1. Copyright 2008, Take Charge America, Inc. All rights reserved. Help! (For Homeowners) Presented by Michael Sullivan, Ed.D. Take Charge America, Inc. February, 2008

2. Copyright 2008, Take Charge America, Inc. All rights reserved. Defining The Problem Median household income was $48,200 in 2006. Median household income was $49,244 in 1999. (both adjusted for inflation) U.S. Census Bureau, 2007

3. Copyright 2008, Take Charge America, Inc. All rights reserved. What’s The Problem?  Housing should cost no more than $1,054 per month (35% of net) Average in 2005 was $1,264.  Transportation should cost $452 (15%) Average in 2005 was $695.

4. Copyright 2008, Take Charge America, Inc. All rights reserved. What’s The Problem?  Food should cost $301 per month (10%) Average in 2005 was $494.  Health care should cost $150 (5%) Average in 2005 was $222.

5. Copyright 2008, Take Charge America, Inc. All rights reserved.Savings? Americans saved (in billions): 2003 2004 2005 2006 310.5 186.7 -180 -205.5 U.S. Department of Commerce, 2007

6. Copyright 2008, Take Charge America, Inc. All rights reserved. Home Equity? Home Equity? Homeowner Value, Debt and Equity (in trillions of dollars) Year 2000 Year 2006 Home Value 11.4 20.3 Year 2000 Year 2006 Home Value 11.4 20.3 Mortgage Amount 4.8 9.3 Home Equity 6.6 11 Percent of Equity 58% 54% Ownership © 2006 Richard Benson Specialty Finance Group

7. Copyright 2008, Take Charge America, Inc. All rights reserved. Borrow? Borrow? CONSUMER CREDIT OUTSTANDING (in billions of dollars) Year 2003 2007 2078 2505.4 Year 2003 2007 2078 2505.4 TERMS OF CREDIT 12.73% 14.35% (Interest Rates) Federal Reserve, 2008

8. Copyright 2008, Take Charge America, Inc. All rights reserved. How Many Houses Are Lost? Preforeclosures: 358,037 Sheriff sales: 22,646 Foreclosures:171,428 Bankruptcies: 282,595 FSBOs: 50,501 Tax Liens: 632,483 Total Listings: 1,517,690 (28,190 foreclosed properties for March of 2005, 18,012 for March 2004) Foreclosure.com January 11, 2008

9. Copyright 2008, Take Charge America, Inc. All rights reserved. How Many Houses Might Be Lost? 30% of borrowers with subprime or Alt –A ARMs or 365,000 are at least 30 days past due even though they have not seen a reset.

10. Copyright 2008, Take Charge America, Inc. All rights reserved. Why Are So Many Houses Lost? Subprime mortgages: 2001 2006 $160 Billion $600 Billion 7.2% of mortgages 20.6% Inside Mortgage Finance, 2008

11. Copyright 2008, Take Charge America, Inc. All rights reserved. Why Are So Many Loans Subprime? Because more borrowers are subprime, and brokers can earn more by designating folks as subprime.

12. Copyright 2008, Take Charge America, Inc. All rights reserved. The Cost? Foreclosures mean: Lost credit and equity to borrower Loss of $$ to lender Lower property values in neighborhood Lower investment value for mortgages All that equals fewer dollars for spending

13. Copyright 2008, Take Charge America, Inc. All rights reserved. Other Problems? Student loan defaults are up Auto loan defaults are up Bankruptcy filings increased 40% in 2007

14. Copyright 2008, Take Charge America, Inc. All rights reserved. Who Loses? Lenders have write-offs Consumers have credit destroyed Property values decrease for everyone Crime increases

15. Copyright 2008, Take Charge America, Inc. All rights reserved. What Happens? When payments are 90 days late, the lender may file a notice of default with the county and send a letter saying that the foreclosure process will start unless the missing payments are made. Usually, this notice includes substantial fees to cover legal costs.

16. Copyright 2008, Take Charge America, Inc. All rights reserved. What Happens? The notice of default is generally reported to the credit bureaus, making refinancing the loan extremely difficult.

17. Copyright 2008, Take Charge America, Inc. All rights reserved. What Happens Next? Borrowers usually have 90 days from the notice of default to make up the deficit before the lender sends out a notice of sale, which sets a sale date for the house (typically within 30 days).

18. Copyright 2008, Take Charge America, Inc. All rights reserved. What Happens Next? Some lenders will allow you to keep your original loan if you can make up the missing payments plus any late fees and legal charges. Others will insist you refinance with another lender.

19. Copyright 2008, Take Charge America, Inc. All rights reserved. What Happens Next? You can also halt the foreclosure, at least temporarily, by filing a lawsuit or filing for bankruptcy. For either legal option to work, you'll have to be able to come up with a payment plan to fix the deficit

20. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are Lender Solutions? Temporarily reducing or waiving payments. Setting up short-term repayment plans to help you make up the deficit. Adding the unpaid balance to the principal of your loan and increasing your payments slightly to cover the extra amount.

21. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are Lender Solutions? If you have a mortgage insured by the Federal Housing Administration, you may qualify for an interest-free (and payment-free) loan to get your mortgage current. The money doesn't need to be paid back until you pay off the mortgage or sell the house.Federal Housing Administration

22. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are Lender Solutions? An estimated 240,000 families can avoid foreclosure by refinancing their mortgages using the FHASecure plan.

23. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are Lender Solutions? A new partnership between mortgage companies and non-profit housing counselors called HOPE NOW is available. Their mission is to reach out to homeowners who may be having difficulty paying their mortgages. For more information or to see if your mortgage company is a member of this coalition go to www.hopenow.com.www.hopenow.com

24. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are Lender Solutions? Project Lifeline is a program developed in conjunction with lending mortgage lenders to help homeowners facing foreclosure. This will delay foreclosure proceedings for 30 days allowing homeowners to have more time to contact their lenders and see if they can catch up on the past due payments, refinance, short sell the home or modify their loan. Homeowners must be 3+ months past due. Not just for people with subprime loans.

25. Copyright 2008, Take Charge America, Inc. All rights reserved. What About Talking To The Lender? Lenders can make it tough to get to the right people. You want to talk to the loss mitigation department. But many lenders won't route borrowers to there until they've missed several payments. Until then, you might be dealing with the lender's collections department, which typically cannot negotiate.

26. Copyright 2008, Take Charge America, Inc. All rights reserved. What About A Solution With The Lender? If you agree to a lender's workout or loan modification solution and fail to make agreed-upon payments, you'll have fewer options the second time around. Most likely, the lender will simply accelerate the foreclosure process.

27. Copyright 2008, Take Charge America, Inc. All rights reserved. What About A Solution With The Lender? Even if you can't work out an agreement, keeping in contact is usually a good idea.

28. Copyright 2008, Take Charge America, Inc. All rights reserved. How Well Do Solutions With The Lender Work? 10% of work-outs in October involved a change in terms. 545,000 subprime borrowers were put on a repayment plan in second half of 2007.

29. Copyright 2008, Take Charge America, Inc. All rights reserved. How Well Do Solutions With The Lender Work? The federal government (OCC) does not encourage cooperation with states. Wells Fargo and J.P. Morgan Chase refused to provide data.

30. Copyright 2008, Take Charge America, Inc. All rights reserved. What’s The Plan? 1. Make a budget. Prepare a spending plan for the next six months. See how much money you can reasonably expect to have for home payments.

31. Copyright 2008, Take Charge America, Inc. All rights reserved. What’s The Plan? 2. Get help. Start with credit counseling. Then seek housing counseling. If you have a VA loan, call (800) 827-1000 to get a referral to a financial counselor. Call Hope Now at 1-888-995-HOPE for a quick link.

32. Copyright 2008, Take Charge America, Inc. All rights reserved. What’s The Plan? 3. Check refinancing options. If you have equity in your home, your credit rating is relatively intact and your lender hasn't yet filed a notice of default, you may be able to get another loan with more affordable payments.

33. Copyright 2008, Take Charge America, Inc. All rights reserved. What’s The Plan? 4. Get organized. If you are going to try for a loan modification, you'll need to prepare a small mound of documentation. Typically you'll need details of your financial situation, a budget, documentation of your hardship (a letter from your doctor explaining an income-reducing illness, for example, or your layoff notice from your employer) and a hardship letter that describes the circumstances that led you to fall behind and the improved prospects that will allow you to get your financial life back on track.

34. Copyright 2008, Take Charge America, Inc. All rights reserved. What’s The Plan? 5. Make a decision. If you can’t get a work out or refinance, you should prepare to lose the house.

35. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are The Options? 1. Sell the house. If you have enough equity in your home to allow you to pay off your mortgage in full, after deducting any real estate agent commissions, then a quick sale is usually your best option.

36. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are The Options? 2. Offer the deed in lieu of foreclosure. If you can't sell the house for what you owe, but you're not deeply "upside down" on your mortgage, you can offer to hand over the deed to your home and your lender agrees to release you from your mortgage.

37. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are The Options? 3. Negotiate a short sale. If you owe substantially more on your home than it's worth, you can ask the lender to accept less than owed by negotiating a sale of the house for whatever you can get, and getting the lender to agree to accept the proceeds and not go after you for the deficit.

38. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are The Options? 4. Allow the foreclosure to proceed. This is not always the worst choice, although in some circumstances, the lender can even go after you in court for any deficit between what the house eventually sells for and what you owe. An attorney or housing counselor can let you know if that's a possibility.

39. Copyright 2008, Take Charge America, Inc. All rights reserved. What Are The Options? 5. File for bankruptcy.

40. Copyright 2008, Take Charge America, Inc. All rights reserved. Questions&Answers