Apparently subprime lenders and hedgefund directors are shocked! shocked! to learn that people earning $30,000 a year can’t keep up a $300,000 mortgage. Yet housing and fair lending advocates have seen the current mortgage crisis coming for years. The Center for Responsible Lending found that at the end of last year, 2.2 million households had either gone into foreclosure or held mortgages that were likely to fail, forfeiting a total $164 billion in equity. 

     The crisis began more than a decade earlier. In Chicago, according to a 2006 report, foreclosures jumped 91 percent between 1993 and 2002. Each foreclosure cost lenders an average of more than $50,000 and cost the city more than $6,000, while depressing the collective property values across the city by $139,000 for each empty house. As the subprime lending industry swelled, Chicago’s government joined lenders and non-profit credit counseling services to form the Home Ownership Preservation Initiative. One of the most effective tools proved to be 311, a telephone hotline established by the city to provide counseling for homeowners in trouble.  

          The Homeownership Preservation Foundation, a non-profit based in Minneapolis, set up a similar hotline as early as 2002, then teamed up with NeighborWorks America to take the hotline nationwide. With financial backing from nine major lenders, including my mortage bank JP Morgan Chase, subprime giant Countrywide, and the federally-subsidized Fannie Mae, 1-888-995-HOPE makes counseling available to troubled homeowners across the United States, 24 hours a day, 7 days a week. As the mortgage meltdown intensifies, there is some comfort in reading the success stories collected at www.995hope.org and sister site, www.foreclosurehelpandhope.org.

                Here’s to Jill, the single mom who fell behind on payments after losing her job and couldn’t get caught up even after finding work again. Her hotline counselor helped her work out a reasonable repayment schedule with her lender.  

                Here’s to Greg, a Viet Nam vet, who nearly lost the home where he’d raised his children after being hospitalized and losing part of his pension. His counselor helped him restructure his loan through a temporary interest rate reduction so he could make up for the missed payments.

                Here’s to newlyweds Ben and Kerry, who bought a house they couldn’t afford with an adjusted rate mortgage that ballooned beyond their budget. Their hotline counselor advised them to sell the expensive home and save up for a down payment on another they could afford.

                These success stories are a small fraction of the number of homeowners facing foreclosure. But with a growing awareness that there is someone out there to help, and a stronger commitment from the lenders who made dubious loans, the number of success stories can grow.