President makes stop in Freehold

Urges use of free program to help with mortgages
Saturday, March 29, 2008
BY JOSEPH R. PERONE
Star-Ledger Staff

President Bush visited a credit counseling firm in Freehold yesterday and urged Americans who are having trouble paying their mortgages to seek help from a free program designed to aid troubled homeowners.

Following a tour of the offices of Novadebt, the president said he wanted to send a message that consumers could use the program to avoid losing their homes.

"I want my fellow citizens, if you're worried about your home, to call this number: 1-888-995-HOPE," Bush said. "Hope Now can help homeowners find the right solution." Launched last October, the Hope Now Alliance is a private partnership organized by the federal government to give struggling homeowners relief from overwhelming mortgage payments. The president selected Novadebt because it was one of the first credit counselors to join the program, which helps homeowners to modify their mortgage loans.

"A lot of families are facing the frightening prospect of foreclosures," the president said. "We have a role to play at the government level, and that is to help lenders and borrowers work together to avoid foreclosure." Bush introduced two homeowners who benefited from the program, including Danny Cerchiaro of Iselin. Cerchiaro, who runs a movie production business from his Middlesex County home, said during an interview that his mortgage payment last summer was set to jump to $3,000 a month from $2,000. He called the mortgage help hotline, and with assistance from Novadebt, he was able to reduce his monthly payment to $1,800.

"I had a perfect credit record, and I wanted to keep it that way," he said.

Bush arrived in New Jersey at McGuire Air Force Base, where he presented Andrell Reid with a President's Volunteer Service Award. Reid, an Army wife at adjoining Fort Dix, has volunteered hundreds of hours of her time to assist soldiers and their families. More than 600 volunteers have received the award since 2002. While visiting Novadebt, the president shook hands and joked with workers in their cubicles. The nonprofit company, founded in 1991, has 200 employees.

Foreclosures around the country jumped 60 percent last month compared with a year ago, according to a report by RealtyTrac, an online marketer of foreclosure properties. The group said 223,651 homes last month were hit with foreclosure filings, which include default and auction sale notices and bank repossessions. Of that number, 46,508 were repossessed by a lender, more than twice the number from a year ago.

Of the 945,153 mortgage loans in New Jersey, 25,945 were more than 60 days past due as of January, up 71 percent compared with the same period a year ago, when 15,177 loans were delinquent, according to Hope Now. The group also said the number of foreclosures begun in the state more than doubled in January, to 977, up from 476 a year earlier.

Some homeowners are becoming mired in debt because of high medical expenses, job losses and adjustable rate mortgages boosting payments beyond their means, said Isis Rockwell, housing department manager for Novadebt. She said credit counselors work with lenders to lower the monthly payments or allow an owner to sell their house at a reduced price that does not cover the entire debt.

"Lenders realize if they don't offer more options, these homes will end up in foreclosure and they will lose a lot of money," she said.

Some critics have complained that the program does not go far enough and that the president's policies have contributed to the credit crisis.

"Today was a nice photo-op for the president, but touting the baby steps the administration has taken in the face of this tsunami of foreclosures cannot be mistaken for the type of bold action American homeowners need," said U.S. Sen. Robert Menendez (D-N.J.), a member of the Senate Banking Committee. "Eight months after the administration first announced it had a plan to help homeowners, it appears a hotline and slow-paced effort that is reaching a narrow margin of at-risk homes is the best it has to offer."

State Sen. John Adler, the Democratic candidate for congress in New Jersey's 3rd District, blamed the president's economic policies for causing financial hardship for working families. "Middle-class families across the country are seeing their opportunity to live the American dream slip away because of President Bush's failed policies over the last eight years," he said.

The Federal Reserve has been cutting interest rates for several months, and the White House has devised a program to provide rebates to taxpayers to stimulate the economy. Still, it is difficult to stop a recession once it is under way, said Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland.

Morici said the federal government needs to reform the banking system to prevent the exotic interest-only mortgages that got some borrowers into trouble in the first place. So far, he said, "'They are not fixing the bad lending practices, they are just propping up the banks."