As foreclosure crisis unfolds, homeowners seek help

‘‘I just want to clear my name. That’s all,” Addo said.

Addo spoke with a law student Thursday at Eastern Montgomery Regional Services Center as part of the Howard University School of Law Fair Housing Clinic. He received information about free counselors through the Civil Justice Inc. Representatives from the organizations explained foreclosure, the steps to avoid it and how residents could get objective and free assistance.

Addo, 62, said he decided a few years ago to buy a smaller house for him, his wife and relatives who lived with him. He thought he was making a good financial move and had money for a down payment and closing costs.

But after he suffered a stroke, his medical expenses grew and Addo was laid off from his job. What had been a manageable mortgage turned out to be a burden.

His interest rate also shot up in two years, bringing his monthly mortgage payment from $2,800 to well over $3,000, he said.

Addo was hoping to find a lawyer or agent who would help him with a short sale, an option some lenders provide to original owners that are about to lose their home. In a short sale, where a house is now worth less than the existing mortgage debt, the lender agrees to take less money than the house is worth in order to avoid the costs associated with foreclosure.

Foreclosures in the county rose dramatically in 2007. About 3,350 foreclosures were filed in 2007, compared to about 1,800 in 2006 and about 1,360 in 2005, according to figures compiled by the Montgomery County Office of Consumer Protection from court records.

While there are some assistance programs available to residents, many in attendance Thursday night said they had not known about counselors who could provide free, objective advice even before residents start their home search.

Edward Davis, program director for the Howard University School of Law Fair Housing Clinic, encouraged residents to become educated before making the biggest purchase of their lives, and use housing counselors available through nonprofits.

Davis warned about predatory lending, a practice in which some lenders give buyers a much higher mortgage than they can actually afford.

Phillip R. Robinson, executive director and attorney with Civil Justice Inc, a network of attorneys that provide aid to low- to moderate-income individuals and families in Washington, D.C., Maryland and Virginia, said adjustable loans were a big issue — mortgages with adjustable rates or interest-only mortgages that have shot up dramatically.

The county’s Office of Consumer Protection is getting more calls for assistance from homeowners who fell for predatory loans, said Director Eric Friedman.

‘‘Our office is acting as a clearinghouse ... to be the first-line responders to consumers with problems ... and try to direct them to potential resources,” Friedman said.

In the meantime, homeowners like Addo are searching for solutions. Addo is living on Social Security due to his medical condition and said he can’t afford a decent apartment in Montgomery County. He is not optimistic about a short sale and believes he will foreclose before March.

Addo and his wife plan to move back to his native Ghana. He said he doesn’t want to burden his grown children who were born and still live in the United States.