Catholic Charities joins effort to end foreclosure crisis

Submitted on March 13, 2008

Send to friendThe foreclosure crisis is taking a toll in St. Louis, with about 6,300 families in the metro area losing their homes last year. But Catholic Charities' housing services is becoming part of the response to the crisis. Chris Krehmeyer of the organization Beyond Housing said the effects of widespread questionable lending practices are expected to be felt for the next two years. "It has hit everybody, in all income levels, but it disproportionately affects those in low- and moderate-income communities," said Krehmeyer, who directs an organization providing housing and support services for low-income families and homeowners. The high-risk loans often are what is known as "exploding ARMs," loans with an initial fixed rate that rises to a higher rate every six months. It means that "families are suffering, children are being uprooted and communities are disrupted," Krehmeyer said. Catholic Charities Housing Resource Center in St. Louis, Beyond Housing, the Urban League, ACORN and Better Family Life are working with the City of St. Louis to help homeowners avoid foreclosures. Mayor Francis Slay announced March 11 that this St. Louis Alliance for Homeownership Preservation will receive $500,000 for counseling services and grants of up to $1,500 to families needing help in restructuring loans. Last year, foreclosures jumped 52 percent in the city to 2,593. They increased 32 percent in St. Louis County to 3,760. In the first two months of this year 271 families in St. Louis County were hit by foreclosures. Slay said families are "losing their connection to the American dream" and will be "set back for many, many years." The funding will help as many people as possible keep their homes, he said. Karen Wallensak, director of the Catholic Charities Housing Resource Center, said her agency saw rising foreclosures two years ago. Funding for mortgage assistance is a bridge, not a handout, she added, and will be tapped only when homeowners working with counselors have used every other means for funds and have a viable household budget in place to ensure future mortgage payments will be met. "We’re pushing the lender to modify terms of the loans to make sure they are affordable," she said. Many people need an advocate when working with their lender, Wallensak noted. Right now the agency is able to prevent foreclosures for about a third of homeowners who seek help, she said. Some people wait too long to seek help. Others have loans that are so far from the mainstream that nothing will help. And others have had a change of circumstances, such as a job loss, that affected their income too severely. In those cases, the Catholic Charities agency works to provide the "softest landing" in more affordable housing. Wallensak noted that many times the agency can help people who don't wait too long to ask for help. "Don't be embarrassed to ask for guidance and help. We can counsel, support and advocate." She suggested that parishes or Church organizations collect funds to help support families. A contribution of $1,500 "will help save someone's house. It might even help someone in their own parish," she said. Those whose homes are in foreclosure "just disappear," she said, often moving without telling anyone of their problems. Foreclosures affect the values of nearby homes and the stability of communities, she noted. Slay said the work of the alliance could help some people avoid homelessness. "This is not a handout, it's a hand up." Krehmeyer urged financial institutions and foundations to contribute to the fund. Those in danger of facing foreclosure are asked to call a toll-free number, (888) 995-HOPE (4673), the Homeownership Preservation Foundation, to be connected to a local agency. The foundation fielded more than 143,000 calls from distressed homeowners nationwide in the fourth quarter of 2007, twice the number of calls during the third quarter and nearly 10 times that of the first quarter of the year.