Credit crunch help offered
When Duane Rill bought his house in Cranberry Township 30 years ago, he thought it would be paid off by now.
Instead, he refinanced it a couple of times, then fell behind on the payments after a divorce and a slowdown in the manufacturing industry cut deeply into his pocketbook.
Then after three decades of living in the same house without a problem, Rill, 49, got notice the bank had sued him and could soon foreclose.
First, he panicked.
Then, he briefly considered walking away and giving the house to the bank.
Finally, he jumped into Butler County's Consumer Credit or Mortgage Foreclosure Diversion Program.
With assistance from a team of people in the program, Rill appeared in county court on Wednesday with a modification to his mortgage that would allow him to keep his home.
“I'm feeling pretty good today,” Rill said. “Things worked out.”
Rill, and many people like him in the county, say mounting debt and the possibility of losing their house or assets can be scary and frustrating.It can take hours on the telephone for these homeowners just to weed out the right person to call. And then, getting that same person on the line a second time can be nearly impossible.Yet once a lender reaches the point of filing a lawsuit, a default judgment can be issued and a home can be added to the next available sheriff's sale list in 30 days.“I decided to stick with it because my sons live with me,” Rill said. “If I was alone, I probably would have walked away. Until I made my first call (to one of the people in the program), I didn't even know there was such a thing as a loan modification.”
Judge Marilyn Horan said communication between lenders and borrowers and a chance to meet face-to-face is the hallmark of the county's flourishing credit program.Horan, who presides over civil cases, initiated the program after her courtroom started being flooded with home foreclosures and credit card cases in 2008.Years of easy credit and people living beyond their means, she said, turned into a crisis when the economy added an upsurge of debtors to the mix who had met unexpected circumstances such as job loss or income decreases.Horan now presides over the credit program, known colloquially by participants as the Credit Crunch Collaboration.The program went into effect in the fall of 2009, and the first few participants met on Jan. 10, 2010.Since then, it's grown so much that starting this month Credit Crunch will meet in two monthly sessions, one dedicated to mortgages and a second for a mix of mortgages and credit card cases.Between 25 and 40 cases are dealt with at each session.“We are full,” Horan said.Between January and October, 91 mortgage cases and 44 credit card cases came through the program.Although those are sizable numbers, they are a slim percentage of the total cases filed.In 2009, the number of credit card and mortgage cases filed at the county prothonotary's office reached 2,193, which was not only more than 90 percent of the total civil suits filed that year, but also more than all the cases combined filed only two years earlier.Prothonotary Glenna Walters said it's not unusual for people to call her office when they receive notice they have been sued.“They're hysterical,” she said. “It's often not their fault, and they don't know what to do.”Before the Credit Crunch program began Walters said she would send the caller a brochure about the Butler County Bar Association and hope for the best.“Now there is a light at the end of the tunnel,” Walters said. “This program has been so positive.”
Borrowers receive notice of the program with the notice of the lawsuit filed against them.If the borrower requests a conciliation meeting, the lender's participation is mandated.Once a borrower decides to participate, the case is stayed until a conciliation meeting is set.There's a two to three month lag between when the request for a meeting is made and when one is held in court.Horan said the hope is that in the meantime the borrower will meet with credit counselors at the county housing authority or at Advantage Credit Counseling to prepare for the in-court meeting or even resolve the issue before the court meeting.
Mary Beth Isles of Advantage said she meets with participants for hours to comb through their bank accounts and financial issues.They leave her office with an assessment of their case, an action plan and a budget, and an idea of their options, which are not always the options the borrower had hoped for.“I tell it to them straight, and a lot of people don't want to hear that,” Isles said. “I give them their options and the tools to act on them. It's up to them from there.”Isles and representatives from the county housing authority are among the people who meet with the borrowers at the conferences.
On those meeting days, borrowers also are assisted by lawyers from Neighborhood Legal Services, the Butler County Bar Association and recent law school graduates from Duquesne University and the University of Pittsburgh.All the services are free.“You actually can help people and that's a nice feeling,” said Butler attorney Mike Pater, who has volunteered to assist in mortgage cases since the first session. “You may never see these people again, but you know you helped them.”Pater said often the borrowers who come to court are nervous and scared.“(Before the options available in the program) people would just throw up their hands and say, “What's the use? ... If I could afford an attorney, I'd pay this bill,” Pater said. “Now, they are not walking in alone in front of a judge. They have a whole team.”Pater said that on court days borrowers meet with the credit counselors and lawyers to decide on options that might be acceptable to the bank and to the judge.Pater said he finds the bank's representatives open to reasonable resolutions.“They are human too,” Pater said. “And they really don't want to take your house.”Attorney Michael Lazaroff said he volunteers because he sympathizes with people who have met financial hardships.Lazaroff, who works both mortgage and credit card cases, said he's seen a lot of the end result of predatory lending practices.“And the same companies are quick to give you the run around, then sue you at the drop of a hat,” Lazaroff said. “Someone has to represent the little guy.”Lazaroff said it's not unusual for borrowers to meet him in tears, still not sure of their position or options.“We help level the playing field,” Lazaroff said. “We've saved a lot of houses.”If the borrower chooses to fight the case through the traditional court process or file for bankruptcy, he is responsible to hire a lawyer.
The participants only appear in court when a resolution is met, a possible maneuver is pending or the case is deemed inappropriate for further participation in the program. Often, the lawyers go in alone, while the borrowers wait elsewhere.“A lot of the work happens in the hallway,” Horan said.Resolutions can range widely.In some cases, the terms of the loan can be extended or modified. In other cases, the homeowner agrees to immediately sign over a deed in exchange for a few months to find a new place to live.“Ultimately, they still have to pay what they owe,” Horan said.But the Credit Crunch program can steer borrowers in the direction of programs that can be helpful or that can educate them on what is happening, Horan said.“This eliminates the trap door a lot of defendants feel like they are standing on. They never know when it will be pulled out from under them,” Horan said. “This gives everyone an understanding and a predictability.”Of the program's participants, 22 percent came to a resolution while in Credit Crunch court. Another 50 percent left the hearing with a proposed plan.Twenty-two percent of participants, including those who did not show up and those who had a defense to the claim, were deemed inappropriate for further participation.The remaining 8 percent had a mix of outcomes, such as bankruptcy or continuances.Horan said the programs' greatest victory is in creating a platform for accountable communication between the lender and debtor.When participants are not meeting in the courthouse, the program mandates both sides to identify a point person for the other to contact for questions.“We've bridged that communication gap,” Horan said.The group that brainstormed the program, which includes Horan and Walters, continues to meet and suggest changes to better it.“Is it perfect as we sit here? No,” Horan said. “But is it helping people? Absolutely. No doubt in my mind.”
