This handout is made available courtesy of the Illinois Credit Union League, a REAL Solutions state league partner.

1. Foreclosures in America
An Update
Mark Lynch,
REAL Solutions Field Coach
In this presentation
The causes of the problem
The magnitude of the problem
The impact on communities
Identifying the impact in your area
The need to be proactive
Identifying members and potential
members who need help
Assisting members and potential
members to know what to do if they are
faced with a problem

2. The Cause of the Problem
Those related to sub-prime issues
Those related to the economic downturn
Diverse reasons for foreclosures –
important to separate the fact from the
fiction, the speculator from homeowner,
the sub-prime from the job loss
Foreclosure affects us all irrespective of
the cause
The Magnitude of the Problem
1 out of every 200 homes will
be foreclosed upon. For a city
like Washington, D.C., that
translates to 3,000
Washingtonians losing their
homes to foreclosure each
year.
– Mortgage Bankers Association

3. The Magnitude of the Problem
Every three months,
250,000 new families
enter into foreclosure.
– Mortgage Bankers Association
The Impact on Communities
Forty-four percent of all
homeowners will likely feel the
ripple effect of foreclosures from
subprime loans, with affected
homeowners expected to lose
nearly $9,000 on average from
declining property values.
- Pew Center on the States, 4/08

4. The Impact on Communities
One child in every classroom
in America is at risk of losing
his/her home because their
parents are unable to pay
their mortgage.
– Based on information from the Mortgage Bankers
Association
The Impact on Communities
Homes in foreclosure that become vacant
provide sites for crime or other neighborhood
problems. One foreclosure can impose up to
$34,000 in direct costs on local government
agencies, including inspections, court actions,
police and fire department efforts, potential
demolition, unpaid water and sewage, and
trash removal.
– William C. Apgar, Mark Duda, and Rochelle Nawrocki Gorey, “The
Municipal Cost of Foreclosures: A Chicago Case Study,” February
27, 2005, p. 2.

5. The Impact on Communities
One foreclosure can result in as much as an
additional $220,000 in reduced property
value and home equity for nearby homes.
– William C. Apgar and Mark Duda, “Collateral Damage: The Municipal Impact
of Today’s Mortgage Foreclosure Boom,” May 11, 2005, p. 4.
The Impact on Communities
Political activity (voting, civic participation) is
higher among homeowners than renters.
High level of neighborhood
homeownership enhances property
values.
– Robert D. Dietz, “The Social Consequences of Homeownership,” June 18,
2003, p.2, 4

6. The Impact on Communities
Homeowners are more satisfied with their
lives and are happier. Homeownership is
positively associated with physical, mental
and emotional health.
– Robert D. Dietz, “The Social Consequences of Homeownership,” June 18,
2003, p.2,
The Impact on Communities
Children of homeowners are likely to perform
higher on academic achievement test and
are more likely to finish high school. They
also have fewer behavioral problems in
school and are less likely to become
pregnant as teenagers.
– Robert D. Dietz, “The Social Consequences of Homeownership,” June
18, 2003, p.2, 4

7. The Impact in Your Area
Regularly monitor and assess the impact
and trends in your area
Foreclosure Data is available from several
sources – most data updates monthly

8. Foreclosure Data Sources
Website
www.dataquick.com
www.foreclosures.com
www.loanperformance.com
www.facorelogic.com
www.economy.com
www.mbaa.org
www.realtytrac.com
Impact on Credit Union Members
An increasing number of credit union
members have or will lose their job
An increasing number of members will
suffer stress related health issues even if
they retain their job

9. No Time To Waste
Some credit union members and staff
have already fallen behind on mortgage &
other payments on non-credit union loans
to abusive or predatory lenders
Some members and staff will fall behind
on payments as soon as they lose their
job
Some members will have sufficient
savings to last a only few months at most
Many homeowners are already at the financial edge
• 43% of American households spend more than they earn each
year.
– Homeownership Preservation Foundation data of 60,000 homeowners
• 52% of employees live paycheck to paycheck.
– The MetLife Study of Employee Benefit Trends: Findings from the 2003
National Survey of Employers and Employees, November 2003.
• Nearly 42% of all American households do not have enough in
liquid financial assets to support themselves for at least three
months.
• 46% of American households have less than $5,000 in liquid
assets, including IRAs.
- Asena Caner and Edward N. Wolff, “Asset Poverty in the United
States: Its Persistence in an Expansionary Economy,” Levy
Economics Institute of Bard College, 2004.

10. Tipping points that put homeowners over the edge
• 32% experience a job loss
• 25% experience a health crisis
• 85% have already missed one mortgage payment
• 50% have already missed two payments
• Most have no savings, no available credit, and their
extended families have limited resources
• Most have first-time loans, and most loans are less than
three years old
• They may have already refinanced two or three times
– Homeownership Preservation Foundation data of 60,000 homeowners
How will members react when faced
with possible foreclosure?

11. Homeowners Facing Foreclosure
If home foreclosure were likely for you, what
best describes how you would feel?
•38% Scared
•35% Depressed
•9% Angry
•8% Embarrassed
•9% None of these
– Harris Interactive poll of 1,334 U.S. homeowners,
conducted October 5-7, 2005.
Homeowners Facing Foreclosure
Six in 10 homeowners wish
they understood the terms
and details of their
mortgage better.
– Freddie Mac/Roper poll of 2,031 U.S. homeowners,
conducted 2005.

12. Homeowners Facing Foreclosure
More than 6 in 10 homeowners
delinquent in their mortgage payments
are not aware of services that
mortgage lenders can offer to
individuals having trouble with their
mortgage.
– Freddie Mac/Roper poll of 2,031 U.S.
homeowners, conducted 2005.
Homeowners Facing Foreclosure
Homeowners fail to contact their lender
because they are embarrassed, don’t
believe the lender can help, and/or believe
it would cause them to lose their home
more quickly.
– Freddie Mac/Roper poll of 2,031 U.S. homeowners,
conducted 2005.

13. Credit Unions Need to be Proactive
Members who are depressed, scared or
embarrassed are likely to do nothing
Credit Unions need to inform and educate
members about their mortgage and their
options before foreclosure becomes an
issue
Credit unions may be seen by members
as trusted advisors, even if they received
their mortgage loan from another lender
The Benefits of being Proactive
Low- and moderate-income borrowers who
enter a repayment plan are 68% less likely
to lose their homes.
– Dona Dezube, “Heroic Homeownership,” Mortgage Banking, (June
2006) p. 82

14. Foreclosure - Everyone loses
Lenders and investors do not make money
on foreclosures. Losses range from 20
cents to 60 cents on the dollar. Lenders
typically lose $50,000 or more on one
foreclosure.
– Craig Focardi, CMB, Research Director, TowerGroup’s consumer lending
division, cited by Dona Dezube, “Heroic Homeownership,” Mortgage
Banking, (June 2006) p. 82.
Information
Think about how you inform your staff and
members now
All members don’t get information the
same way and not all members are or will
be affected in the same way
Now might be a good time to expand your
information sharing program
And remember – FOCUS!

15. Begin at Home
Members who trust their credit union may
ask any one of your staff for help or advice
Some of your staff may be facing
problems themselves.
For both of these reasons:
Make sure all of your staff understand
the basic information
Make sure all of your staff are able to
provide members with basic, accurate
information
FOCUS!
Members and staff who have a mortgage
with your credit union
Members and staff who have a mortgage
with someone else
Members and staff who are renting
Members and staff who might be willing to
help spread the word

16. Members with Credit Union Loans
Members with CU Mortgage will face
problems
Members with other CU loans will face
problems
Credit Unions need to develop policies to
help members keep their homes
Credit Unions mustn’t forget staff may face
problems as well
Ways to inform – written!
Newsletters
Statement stuffers
Brochures for staff to distribute
Posters for lobby notice boards

17. Ways to inform – electronic!
Website
E-mails
Text messages
Social media
Ways to inform – Community Partnerships!
Identify community organizations that have
a vested interest in helping minimize
foreclosures and their impact
Partner with them to convey information to
members and potential members

18. Possible Community Partners!
HUD-approved Housing Counseling
Agencies
More on this in a few minutes…
Churches
Social Welfare Organizations
Service Clubs e.g. Rotary, Lions
Chambers of Commerce
Community Actions Groups
Possible Community Partners!
Social Welfare Agencies
Local Government Agencies
Chambers of Commerce
VFWs
Seniors Organizations

19. Benefits of Community Partnerships!
Good way to communicate with existing
members
Great way to introduce yourself to
potential members
Gaining members in times of adversity
creates long term loyal membership
If you are a mortgage lender, great way to
get your loan products known – certified
counseling agencies also do pre-purchase
counseling and refer clients to lenders.
What sort of Information?
Keep it basic and simple
Contact your credit union if you are in the
following circumstances etc
Use the “Do’s and Don’ts” and “Questions
& Answers” approach
Tell members how to avoid scams
Stress - contact your credit union before
you do anything!
Tell members to act – not procrastinate!

20. One-on-One Counseling
One key part of information and education
is to encourage “at risk” members to seek
one-on-one counseling AT THE RIGHT
TIME
Counseling should only be undertaken by
trained professionals
Knowing where to send your members to
get counseling is vital
Education
Encourage “at risk” members to attend
education workshops
Refer members to agencies that have
education programs aimed at avoiding
foreclosure and keeping their home (HUD
accredited)
If agencies are not available, use pre-
packaged courses and videos

21. Homeowner Affordability and Stability Plan
Why
The deep contraction in the economy and in
the housing market has created devastating
consequences for homeowners and
communities throughout the country.
Millions of responsible families who make
their monthly payments and fulfill their
obligations have seen their property values
fall, and are now unable to refinance at
lower mortgage rates.
Homeowner Affordability and Stability Plan
Why
• Millions of workers have lost their jobs or
had their hours cut back, are now
struggling to stay current on their
mortgage payments – with nearly 6
million households facing possible
foreclosure.
• Neighborhoods are struggling, as each
foreclosed home reduces nearby
property values by as 9 percent

22. Homeowner Affordability and Stability Plan
The Homeowner Affordability and Stability
Plan is part of the President’s broad,
comprehensive strategy to get the
economy back on track. The plan will help
up to 7 to 9 million families restructure
or refinance their mortgages to avoid
foreclosure.
The key components of the Homeowner
Affordability and Stability Plan
Provide Access to Low-Cost Refinancing
for Responsible Homeowners Suffering
From falling Home Prices
Refinancing for Up to 4 to 5 Million
Responsible Homeowners to Make Their
Mortgages More Affordable

23. The key components of the Homeowner
Affordability and Stability Plan
$75 Billion Homeowner Stability Initiative to
Reach Up to 3 to 4 Million At-Risk
Homeowners
Helping Hard-Pressed Homeowners Stay in
their Homes: This initiative is intended to
reach millions of responsible homeowners
who are struggling to afford their mortgage
payments because of the current recession,
yet cannot sell their homes because prices
have fallen so significantly.
The key components of the Homeowner
Affordability and Stability Plan
Supporting Low Mortgage Rates,
Strengthening Confidence in Fannie Mae
and Freddie Mac
Helping Hard-Pressed Homeowners Stay
in their Homes:
This initiative is intended to reach millions
of responsible homeowners who are
struggling to afford their mortgage
payments because of the current
recession, yet cannot sell their homes
because prices have fallen so significantly.

24. Homeowner Affordability and Stability Plan
For more information log on to:
www.financialstability.gov
Federation’s HUD Housing Counseling Program
Program transferred from NCUF
14 Credit Unions in 9 states
Last year
Counseled 1185 clients
Educated 1150 clients
Federation’s Housing Counseling Web
page -
http://natfed.org/i4a/pages/index.cfm?page
id=1463

25. Counseling Trends
80%
Percentage of Total Individual
Counseling Services
60%
Pre-purchase
40%
Delinquency/Foreclosure
20%
Post-purchase
Rental
0%
2005 2006 2007 2008
Year
http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

27. HOPE NOW
HOPE NOW is an alliance between
counselors, servicers, investors and other
mortgage market participants to prevent
foreclosures through outreach to
delinquent borrowers, counseling, and
loan workouts based on the borrower’s
ability to repay

28. Members of HOPE NOW
27 Servicers
90% subprime market, majority of prime
market
Investors, Federal National Mortgage
Association (FNMA), HUD, Freddie Mac,
American Securitization Forum (ASF) and the
Securities Industry and Financial Markets
Association (SIFMA)
Housing Industry Trades, Insurance
Companies
Non Profits, HUD Counseling
Intermediaries
HOPE NOW
Free counseling through HOPE Hotline
888-995-HOPE
Homeowners connected to one of 450
counselors
24 hours/7 days a week
3,300 daily calls
From July 2007 to September 2008, over
2 million homeowners avoided foreclosure
through the efforts of HOPE NOW
members