird owned her two-family St. Albans, Queens, home for 11 years. In 2005 she refinanced through a local mortgage broker with an interest-only loan that converted to an adjustable-rate loan. This year her monthly mortgage payments soared to $3,500 from $1,200, while her household income was less than $5,000 a month.

“I thought I would lose my house and be put out on the street,” said Baird, a member of Hospital Employees Local 420. The brokerage also recommended the contractor to whom Baird unknowingly signed over her hard-earned home equity check of $35,000 for repairs to the roof, kitchen and windows. He never finished the job. And her bank ignored her requests to refinance at a fixed rate.

Annette Baird was the victim of a classical case of predatory lending. “I had nowhere to turn until a co-worker suggested I contact the union,” she said.

On Staten Island, Board of Education Local 372 member Rosalind Rizzo had been applying for a loan to refinance her mortgage for two years. Like Baird, Rizzo wanted to use equity to make home improvements. She also had a few bad debts that hurt her credit rating.

“It was a Catch-22. The bank wanted us to clear up our debt before they’d refinance, while we were looking for the refinance to clear up our debt,” Rizzo said. A co-worker showed her the Municipal Employees Housing Program at DC 37 in the PEP.

Baird and Rizzo are both victims of the subprime loan crisis that has socked Wall Street and other lenders with billions of dollars in losses, plunged the housing market into near recession and left more than 2 million homeowners behind on their mortgage payments. The bubble has burst, and foreclosures at alarming rates are sweeping across the country, with communities of color being hit the hardest.

A growing number of homeowners with adjustable rate mortgages are seeing their payments rise by hundreds of dollars a month or more. Some struggle and sacrifice to keep paying the bank; others can’t make the payments and face being turned out of their homes.

Help for homeowners
Under growing pressure to take action, President Bush announced in December a too-little, too-late voluntary plan for banks to freeze low teaser rates for five years to prevent foreclosures. Mortgage experts estimate that the Bush plan — laden with limitations at therequest of Wall Street and mortgage firms — would help only 12 percent of all sub-prime borrowers and only 5 percent of minority homeowners.

The AFL-CIO has called for a nationwide moratorium on subprime foreclosures and strict regulation of lenders to end unscrupulous practices.

“DC 37’s housing program has implemented an FHASecure initiative — a temporary programdesigned by the federal Housing and Urban Development Dept. to help borrowers before they lose their homes to foreclosure,” said Henry Garrido, assistant associateadministrator of DC 37.

The new initiative gives borrowers who became delinquent after their interest rates increased the chance to refinance their adjustable-rate mortgages to fixed-rate loans through GMAC Mortgage, LLC, with backing from the Federal Housing Administration.

“Using MEHP was a smooth ride from our first call,” Rizzo said. “We contacted the union on Friday and on Monday they had a fixed-rate mortgage for us. DC 37 did in one weekend what our bank had not done for two years.”

Baird also got speedy, professional service from MEHP. Refinancing in September and making her first mortgage payment in November gave her some breathing room, she said. “The situation is still hard to talk about, but I am grateful to my union. My new fixed-rate mortgage is much more comfortable.”

To qualify for MEHP refinancing,applicants must have paid their mortgage on time before their ARM increased and they must have at least 3 percent equity in the home. In some cases, borrowers mayinclude past-due mortgage payments in the new fixed-rate FHA loan.

For more information, call MEHP counselors Tracy Lewis or Jorge Ortiz at 212-815-1814. DC 37 members who may be victims of predatory lending should also contact MELS 212-815-1800 for legal counsel.