Consumer

The Face Of Foreclosure: Help For Homeowners

CHICAGO (CBS) ― The number of Americans facing foreclosure is dramatically higher from a year ago – 112 percent, according to research firm Realty Track.

CBS 2's Anne State goes beyond the headlines for a closer look at the face of foreclosures in Chicago.

A full-time dad raising five kids, alone, Richard Fox says life got hard when his wife got sick.

Fox says he took out a home equity loan to help pay medical bills, but when CBS 2 talked to him, he had missed three house payments.

Like many Illinoisans, Fox basically owes more than what the house is worth.

Illinois Attorney General Lisa Madigan has advice for people like Fox: "Please reach out. Make sure that you are in communication in particular with a HUD-certified housing counselor because they can make sure that you understand your loan."

The State of Illinois is sponsoring "Outreach Days" throughout the state at which homeowners can find counselors and lenders under the same roof.

The governor's office says lenders have pledged up to $300 million to help Illinois homeowners refinance.

HOPE NOW is a similar project traveling around the nation reaching out to at-risk homeowners. Hundreds of people showed up at a recent Chicago stop.

Housing counselors say the most important thing you can do if you're about to fall behind in your mortgage is contact your lender before you miss a payment.

But Maria Gallegos, a single mother of four, did reach out to her lender. She was told there was nothing they could do for her because she lost her job.

Now the boxes are stacked on the wall and she's fighting foreclosure, but lucky to be getting help from the Illinois attorney general's office.

"This is something that for me and my kids was going to be our dream come true having our own place," Gallegos said.

Jo Albert, a housing counselor with the DuPage Home Ownership Center, is helping Richard Fox.

She says people like him -- with little or no income -- may not be able to refinance.

"It may be necessary for him to consider selling," Albert said.

Albert says some lenders may agree to what's called a "short sale," where they agree to sell the home for a loss, instead of foreclose on it.

As one mortgage banker explained to CBS 2, lenders are usually eager to sell.

Catronovo "They don't want to be in the real estate business," said Mike Castronovo of the Castronovo Group. "Banks have never wanted to be, they don't want to own property."

But Fox is worried about where he and his kids will live if they have to sell.

"So I really don't know what I can do. I'm kind of stuck," he said.

However, things can -- and do -- work out. The attorney general's office says 50 percent of people who contact their lender are able to work out a modified payment plan and save their homes.

It helps to work with a HUD-certified housing counselor. To find one, and for other tips on fighting foreclosure check these resources:

-- The Attorney General's Mortgage Lending Guide, a resource manual containing step-by-step instructions for those struggling to make their loan payments and a list of HUD-certified counseling agencies that offer default counseling services. 

-- To get a referral to a certified housing counselor or to learn more about the steps to take to avoid foreclosure, homeowners can call Madigan's Homeowners' Referral Helpline at 1-866-544-7151 from 8 a.m. to 5 p.m. Monday through Friday.

-- State of Illinois Resources – this includes a calendar of upcoming Homeownership Outreach Day Fairs

-- DuPage Homeownership Center -- the group working with Richard Fox 

-- City of Chicago Foreclosure Prevention

(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)

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