Bush promotes debt counseling


BY MICHAEL L. DIAMOND • GANNETT NEW JERSEY • MARCH 29, 2008

FREEHOLD — President Bush visited a credit counseling agency here Friday, touting its service as a way for debt-saddled homeowners to get their payments under control.

Bush didn't announce any new government initiatives to help strapped consumers during his nearly 90-minute visit to Novadebt, but he said he understands the burden they face.

"A lot of families are facing foreclosures," Bush said at a makeshift podium set up in front of a bank of counselors. "That has caused consternation and concern."
Credit counselors watch as President Bush touts their services on Friday in Freehold.
GERALD HERBERT/Associated Press


Bush's visit to Monmouth County came as consumer advocates and Democrats have urged the federal government to give more help to homeowners, whether it's a freeze in mortgage payments or financial aid.

Bush's main advice to worried consumers: Call Hope Now, a Minneapolis-based program made up of 10 credit counseling agencies, including Novadebt.

Two homeowners stood behind Bush during his remarks and served as examples of what can happen when the program works to perfection. And they also demonstrated it's not just lowincome residents facing a financial squeeze.

Danny Cerchiaro, a film editor from Woodbridge, saw his mortgage rate recently jump to 9 percent, sending his monthly payments from $2,000 to $3,000. With Hope Now's help, he now has a fixed interest rate of 5 percent and a monthly payment of about $1,800.

Bush's helicopter, Marine One, landed in a grassy field outside Novadebt's office about 2:30 p.m. He met with nine company executives, counselors and homeowners behind closed doors, and then toured the building, walking from cubicle to cubicle to shake hands with employees. Workers tried to lead a normal day, but that didn't seem possible. They arrived to a swarm of police officers and Secret Service personnel. They left their office for a security sweep. They returned and had to walk through a metal detector. News media hovered.

Novadebt has seven offices in five states. Counselors work with consumers to create a budget, figure out where they can save money and, in some cases, serve as an intermediary with lenders. The company has 200 employees nationwide. In the last year, it doubled the amount of counselors devoted solely to consumers with mortgage woes.

The problem: When home values were soaring earlier this decade, lenders approved unconventional mortgages to many consumers with shaky credit histories. When the housing market slowed and mortgage payments spiked, many buyers began to default.

The counselors said most of the calls are from California, Florida, Ohio and Michigan. But New Jersey hasn't been immune. About 5.4 percent of all mortgage loans were at least 30 days past due in the fourth quarter of 2007, up from 2.71 percent a year earlier, according to the Mortgage Bankers Association.

"It's unfortunate the number of people with financial difficulties," said Michelle DiMauro of Jackson, a senior housing lender. But "the banks are working with homeowners a lot more" to keep them in their homes. The Bush administration and the Federal Reserve Board have received praise for engineering the sale of Bear Stearns, an investment company that owned mortgages headed for default.

But for homeowners, his policy has been more hands off. Last year he asked mortgage companies to freeze the interest rates on loans for distressed consumers, but only voluntarily. And he became an advocate for the Hope Now program.

On Friday, he reiterated his policy. "That is to help lenders and borrowers work together to avoid foreclosure," he said.

Afterward, Novadebt President and Chief Executive Officer Joel Greenberg allowed himself a deep breath. He said the mortgage problems aren't over. The economy is flirting with a recession, and consumers may have to come to grips with their massive amount of debt.

But he thinks there's a place for Hope Now. "I think it will solve some of the problem we're facing," Greenberg said.