Foreclosure Prevention Loans Help Few

Ann Dornfeld
09/08/2008

In January, Seattle Mayor Greg Nickels announced the city would offer loans to help area homeowners faced with foreclosure. Eight months later, only one loan has been disbursed. KUOW's Ann Dornfeld reports.

TRANSCRIPT

THE FORECLOSURE PREVENTION PROGRAM WAS DESIGNED TO COMBINE FINANCIAL COUNSELING WITH LOANS OF UP TO $5,000 FOR PEOPLE AT RISK OF LOSING THEIR HOMES. WHEN MAYOR NICKELS ANNOUNCED THE PROGRAM IN JANUARY, HE OFFERED $200,000 FOR AT LEAST 40 LOANS. CALLS FLOODED THE ORGANIZATIONS IN CHARGE OF DISBURSING THE MONEY: SOLID GROUND AND THE URBAN LEAGUE.

BUT THE CITY COUNCIL WANTED TO WORK OUT THE DETAILS. IT DIDN'T PASS THE LEGISLATION UNTIL MAY. FINALLY, SEVERAL WEEKS AGO, THE FIRST HOMEOWNER RECEIVED A $5,000 LOAN TO STAVE OFF FORECLOSURE.

SEATTLE OFFICE OF HOUSING DIRECTOR ADRIENNE QUINN SAYS DESPITE THE LAG TIME, THINGS ARE GOING AS PLANNED.

QUINN: "It's really pretty much how we would hope it would have turned out, that we are not seeing a large number of foreclosures. We are very satisfied with where things are right now and we're hopeful that the market will remain strong."

FORECLOSURES IN KING AND SNOHOMISH COUNTIES WERE UP 41% IN JULY COMPARED TO A YEAR AGO, BUT FEW HOMEOWNERS QUALIFY FOR THE FORECLOSURE PREVENTION LOANS. SOLID GROUND SPOKESMAN MIKE BUCHMAN SAYS THAT'S BECAUSE MOST APPLICANTS MAKE MORE THAN THE INCOME RESTRICTIONS: ABOUT 62,000 DOLLARS FOR A FAMILY OF FOUR, OR 43,000 FOR A SINGLE PERSON.

BUCHMAN: "The sad reality is that with our housing costs being so high, even folks that have what we would consider middle–class or even upper–middle–class incomes are potentially facing economic catastrophe because of getting into loans that were requiring more of their income than was really prudent."

MORE PEOPLE COULD BE IN THAT SITUATION NEXT YEAR, WHEN ABOUT 12,000 ADJUSTABLE RATE MORTGAGES IN KING COUNTY RESET.

ANN DORNFELD, KUOW NEWS.

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