In November 2018, Lisa Christensen, Financial Coach/Budget Counselor, was approached by Mary and her daughter, Kate. Mary was a widow in her 70’s on a fixed income. Several years earlier, Mary took out a reverse mortgage on her home. She used the proceeds from the reverse mortgage to pay off her outstanding mortgage balance and make some repairs to the property. Unfortunately, 5 1/2 years later, she was having difficulty paying her homeowner’s insurance and taxes. She kept the situation to herself until the reverse mortgage started to threaten her with foreclosure. At that point, she was two years behind on homeowner’s insurance and three years past-due on taxes. She shared her situation with her daughter and together, they turned to Newcap for help.
After their initial budget counseling, Kate reached out to the reverse mortgage company to request copies of all her mother’s documents and to see what was needed to stop the foreclosure action. Fortunately for them, the mortgage company was very willing to work this out and set up a repayment plan that covered the payments they had made on Mary’s home for insurance and taxes. They did not add any additional fees, but were still seeking repayment of $7,095.90, at a rate of $141.92 per month for just over four years.
Mary, Kate, and Newcap were able to find ways to improve Mary’s budget to by utilizing Foodshare, the local food pantries, Energy Assistance and other outside programs, as well as trimming Mary’s hobby budget a bit. As a result, she was able to free up enough for the monthly payments to the mortgage company as well as allow her to put enough into a separate savings account to cover taxes and insurance going forward. She made her first payment in January 2019.
Next, an HQS Inspection was done on her property. Mary’s son is a contractor, so he was able to make the minor repairs that were found. From there, we formulated a plan to help Mary get out from under these payments.
In April 2019, once the repairs were completed and Mary had shown that she could afford the monthly payments on the mortgage and deposits into the tax and insurance savings account, Newcap sent a check for $2,000 to the reverse mortgage company to be applied to Mary’s past-due balance. Three months later, we verified that Mary had been keeping up with her monthly payments and deposits to her “escrow” account. At that time, we sent another check to the mortgage company on Mary’s behalf.
As part of our action plan, Lisa reached out to Mary in January to see if everything was still going well. She informed me that, thanks to some inheritance money, she was able to pay off some of her other debt, thus freeing up a bit more money to cover her expanses. In addition, she had already paid the 2019 property taxes in full and her homeowner’s insurance was up to date, as well. She only has about $800 left to pay to the reverse mortgage company and is able to stay within her new budget and spending patterns.
Lisa will be contacted them again in November, two years after their initial meeting. At that point, Mary’s life should be back to. normal with the past-due balance completely taken care of.
She and her daughter, both have expressed their gratitude to Newcap, not just for the funds, but for the advice and support Newcap was able to give to make this financial turnaround happen.
Homeowner Assistance (HCRI) Program:
The Homeowner Assistance Program (HCRI – The Housing Cost Reduction Initiative) provides assistance to low-income individuals who are in danger of losing their home to foreclose by helping them catch up on mortgage payments and past due property taxes.
For those homeowners who do not meet the eligibility criteria, there is still assistance available in the form of budget counseling, organizing and understanding the materials associated with foreclosure, and communicating with the mortgage company to attempt to work out any possible alternatives to foreclosure.
Learn more about eligibility guidelines and application process here: https://www.newcap.org/program_category/stability/
Counseling through Financial Capabilities
Do you need help to develop a budget? During your session, our Financial Coach assists with establishing a budget, evaluating debt, setting financial goals, and developing an action plan.
Mortgage & Tax Relief Couseling
Are you behind on your mortgage or real estate taxes? During this counseling service, our Financial Coach guides clients to get back on track if they have fallen behind with mortgage payments or taxes. Our trained counselor discusses available options for curing your delinquent home loan and create an action plan for successful homeownership.
Learn more here: https://www.newcap.org/program_category/stability/