Ent helps fend off foreclosures

After eight months of unsuccessfully trying to sell his Falcon-area home for enough to pay off his first and second mortgages, Wade Gore faced foreclosure.

Instead of destroying his credit and likely saddling his lender, Ent Federal Credit Union, with a significant loss, he worked out a compromise with Ent, using a new team formed to help borrowers who run into financial trouble avoid default and foreclosure.

Ent, southern Colorado's largest financial institution, created its Member Solutions Group as foreclosure filings have skyrocketed both locally and nationwide, reaching record levels in El Paso County last year and already reaching nearly twothirds of last year's total in the first half of the year.

Ent's four-person team was formed five months ago after another member, who had a near-perfect credit score, walked into an Ent office Jan. 3 to drop off the keys to a home he had unsuccessfully tried to sell for a year and could no longer make the payments on.
"That was our wake-up call. We became concerned that this real estate and mortgage market was not just affected by subprime borrowers," said Bill Vogeney, Ent's senior vice president and chief lending officer. "That is when we realized we needed a different approach."

Gore, a real estate agent with Prudential Professional Realtors, knew any solution was better than foreclosure. Ent agreed to allow him to sell the home for less than he owed on the two mortgages and accepted a personal loan from Gore for the difference.

"After working in the mortgage industry for 17 years, I knew the process was available. I knew there were more (negative) consequences with a foreclosure than a workout with the lender," Gore said. "It was a beautiful five-bedroom house in good condition on a golf course. We eventually sold the home for $10,000 less than we paid when bought it four years ago. My experience with Ent on this was outstanding. They were respectful of my situation."

In the past, Ent and many other lenders typically waited until a loan was at least two weeks or a month delinquent before turning the account over to their collections operation, which would then call the borrower. Vogeney started the Member Solutions Group to take calls from Ent members who are having financial problems and want help.

"We needed to reach out to our borrowers and let them know that we couldn't resolve the situation without knowing about their problems," Vogeney said. "Calling someone up and asking them for money doesn't change the borrower's situation. If you don't do something to help the borrower then you are only changing the priority level of what you are owed. No two scenarios are exactly alike. Problems are often caused by job loss, income reduction or some other reason."

The group has worked with 50-75 borrowers this year, which has helped Ent avoid the foreclosure problems plaguing most other lenders. Vogeney said Ent, which makes up to 170 first mortgages and up to 350 second mortgages a month, has foreclosed on fewer than 10 homes this year. In some cases, the team will allow borrowers to skip a payment, pay just the interest that month or even restructure the loan so the borrower can keep paying.

Other credit unions in El Paso County don't have a team like Ent's but say they are willing to work with borrowers who are having trouble making mortgage payments on a case-by-case basis to avert foreclosure. Many top lenders, including Countrywide Financial Corp. and Wells Fargo Mortgage, have departments and divisions dedicated to helping mortgage borrowers avoid foreclosure.

"Foreclosure is always the most expensive option and the lender will never get the price selling the home that the borrower would," Vogeney said. "The solution depends on the borrower's situation, how serious it is and how much time they need" to resume normal payments.

Ent's delinquency rate is among the lowest in the credit union industry - 0.3 percent of its $1.79 billion loan portfolio is two months or more delinquent, compared with between 0.8 percent and 1 percent for all credit unions and 5 percent for the mortgage industry. Vogeney said he expects Ent's delinquency numbers to increase in coming months, but believes Ent's "proactive" approach will keep its delinquencies well below average.

"Our best recommendation is that if you are having issues with making your payments, it is critical to contact your lender. It will hurt you and your credit a lot less than trying to do it on your own," said Jim Moore, another senior vice president and Ent's spokesman.

Not every lender, however, is easy to work with, said Gore, the Ent borrower. He has negotiated seven "short-sales," in which a home is sold for less than what is owed on it, on behalf of his real estate clients this year. Two fell through because lenders failed to respond before the buyers backed out and two others are awaiting lender approval.

DETAILS

- Colorado Foreclosure Hotline, 1-877-601-4673 or www.housingcounseling.com for more information.

- Pikes Peak Foreclosure Prevention Partnership hot line, 444-8833 or www.ppar.com/ppfpp/default.htm.