By Shannon Fiecke and Mark Olson, Staff Writers

While job security in the United States is tenuous at best, there is one job in no current danger of downsizing.

As foreclosures continue to rise, two housing counselors in downtown Chaska have been up to their eyeballs in caseload files. And with additional state funding, the Carver County Community Development Agency (which also serves Scott County), plans to hire another caseworker.

“We’re trying to brace for what comes this year,” said Mary Monteith, CDA assistant executive director.

Sales of foreclosed homes in Scott County have risen 582 percent since 2003. 

When Carver and Scott County residents receive a sheriff’s sale notice, they often turn to Jean Stanley and Louise Setterquist for help to save their home. The pair is currently working on about 52 open files, and each file can take up to a year to resolve.

When Setterquist first started at the CDA, she recalled receiving 120 to 150 calls per year from Carver and Scott County residents, with one to two appointments per week. By last year, her office received over 350 calls, and Setterquist had five to eight meetings with clients per week.

Early intervention

Some homeowners with financial issues contact the CDA early in the process, when they’ve only missed one payment, and before it even reaches the foreclosure stage. “Thanks to the media attention of the foreclosure problem as a whole this last year, many have called us earlier,” Setterquist said.

However, “many are waiting until the last minute — it’s a pretty alarming amount,” Monteith added.

Early intervention is essential. “I think that the lenders are more willing to work with people before they go into foreclosure,” Stanley said.

Homeowners whose homes are up for a sheriff’s sale are often referred to the CDA.

“Unfortunately, this is many times too late in the game,” Setterquist said. “When they get the sheriff’s sale notice, they are at least three-plus months behind, which is about two months too late.”

As a result of the last-minute calls, caseworkers often need to “triage,” Stanley explained. Triage is a method of dividing battlefield patients into categories, depending on which need the most urgent care.

Lenders

CDA caseworkers can direct homeowners to the best financial tools to resolve an issue. They can also negotiate with housing lenders on the homeowner’s behalf.

“Sadly, the people that try on their own are treated very poorly by the mortgage companies,” Setterquist said. “Some have expended energy on this and don’t get response for months later, and they may not have been given any good assistance, even when they have a renewed means of repaying the mortgage payment.”

The biggest challenge for the counselors is finding time to negotiate with mortgage companies for the many people seeking help. And working closely with lenders is not always easy. Caseworkers are accustomed to being on hold, waiting for a lender representative for at least 15 minutes and sometimes up to 40 minutes.

However, with the explosion of the mortgage crisis, and additional financial and government pressures, lenders have become easier to work with, according to CDA officials.

“They were pretty stubborn for quite awhile, but now they’re under a lot of pressure from the feds and the investors, so they’re looking at (foreclosures) on a case-by-case basis more often then they used to (and are asking), ‘If we do a loan modification, will this cost more than going through the foreclosure?’” Stanley said. “Maybe it’s a little bit of mea culpa too, because credit was so easy.”

Besides loan modification, other options may be repayment plans, bankruptcy and, occasionally, refinancing. Other times the solution could be a short sale — which involves selling a house for less than the amount of the outstanding loan, and asking the lender to absorb the difference.

It’s not easy for people to give up their home, Monteith said. However, after exhausting all the financial options, that’s the only choice left. “A lot of times, they’re thankful for someone telling them,” Monteith said.

Thick skin

The increased workload takes its toll on CDA workers. “I’m more jaded than I was. When I started, I had this altruistic goal,” Stanley said. “There are times where it’s just … the people are in such a crisis and in denial, and the homes are so important to people. There are days where I just say, ‘I can’t take any more phone calls today.’”

“You kind of have to get thicker skin,” Stanley said.

Setterquist said she deals with the pressure by eating too much and walking. “We have a little bit of area that we can pace to let off some of the stress. In nicer weather I walk outside for my lunch time.”

Advice

If Setterquist could travel back in time, she would advise her clients: “Do not pay off credit cards and car loans with your house equity by refinancing, ever, or at least not unless the new total loan is under 45 percent of your property’s value, or after seeking counseling from mortgage counselors like us.”

“Trust your instincts, if it doesn’t feel right don’t do it. Go back to the way our parents and grandparents said, don’t spend more than you can afford. ‘Just say no.’”

“The key to everything, when you look at helping these people prevent foreclosure, is income,” Stanley said. “If they don’t have the income to afford the house, there’s nothing we can do.”

The counselors also recommend vigilance. “Don’t be afraid to call our elected leaders and/or attorney general’s office if you feel you’ve been scammed or stuck with a predatory loan,” Setterquist said.

To avoid foreclosure, Setterquist recommends:

+ Building a savings account (worth six months of household bills) to cover a loss of income.

+ Reviewing budgets to cut unnecessary costs.

+ Don’t live above your means.

+ If you lose your job and can’t make a payment, call a lender right away.

+ Understand what documents you are signing. “If your gut tells you something is wrong, listen to it!”

Scott County

A decade ago, foreclosures took up little of Sgt. Duane Jirik’s time. Now there are days where that’s all he handles at the Scott County Sheriff’s Office.

The Sheriff’s Office oversaw 607 sales of foreclosed property last year, nearly seven times that of 2003. Even more homes were in threat of foreclosure, with debts settled or bankruptcy filed before the house was put on the auction block.

Thursdays are the biggest day of the week for sales of foreclosed homes — with as many on one day as there may have been in a month a few years ago, said Jirik, who is assigned to the sheriff’s civil process unit.  

Once a mortgage company begins the foreclosure process, a notice is published for six weeks and the occupant must be served papers at least a month before the sale, Jirik said.

There may be 20 sales scheduled, but only half as many that materialize.

Typically, it is a mortgage company — not a third party — that buys the debt on the property.

After the sale, the homeowner has six months to redeem the property — perhaps by selling it or obtaining financing from someone else. But the longer the redemption takes, the more one must pay — for in addition to the debt owed, there may be interest, attorney fees and insurance costs.

The only time a lot of third parties have bid on properties was a few years ago, when interest rates on savings were low, Jirik said. The buyer was guaranteed a minimum of 6 percent interest if it was redeemed and, if not, would have a nice home on their hands. 

Far fewer people are redeeming. Jirik said half of foreclosed properties were redeemed in 2003, compared to about a 10 percent in 2006.

When Jirik joined the civil process unit in 1998, the typical mortgage he saw was about $150,000; now the average home falls in the $270,000 to $370,000 range.

The housing types are all over the board — from unoccupied newly constructed houses to townhomes to large houses.

The reasons for foreclosures is also wide ranging.

“It could be from somebody losing a job to somebody getting sick and their family overextending themselves,” he said.

What’s more, deputies are finding a lot more vacant homes when serving foreclosure papers than they used to. 

When a house is vacated during the foreclosure process, the redemption period can be moved up from six months to four weeks so the buyer can preserve the home as soon as possible, Jirik said.

In the winter, when heat might be turned off in a vacant home, potentially damaging the plumbing system, this is especially important.

If people continue living in a foreclosed home, once the six-month redemption period expires, the mortgage company might have to go through another process to evict them.

From the start of foreclosure through the eviction process, it would likely take a mortgage company ten to 12 months to remove occupants from the home, Jirik said.

 Shannon Fiecke can be reached at sfiecke@swpub.com [2]. Mark Olson can be reached at editor@chaskaherald.com.