Remarks by Michelle Jones at Decatur Rotary Club, Decatur, GAFriday, February 20, 2009

I've been with Consumer Credit Counseling Service for 12 years, and over the course of those twelve years, I have had the same introductory conversation hundreds of times. I'll be at my daughter's school, or in the grocery store, or at a networking event and someone will ask what I do. "Why I work for consumer credit counseling service" I'll reply and they will inevitably respond, "oh, that's great . . . now what exactly is it that you do?"

Now for some of you in the room, that may not be the case. We're the organization that you know typically only if you ever have cause to need us. So if you have an employee base or some other constituency who may be in need of our services, you may well know who we are. And if you've ever tried to help a friend, family member or neighbor during tough times, you may have discovered our services during your search for resources.

But for those who may not be familiar, I'll give a brief overview before I get onto the main topic of today's conversation, which is the pressing foreclosure crisis that continues to plague our communities and our nation, what that has looked like from my agencies perspective, and what we can do and are doing to help.

Consumer Credit Counseling Service of Greater Atlanta is based in downtown Atlanta at 100 Edgewood Avenue in the United Way building. However, while we are based here, we are one of the nation's leading nonprofit counseling agencies, providing confidential financial counseling to people who have too much credit card debt, have missed a mortgage payment and are trying to avoid foreclosure, and for people who may need to file for bankruptcy.

We provide much of our counseling over the phone and over the Internet. In recent years, technology has enabled us to reach many more people, either by toll-free, 800 telephone number or through our web site, which is www.CredAbility.org.

However, we still counsel many people in person. We have 10 offices throughout north GA and metro Atlanta where a person can make an appointment and speak to a certified credit counselor. In fact, we have an office staffed with counselors in downtown Decatur, just a block from here at 140 East Court Square.

We often refer to our agency as a financial emergency room. Our job is to work with people who are in the midst of a financial crisis, identify their options and best next steps, and then move them to a situation where they can deal with their financial lives in a confident manner.

An increasing amount of our work these days comes from homeowners who are delinquent on their mortgage payments and seeking help to avoid foreclosure. Our job is to help them find a solution that will either save their home, such as a loan modification, or offer a graceful exit, such as a pre-foreclosure sale or deed-in-lieu of foreclosure. But at CCCS, while the consumer is our primary client, we act as a neutral 3rd party and work to craft solutions that will not only work for the homeowner, but also one that is acceptable to the mortgage company. It's because of this measured, impartial advice and counseling that both homeowners and mortgage servicing companies see the value of working closely with our organization.

Because of the increased demand from people seeking help, the number of housing counseling sessions we conduct is skyrocketing.

Housing counseling sessions at CCCS have been increasing since the mortgage crisis began three years ago. Back in 2006, when we had only eight housing counselors, we conducted less than 10,000 housing counseling sessions. That number jumped to over 31,000 in 2007 to an unbelievable high of 73,573 last year. During that period, we have gradually added to staff and now have roughly 175 housing counselors in total who are helping people trying to avoid foreclosure.

WHO WE SERVE

So who are our clients? Well, that picture has changed somewhat over the past few years. Three years ago our client was typically in her mid-30's with two dependents and a household income in the low to mid-30's.

Here are three stories of clients we recently helped avoid foreclosure.

A Lithonia woman in her late 20s fell behind on her mortgage payments last year following a car accident and some tax issues. The other motorist in the accident did not have insurance, so the car repair bills and other expenses caused the Lithonia woman to miss two mortgage payments. She called CCCS and her counselor made several recommendations to get her back on track. Since speaking with her counselor, the client found a roommate to cut living expenses. She also occasionally participates in a car pool to work, has cut back on eating out and hair appointments. She received a loan modification from her servicer that cut her payments by roughly $60 per month by going from a 30-year to 40-year fixed rate loan. They also allowed her to delay payments for a couple of months before going into the new loan to build up her savings.

Last year a woman from New York bought a home in DeKalb County's Ellenwood area to be closer to her children. She had not yet sold her home in New York and in a few months suffered a loss of income. With an increasing interest rate on the New York home, she quickly fell behind on her bills. She tried to call her lender, but didn't get far because she spoke mostly French. Our clients typically have trouble getting past bankers jargon even when they speak the same language. After patiently working with the right contact at the mortgage company, our French-speaking counselor negotiated a lower interest rate for the loan on the New York home, providing our client more time to increase her income or sell her home up north.

Adjustable Rate Mortgages are often the reason our clients have trouble making monthly loan payments when they have a history of paying on time. One of our counselors recently helped a family from Jacksonville stay in their home after their mortgage rate adjusted from a lower rate to 9.65%. After having difficulty reaching someone at the mortgage company able to help, the homeowner contacted our counselor. After a three-way call that included the mortgage company, the lender and the homeowner, the lender agreed to drop the rate to 5.75 percent for the next five years, which was affordable within the family's budget.

These are the real stories behind the statistics you've read in the news in the past year. The national foreclosure crisis is increasingly evident in metro Atlanta neighborhoods, including DeKalb's.

In case you haven't heard some of these troubling statistics, I've selected some numbers to help underscore the challenges our community faces.

Last year Georgia's foreclosure rate ranked eighth in the in the country and Atlanta was the 17th ranked metro area. The majority of CCCS' Georgia clients are from metro Atlanta.

Foreclosures were up 50 percent last year in the five largest metro Atlanta counties. In metro Atlanta, about 20 percent of homeowners are underwater on their mortgage.

CCCS' foreclosure prevention clients from Georgia last year had an average annual income of just over $41,000, with a monthly budget shortfall of about $1,300. The average net worth of our clients in mortgage crisis was nearly $56,000 in the negative; about ten times lower than 2007.

Before your eyes glaze over, I've got one more statistic to share with you. Studies show that only half of the homeowners who fall into foreclosure attempt to speak with their lender or service company.

We know that the key to foreclosure prevention is communication with the lender. But many people don't know how to prepare for a conversation with their lender. It's important to be able to explain how you got in trouble, what your current financial situation is, and how you will be able to afford the mortgage in the future.

This takes some clear, calm thinking. That's something that might be in short supply by the time someone calls us for help.

HOW FORECLOSURE COUNSELING WORKS

When we get that call, here is a brief description of how our counselors help people who call us and need to avoid foreclosure.

Our agency is one of a handful of nonprofit counseling agencies in the United States that take calls from homeowners calling the HOPE hotline. This is a toll-free telephone number available to anyone in the country, and it is particularly useful for people who are delinquent on their mortgage.

The HOPE hotline number is 1.888.995.HOPE. When anyone in Georgia calls that number, they will likely reach one of our counselors here in metro Atlanta.

Our hotline call volume is constantly increasing and in January 2009, 22,405 total calls were routed to CCCS from the HOPE hotline - the busiest month in a year.

Once a person calls, an appointment is made to speak with a counselor. There is no fee to speak with a counselor.

In a counseling session, we ask the homeowner to provide us all of their personal financial information, including their monthly income and expenses. The latter, of course, would include information about their mortgage payment.

From there, we help each person find ways to cut their expenses, and, if possible, increase their income.

We take a look at many everyday expenses to determine how they can reduce their spending. Many times, we can save families hundreds of dollars every month by eliminating unnecessary expenses, such as meals at restaurants, cable television and cell phones for every person in the family.

Once we've worked out a new budget, and we can determine that the homeowner has enough money available to make their mortgage payment, we contact the mortgage company and forward the homeowner's information on to them.

We know that, in many cases, the homeowners have been unable to reach their mortgage company, or may have reached the wrong person. Or the homeowner may speak a different language than the person on the other end of the phone. We were able to help the French-speaking woman from Ellenwood. And we are quickly expanding our staff of Spanish speaking counselors.

Because we speak with people at almost every mortgage company in the U.S. every day, one service we offer the homeowner is the ability to get information requesting a new mortgage agreement in front of the right people.

In some cases, we are able to reach the mortgage servicing company with the homeowner and set up a three-way conference call, as in the example I mentioned earlier, to discuss a solution for the homeowner.

If a homeowner is looking at keeping their home and avoiding foreclosure, there are two common plans that CCCS counselors typically explore with their lenders.

A repayment plan is the most common workout plan for any household that is 1-3 months delinquent on their mortgage payment.

Under this scenario, a homeowner sends in their normal payment plus an additional amount each month that is agreed upon by the mortgage lender. Repayment terms typically span from 3-24 months and the terms of the loan are not changed.

The second common workout plan is a loan modification. This is a written agreement between the servicer and homeowner that changes one or more of the original loan terms, such as the interest rate, term of the loan or type of mortgage.

Under a loan modification, the monthly payment often is not reduced, though the interest rate usually will not "reset" to a higher rate or will be rolled back to the initial rate. This can be a solution for a family with an adjustable rate loan where the rate has recently increased, or is about to increase.

We believe our agency can assist most delinquent homeowners, especially if they call us as soon as they believe they need help.

I have barely touched on some of the other counseling services we offer, including Debt Management Plans for people struggling with credit card debt or our counseling services for people considering bankruptcy. But I know as DeKalb County's leaders you must be particularly concerned about the pockets of the county hardest hit by the current mortgage crisis. I wanted to let you know that, for people who reach out, there are some positive alternatives to foreclosure right here in DeKalb County.

Thank you. I'll be glad to take any questions.