Martin Montes, 37, a Culver resident, didn’t see it coming.
He bought a new home in 2007, when he had a good job and the economy was fine. But a year later a slew of events - a new baby, a reduction in his weekly hours at Bright Wood Corp., from 40 to 28, and a high-interest loan - made mortgage payments impossible to pay.
It’s a story that’s becoming increasingly familiar and like many, Montes thought he had no choice but to wait for the bank to foreclose on his property.
In the fourth quarter last year, 4,680 homes in Oregon were in foreclosure proceedings - an increase of 26 percent from the third quarter, according to the state Department of Consumer and Business Services.
Tom Greene, president of the Central Oregon Association of Realtors, said too many Central Oregonians still don’t realize they have options besides foreclosure.
Montes, who speaks Spanish, learned about those options when he met Selef Spragg, a bilingual homeowner specialist with NeighborImpact.
The nonprofit agency provides an array of help, such as energy assistance, help with achieving home ownership and temporary housing for families with children. Spragg’s services are free.
He was initially placed in the Madras office in March to help people buy homes. But his focus quickly switched to helping people keep their homes or sell them in a way that would result in the least damage to their credit.
“The way the economy has shifted, our biggest focus has become foreclosure prevention,” Spragg said. “People are losing jobs, not making the same amount. It has changed completely the aspect of what we’re doing and what we initially wanted to do.”
Spragg said, so far, not one of his 15 or so Jefferson County clients has lost his or her property through foreclosures.
Ideally, he tries to keep people in their homes.
And it’s been easier lately, he said, with lenders who are more willing to work with people than in the past.
The first step Spragg takes is sitting down his clients and going over their budgets.
With Montes, he immediately saw the available options narrow because Montes was operating in the red.
After working with Spragg, Montes decided his best option was to broker a short sale, which is when a property is sold for less than the amount owed to the lender.
So, Montes will try and sell the home he bought for $190,000 for $169,000, which is the current market value, according to Spragg. If he receives an offer for that amount, Spragg said, Montes will pay the lender the proceeds to avoid foreclosure.
The lender has agreed to forgive the difference between Montes’ mortgage balance and the amount received from the selling of his home.
If Montes had opted to go through the foreclosure process, not only would he have caused more damage to his credit rating, but he also would have put himself at risk of being sued by the lender.
Other options, such as asking for forbearance, a forgiveness on payment until a person is back on his or her feet, were not available to Montes.
Spragg said forbearance isn’t granted often, and the borrower still has to continue to pay his or her mortgage, plus everything else back at a later date.
Some of Spragg’s clients also have been able to negotiate a deed in lieu, where a homeowner gives the deed and title of his or her property back to the lender.
This can release a borrower from many of the obligations regarding his or her loan.
Spragg is also helping a handful of people refinance their mortgages and obtain lower interest rates. Usually they are loans the buyer should have been told about when first interested in purchasing a home, according to Spragg.
“There are better loans for families out there, but there were a lot of predatory lenders, and they put them into loans because they made more money,” Spragg said.
Holly Booren, a real estate agent in Madras with Century 21 Gold Country Realty, said she has seen an influx in foreclosures, but also a recent change in the way lenders work with clients.
“I think lenders are better at telling them what their options are right now,” Booren said, referring to borrowers. “They are easier to work with in that respect.”
Coming up with another option, besides foreclosure, is worth it, said Dan Evans, a broker based in Bend.
“Certainly, first and foremost it helps to save people’s credit somewhat,” he said.
Montes, who said it’s been a difficult road, offered some basic advice.
“Don’t buy a house if you don’t have the money,” he said.
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