Someone to Speak for Borrowers in Trouble

AS she leafed through her client’s mortgage papers, the housing loan counselor just shook her head.

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The numbers and interest rates and payment schedules formed such a familiar, dispiriting picture. The 32-year-old man who was sitting across the desk from her said he had been persuaded to take out an adjustable rate mortgage called an option ARM when he bought his home, the first he has owned. The terms of the loan put him in danger of joining millions of people dragged under by the mortgage crisis that has washed through towns and cities across the country.

But this client, a waiter, had not yet fallen behind on his payments, so there was still time to help him.

The loan counselor, Judy Brzuskiewicz of New Jersey Citizen Action, a nonprofit advocacy group in Newark, picked up the phone to call the lender, Countrywide Financial, and told the representative that her client still had good credit and needed the 9 percent interest rate on his mortgage lowered, maybe to 6 percent. Politely but insistently, she said the adjustable rate needed to be frozen.

“I’m counting on you,” she told the representative, who told her that he fielded calls like hers all day long.

Day after day, Ms. Brzuskiewicz and counselors like her across the country keep making the same calls, trying to stand between homeowners who say they took out loans they did not comprehend, or could not afford, and foreclosure.

More than 1.6 million borrowers nationwide defaulted on mortgages last year. A Federal Reserve Bank of New York study of 75 percent of the subprime loans held by homeowners in New York, New Jersey and Connecticut found that as of late last year 9.9 percent of those examined were in foreclosure, or about 12,147 of 123,200.

The study reviewed 3,356 subprime loans in Bridgeport and found that 334, or 10 percent were in foreclosure. In New Haven, 8.6 percent or 186 of 2,151 subprime loans studied were in foreclosure and in Waterbury, 9.8 percent or 140 of the 1,434 loans studied were in foreclosure.

The housing counselors are overwhelmed.

In Bridgeport, a city that in 2006 had some of the highest subprime lending rates in the state, Julissa Soto, a housing counselor with Acorn, a housing advocacy group, said that demand was so high that the organization recently trained its 21-year-old administrative assistant as a counselor.

“We’re totally bombarded,” said Ms. Soto, who is 25.

The homeowners reach out when they are at wits’ end, and almost beyond help. “They’re frantic, and they don’t know what to do,” Ms. Soto said.

This month, she counseled a family with problems that are becoming more and more typical, requiring that the counselors act both as therapists and financial advisers. A Bridgeport police officer and his wife, a schoolteacher, had taken out a mortgage with an adjustable rate, and their monthly payments now totaled more than ,000. “He had perfect credit,” Ms. Soto said of the officer. “Their car got repossessed. He feels ashamed that he can’t provide for his family.”

Ms. Soto is trying to negotiate with the lender, Wells Fargo, to freeze the interest rate on the couple’s mortgage, but they are already two months behind.

Last week, the Bush administration worked out a plan with some major mortgage lenders that would allow some homeowners facing foreclosure to delay losing their homes for 30 days. Although the lenders are not required to do so, they can use the 30-day window to agree to more affordable mortgage terms. Borrowers who are at least three months behind on their mortgage payments can apply.

As the mortgage picture darkens, the housing counselors have seen their roles shift and take on new importance. Where once they mainly counseled first-time home buyers and brokered affordable mortgages, they now take calls from increasing numbers of homeowners in crisis. The counselors negotiate with lenders for lower interest rates, propose payment plans, or — in the worst cases — are reduced to offering sympathetic words for those on the verge of foreclosure.

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