According to Mayor Moccia, there may be 1900 subprime loans in Norwalk that could be caught in the tightening credit squeeze affecting interest rates. Not all loans are at risk, but potentially some are, and the city is ready to step forward and help. From the Hour:

“I want to ensure that everyone who may face this problem is aware of the programs available,” Moccia said. “Norwalk has over 1,900 subprime loans with a value of over $600 million dollars. While not all families with these mortgages are facing payment problems, based on best estimates, approximately 10 percent could be.”

If those figures are accurate, Moccia continued, “almost 200 families in Norwalk could face the danger of losing their homes.”

Last week, the Bush administration, along with lenders, investors and consumer advocates, unveiled a voluntary plan to extend lower, introductory interest rates on home loans before they reset at higher levels to qualifying borrowers. While the initiative has been publicized in the press, Moccia said Tuesday he wanted to ensure that homeowners are aware of the programs available.

Moccia named that and two other initiatives.
Under FHASecure, the Federal Housing Administration offers refinancing for homeowners who have good credit histories but can’t afford their current payment. In three months, the administration has received more than 120,000 refinancing applications and has already helped more than 35,000 people refinance. By the end of 2008, the FHA expects this program to help more than 300,000 families, according to the Moccia’s press release.

HOPE NOW alliance, a private-sector initiative assembled by U.S. Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson, offers toll-free, 24-hour-a-day mortgage counseling in multiple languages at 1-888-995-HOPE.

In addition, the federal government is taking several regulatory actions to make the mortgage industry more transparent, reliable and fair, according to Moccia’s press release.

Margaret K. Suib, Norwalk’s fair housing officer, said various assistance programs are available to homeowners who hold adjustable rate mortgages.

“The federal level has just announced some assistance, as did the governor of Connecticut. There’s also state money available for people who have adjustable rate mortgages and are seeking help paying them,” Suib said. “They should seek help as soon as possible. You need to get help before the foreclosure process (begins).”

Suib said homeowners who are unsure about where to turn may call her for a referral to various help sources. Her telephone number is (203) 854-7820.

For several years, Suib and the city’s Fair Housing Advisory Commission have spearheaded an antipredatory lending campaign titled “Don’t Let A Thief Steal Your House.”

Predatory lenders offer loans with excessive rates and fees with the intent of acquiring the borrower’s property. Such lenders often target poor and minority neighborhoods in cities. While not all subprime loans are predatory, most predatory loans carry subprime rates.

Suib said identifying the number of predatory mortgages in Norwalk is “close to impossible.” That would require going through land records and the terms of each and every mortgage, she said.

“What we do know from data is that Norwalk has fewer subprime loans than do some of the bigger cities like Bridgeport, Hartford and New Haven, and therefore it’s reasonable to believe we have fewer predatory loans,” Suib said. “Even though we have fewer than some of the larger cities in Connecticut, each one represents potential disaster for a family, so we encourage people to come forward and seek help.”

source: The Hour, City offering aid for homeowners in loan crisis December 12, 2007