On the front lines of the Foreclosure Crisis

In 2006 the nation was experiencing an unbelievable spike in the number of foreclosures.  From December, foreclosure rates would rise one-hundred percent over the next year. One of the primary reasons for this dramatic increase was the high number of adjustable-rate mortgages (ARMs) that were resetting to higher rates.   Adjustable rate mortgages fluctuated with the market, and a monthly payment could easily double.  It became too easy for homeowners to fall behind in payments, and consequently face the threat of foreclosure.  With an estimated two million ARMs resetting in 2007, the problem quickly overwhelmed the nation.

In response, the federal government established a HOPE Hotline where homeowners could call for advice about their loan payment options.   However, the hotline did not use government officials. Instead it relied on non-profit organizations.  St. Ambrose was one of the many organizations prepared to help homeowners.

Anticipating the extreme amount of calls from the hotline,  St. Ambrose began adding and training new staff.  Their team consisted of some exceptionally experienced default mortgage counselors, who were able to contact lenders, and help homeowners work out payment agreements.  In a few special cases, staff attorneys were even able to reverse foreclosure proceedings.

One of St. Ambrose’s counselors Frank Fischer explained the situation in this way, “In the past, [people] fell behind in their mortgages because they lost their job, or their marriage broke up or they got sick. Now the problem is the loan itself, not that something has happened to the family. It’s a lousy loan.”

In 2007 St. Ambrose more than doubled their average number of clients to serve nearly 2,000 families.  While comparatively the need is not as extreme, foreclosure prevention still remains an integral part of St. Ambrose’s services.  In the last fiscal year, St. Ambrose counselors assisted 258 families with foreclosure prevention or financial counseling.