Counseling Superhero: A Client's "Secret Weapon" to Keep Her House

“My housing counselor is my definition of Superman, he stands for truth, justice and the American dream of home ownership.” These are the words of a housing client who lives in Detroit, Michigan. Here's her story with a heroic ending.

It starts with a flashback to almost 20 years ago: this client bought her home, and over the years had a good payment record with her mortgage company, and even put in more than $100K in repairs and upgrades to keep it in tip-top shape.

In 2011, she lost her job and contacted the mortgage company to help her circumstances with either a loan modification or forbearance on the mortgage—at that time the company said it would not change the loan terms. She ended up spending the next several years doggedly trying to hold off foreclosure efforts by invoking Michigan housing laws, going to court, and any other measures she could find to help delay the inevitable.

But in 2013, she ran out of legal options and was in serious danger of losing her home. At this point, she was a senior citizen with a small monthly income, and along with most of Detroit, was experiencing its very poor economy. She was at her wits end about what to do to save her home.

The client connected with one of our housing counselors and explained the situation. In turn, the counselor worked with the mortgage company to determine a plan that would help secure her loan modification request. Through ongoing communication, various applications, and other efforts he eventually was able to help the client get that loan modification. “He was my secret weapon,” the client said. “He also kept me informed and encouraged me all along the way."

Even better, the housing counselor found a special Freddie Mac loan modification package that had not even launched yet and the loan terms were even more advantageous for her. “He hunted down that special program. I am so glad that he took the time to stay up to date on everything that HUD, Freddie Mac, and Fannie Mae put out there,” she said.

“As a result of his diligence, I got a large reduction in my loan interest rate and I get to stay in my house,” the client said.

A home sweet home ending indeed!

What are the differences between a credit counseling agency and a debt settlement company?

One of the most confusing areas for consumers is understanding ways to pay off debt. While both credit counseling services and debt settlement companies focus on helping you with problems making debtor payments, there are major differences in how they operate—not understanding could wreak more havoc on a financial situation.

Here is an overview of how they differ:

  • Credit counseling organizations are typically nonprofit and offer free or low-cost money management counseling. Debt settlement companies are either for profit or law firms and do not provide additional services to clients.
  • Credit counseling agencies can create a Debt Management Plan (DMP), a single payment that a credit counseling agency makes to pay to your debtors each month or pay period; a debt settlement company arranges settlements of your debts with creditors or debt collectors.
  • Credit counseling agencies negotiate up-front agreements with creditors so they will not pursue collection or charge late fees. Debt settlement companies do not have any such agreements with creditors.
  • Credit counseling focuses on full repayment of your debt by lowering your monthly payment or interest rates—not the overall amount owed to the creditor. Debt settlement companies offer to pay off your debts with a lump sum payment, rather than the full amount you owe to creditors.
  • Credit counseling encourages you to continue paying your debt each month but negotiates your monthly payment and interest rate; debt settlement companies require that you stop paying creditors altogether to be successful in their program, which can cause more late fees, collection efforts, and penalty interest charges.

Before making any decisions about using credit counseling or debt settlement, talk to your financial institution or personal finance advisor to understand the pros and cons.

Fast, Free, and Fun Education

Personal finance issues like buying a car, getting a mortgage, understanding credit scores, or identity theft are hardly things we love to spend time on. However, BALANCE wants to make learning about these topics easier and faster than ever.

Check out our five financial fitness minutes featuring short, lively “sketched” videos with practical tips on these most common financial worries. Don’t forget to share them with your family, friends, and colleagues!

Know Your Rights:
National Consumer Protection Week is March 1-7

Next week is National Consumer Protection Week (NCPW), a coordinated effort to make sure you as the consumer know your rights and can make better-informed decisions. Whether it’s getting your name off a telemarketing list, detecting an internet phishing scheme, claims of anti-aging product claims, or foreign money scams, know your rights on these and a variety of other finances, health, privacy, technology and other issues. Find out more.

Like us on Facebook Follow us on Twitter Follow our blog

© 2015 BALANCE
Manage Your Account Visit BALANCE Visit CCCS Facebook Twitter