WHEN Matilde Amico’s employer cut back her overtime in September, her working hours as a dispatcher for an alarm company fell from a high of 70 hours a week to about 40.
November she had missed two mortgage payments on the three-bedroomranch in Mastic that she had bought as a single mother in 1989, and hadkept by working either two jobs or long overtime hours. She received anotice from her lender threatening foreclosure.“At that point, I didn’t know what I was going to do,” Ms. Amico said recently. She lives in the house with her 24-year-old son, whose own small business recently failed. “I could see the sheriff coming and putting all of my things on the street.”
Ms. Amico told her story at a news conference held on April 12 by Suffolk County officials to announce that there is help available for homeowners facing foreclosure.
The county at first said the number of foreclosures on Long Island in 2007 was expected to total 18,854, citing data received from the office of Senator Charles E. Schumer.
But the senator’s office later said that the county had misinterpreted the figures and that the 18,000 represented mortgages whose interest rates are likely to rise substantially this year.
It is a big step from rising mortgages rates to foreclosure, however. In all of 2006, 192 homes were lost through foreclosure on Long Island, according to RealtyTrac Inc., a firm that tracks foreclosures nationwide. (Other homes, of course, may have been sold to head off legal action.)
Foreclosure actions are often a result of illness or loss of income, as in Ms. Amico’s case. But many also result from risky loans given to home buyers during the recent real estate boom, officials say.
Higher payments have come due on large numbers of subprime mortgages, putting more borrowers in difficulty. Such mortgages — which often start with low “teaser” rates and then spike up to higher levels after a few years — are usually made to borrowers who have poor credit backgrounds or whose income may not be high enough to comfortably afford larger monthly payments.
As Steve Levy, the Suffolk County executive, said at the meeting, “Now we’re starting to see that these folks are starting to fall behind on mortgage payments.”
One recourse, a service set up by the county, refers those facing foreclosure to counselors certified by the United States Department of Housing and Urban Development. The counselors can help homeowners take one of several possible paths, depending on the severity of their financial plight: renegotiate monthly mortgage payments; provide bridge loans that don’t have to be paid back until the house is sold or refinanced; refinance the mortgage to a lower interest rate; or sell the house and find other living arrangements. Nassau announced a similar program the same day. In Suffolk, the telephone number is (631) 853-4800; in Nassau, (516) 571-4663. The counseling and assistance are free.
In the three days after the announcement, Suffolk received nearly 300 calls from homeowners. Nassau reported 260 calls.
The county can also provide limited financial assistance, up to $1,000 per homeowner, from a federally financed homeless prevention program. “This isn’t throwing good money after bad,” Mr. Levy said. “Foreclosed homes become eyesores in the community; they devalue other homes nearby.”
A day before the Suffolk press conference, the Joint Economic Committee of Congress proposed in a report released in Washington that the government provide funds ($3,300 per household) to help prevent foreclosures nationwide.
In the report, Nassau and Suffolk Counties ranked 37th among the 50 metropolitan areas with the highest foreclosure rates in 2006. (Detroit-Livonia-Dearborn, Mich., was first.) Across New York, 13 percent of subprime loans were 60 or more days delinquent as of the end of February, up seven percentage points since February 2005, with the highest increases in Long Island, Dutchess County and New York City, according to the report.
While Ms. Amico had a fixed-rate 30-year mortgage, her situation illustrated how quickly even a solid homeowner can fall into dire straits. In her case, help came by way of a friend who referred her to the Long Island Housing Partnership, a nonprofit organization that provides free counseling and garners public funds to help build affordable housing.
Kisha Wright, a counselor at the partnership, called the lender who held Ms. Amico’s mortgage and tried to restructure the loan. When the bank turned Ms. Amico down, the partnership lent her $13,500 in New York State grant money. Together with $4,000 that Ms. Amico had saved, the amount covered seven missed mortgage payments. Meanwhile, Ms. Amico was able to restore her overtime hours.
Ms. Wright said that 59 homeowners facing foreclosure had come to the partnership for help in the last three months. In previous years, there would typically have been “only a handful” of such cases in the same period.
By the time Ms. Wright sees them, homeowners have typically missed 3 to 12 months of payments.
The situation is likely to worsen on Long Island and elsewhere in the country, local and United States government officials say.
“Subprime loan foreclosures are expected to increase in 2007 and 2008 as 1.8 million hybrid ARMs — many of which were sold to borrowers who cannot afford them — reset in a weakening housing market environment,” the Congressional report read. (Hybrid adjustable rate mortgages have rates that climb, but only after an initial rate that can be locked in for, say, 3, 5, 7 or 10 years.)
Borrowers with interest-only mortgages may eventually be saddled with an additional payment against the principal amount of the loan. That could as much as double monthly payments, according to Pearl Kamer, chief economist of the Long Island Association.
With a glut of homes on the market, she added, prices are declining, particularly for homes listed for more than $500,000. And lenders have tightened requirements for borrowers, fewer of whom can thus qualify for mortgages.
She said she believed all neighborhoods on Long Island would be affected, not only the less affluent ones. When real estate was booming, less affluent buyers “got into these more expensive homes with subprime mortgages,” Ms. Kamer said, often to move to a better school district.
As home prices drop, she said, many homeowners are stuck owing more money than they can recover by selling the house, which could lead to foreclosure if they are unable to keep up with the monthly payments.
Ms. Amico of Mastic said she was initially embarrassed to face Ms. Wright, the counselor who helped her. “I thought, what was this woman going to think of me?” she said.
But she later told her story publicly in the hope that others would swallow their pride and seek help. “She really helped me save my house,” Ms. Amico said of Ms. Wright. “She was with me from Step 1 all the way to the end.”
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