Clay McRae is something of a recent exception as far as Consumer Credit Counseling Service of Nevada and Utah is concerned.
Out of work for nearly two years, possibly on the verge of losing his home to foreclosure, McRae walked in the front door of the nonprofit early Monday in pursuit of help, something a surprisingly large number of Nevadans have failed to do this past year.
Maybe they’ve given up any hope of resolving their financial troubles amid the worst economy since the 1930s. Record unemployment and home foreclosure rates will do that. Maybe they’ve decided it simply isn’t worth the time and effort to save homes that are worth much less than the mortgages used to purchase them. It’s a strategic choice for many financially and emotionally exhausted Nevadans.
But that’s a mistake, credit counselors say, because working through financial problems can not only benefit underwater homeowners but their neighbors, as well.
McRae lost his $54,000-a-year engineering job at the Circus Circus Adventuredome Theme Park in January 2010 and hasn’t pulled down a regular paycheck since. He earns about $650 a month repairing cars for friends and acquaintances but isn’t eligible for unemployment benefits, having lost his position in a dispute with management.
Yet the 57-year-old native of Canada doesn’t want to walk away from the
North Las Vegas home he bought in 2009 for $125,000, even though it’s worth just $70,000 today.
“I’m just here to see if somebody can help me save my house until I find a job,” he says. “I don’t let life get me down. I’m not depressed. I just want to save my house and find that job.”
In the early goings of the recession, Consumer Credit Counseling President and Chief Executive Officer Michelle Johnson and her staff at 2650 S. Jones Blvd. dealt with a crush of individuals in McRae’s situation — once solidly middle- and upper-middle class Nevadans and Southern Utahans who’d hit hard times and were fighting to hold onto their homes and pay their bills.
Now, Johnson’s team sees “the most incredible slowdown” in the demand for their services. Some of that, she says, can be attributed to a lack of awareness of federal and state programs that have helped troubled homeowners find some relief.
Much of it also can be found in the frustration of tens of thousands of Nevadans who cannot begin to grasp the complexity of federal and private-sector homeowner relief programs, a significant number of which fail to meet the needs of homeowners who are significantly upside down on their mortgages. Nonetheless, at least half of all Nevadans qualify for “some sort of program,” Johnson notes.
“It’s really a case of the homeowner self-eliminating themselves from applying,” she says. “Then again, maybe I’m kidding myself.”
There’s also a caveat. Even if homeowners fail to qualify for relief, there’s a right way to walk away from a home. It may sound counterintuitive, particularly for angry Nevadans about to lose their homes, but she suggests that homeowners facing foreclosure:
• Maintain their home, inside and out.
• Assist the lender or loan servicer by finding a buyer for the home, listing it for sale, locating a real estate agent who is experienced in a short sale and providing all the required documents that lenders need to substantiate that a short sale is the best alternative.
• Recognize that the job of an experienced real estate agent is to negotiate with the mortgage company to ensure that the short sale eliminate any financial obligation written into a homeowner’s contract. The lender can pursue the homeowner for the deficiency balance unless otherwise negotiated.
• Understand that the federal government permits until Dec. 31, 2012, the forgiveness of any tax obligation on deficiency balances that remain on owner-occupied homes. Investment properties are not eligible for such exemptions.
“I understand the homeowner’s asking, ‘Why should I help the lender?’”
Johnson said. “The homeowner signed a contract and should fulfill their obligation by finding resolution if they’re not able to honor their original contract, and this is where it gets a little fuzzy because this is where social responsibility comes in. It also benefits the neighborhood because the home doesn’t remain empty, and it benefits the homeowner because they’re fulfilling their legal obligation. You can also speak about moral and social obligations, as well. It doesn’t matter to some people, but that’s where our conversations about the long-term health of the community come in.”
To help McRae hold onto his home, the CCCS set up meeting between him and
Angela Ghilarducci, a certified housing counselor with the nonprofit agency.
Her job was to evaluate his financial situation and options, explain the benefits and detriments of his choices and help resolve his housing situation. The goal: manage McRae’s expectations, given his lack of income, and help him understand the best way to keep or sell his home.
McRae and Ghilarducci put together a worksheet estimating McRae’s monthly household expenses, which totaled $2,420 for a mortgage, child support, groceries, utilities and other needs.
Ghilarducci called McRae’s mortgage lender, Bank of America, to determine whether he qualified for a loan modification. He didn’t without earning a regular income, decreasing his likelihood of maintaining smaller monthly payments.
No foreclosure notice had been filed on the home but one could be forthcoming, which woould force McRae to vacate the home by late spring. He needs a job, but more than 100,000 construction jobs have been lost in Nevada since 2008, so it’s likely that he’ll have to undergo job retraining to find employment if he chooses to remain here. There are federal and non-profit dollars available to help pay for school.
“Try to get employment, anything and then apply for the (loan modification program) to save your home,” Gilarducci told him.
Ghilarducci also provided McRae with a list of nonprofit and government agencies that might help him retrain, including Nevada Partners, Catholic
Charities and the Community College Workforce Development Center. She also recommended that he pursue the safety net of food assistance through
Catholic Charities, the Jewish Family Services Food Bank and the food stamp program.
Would he fail to find work to qualify for a mortgage modification, Ghilarducci told McRae, he could qualify for the federal Home Affordable Foreclosure Alternatives program, which provides troubled borrowers with $3,000 for relocation assistance after completing a short sale. Borrowers are fully released from future liability for the first mortgage debt and second-mortgage lenders participating in the program must also release borrowers from future liability.
“You least you know what your options are,” Ghilarducci told McRae.
After the counseling session ended, McRae said he was firmly committed to hanging onto his three-bedroom, two-bathroom home. He shares the residence with his daughter, who shuttles between her parents’ homes.
“Everything I’ve got, I own. It would be gone if I didn’t take care of it,” he said, “and I don’t want that to happen. I’ll do all I can to keep my home.”