President touts credit counseling

PRESIDENT TALKS ABOUT MORTGAGE WOES IN VISIT TO FREEHOLD TOWNSHIP
BY MICHAEL L. DIAMOND • BUSINESS WRITER • MARCH 29, 2008

FREEHOLD TOWNSHIP — 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.
President Bush talks about the nation's mortgage problems Friday during his visit to Novadebt in Freehold Township.
(STAFF PHOTO: THOMAS P. COSTELLO)

"We have got an issue on housing in America," Bush said at a makeshift podium set up in front of a bank of counselors. "A lot of families are facing foreclosures. . . That has caused consternation and concern." It marked Bush's first visit to Monmouth County during his presidency. And it came as consumer advocates and Democrats have called on the federal government to offer more help to homeowners, whether it is a freeze in their mortgage payments or financial assistance.

The event kept the spotlight on the faltering housing market that has threatened to plunge the economy into recession. 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 7 percent to 9 percent, sending his monthly payments soaring from $2,000 to $3,000. He was referred to Hope Now by his lender, which eventually agreed to a fixed interest rate of 5 percent and a monthly payment of about $1,800.

"I thought it was a scam," he told reporters after Bush's remarks, but his skepticism faded.

marine one lands

Bush's helicopter, Marine One, landed in a grassy field outside Novadebt's headquarters about 2:30 p.m. Bush wore a gray suit and light blue tie. He met with nine company executives, counselors and homeowners during a closed-door meeting, and then toured the building, walking from cubicle to cubicle to shake hands with employees.

He apologized for interrupting their day. He disarmed them with winks, smiles and pats on the arm. "He asked how everything was going," said Darla Keegan, a Jackson resident and senior housing counselor at Novadebt. "I said, 'We're trying to get the word out,' and he said, 'That's what we're all trying to do.'" 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.

Most of them learned Tuesday that the president would visit. And they were told not to bring anything to work that couldn't get through the airport — along with fruit.

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 their lenders to re-work the terms of their loans.

It has been a busy time. The company has 200 employees nationwide. In the last year, it doubled the amount of counselors devoted solely to consumers whose mortgages have become too high. The problem: When home values were soaring earlier this decade, lenders approved unconventional mortgages to consumers who had shaky credit histories. The mortgages were sold to investment banks, which then sold them to investors.

When the housing market slowed and mortgage payments spiked, many buyers began to default. It left: Home owners facing foreclosure; investment banks and investors owning mortgages whose value plummeted; and the nation looking at a financial crisis.

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 in the fourth quarter of 2006, according to the Mortgage Bankers Association. They hoped homeowners would avoid a common mistake: Avoiding letters and calls from the lenders seeking payments.

"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 been praised 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.

what's that number?

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

Sounding like a pitchman, he twice gave the Hope Now telephone number, 1-888-995-HOPE. He left out one of the 8's both times, leaving it to homeowner Cerchiaro to point out his mistake. Bush walked back to the podium, paused, smiled and gave the correct number.

The event ran like clockwork; Bush left before his scheduled 4 p.m. departure time. 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.