Subprime clean up: Sadness overwhelms

By Alexandra Berzon

Wednesday, Jan. 30, 2008 | 2 a.m.

Kendra Sellers sits in a small office and listens to tales of lives falling apart.

All the woe can be tough to hear. And she wonders whether she contributed to it.

In her past job, Sellers was a mortgage lender. She pushed subprime home loans to customers, then tossed and turned at night, wondering what would happen to the homeowners. But she was under big pressure to push those loans. The lending companies were desperate.

Then, in March, Sellers was laid off, another victim of the housing crisis.

Last month she found a job that taps her mortgage expertise for a whole different purpose. She was hired at the nonprofit Consumer Credit Counseling Services to give advice to people facing foreclosure.

It haunts her.

“Sometimes I think, ‘I bet I did that loan,’ ” Sellers said. “It’s so sad. I always said when I was doing mortgages, ‘I hope I never lose my feeling. I don’t want to get callous.’ But you couldn’t help but get that way.”

And she can’t shake some of the stories she’s hearing now, like that of the man with huge medical bills who says he doesn’t have anywhere to go if he loses his home.

Like all the other organizations in town with expertise in housing or credit counseling, Consumer Credit is struggling to keep up with the need. Nevada leads the nation in the rate of foreclosures.

Sellers’ salary is half what it was, but she says she’s a lot more content.

Visits and phone calls to her agency have doubled since this time last year, but government funding hasn’t arrived as promised to keep up with the need. For the agency, that’s meant cutting back on other services — and falling behind. Sellers has a backlog of 80 client files on her desk that await an initial interview.

After the scope of the foreclosure crisis became apparent, Senate Majority Leader Harry Reid and Assemblywoman Barbara Buckley, D-Las Vegas, recorded a public service announcement directing at-risk homeowners to call Consumer Credit. Calls and visits there jumped — from 620 in December 2006 to 1,070 last month.

The federal government advises homeowners in trouble to call a hotline that, in Las Vegas, rings at the desk of Margarita Rebollal at Neighborhood Housing Services. In August that agency had barely done any foreclosure counseling. Now it too is swamped.

To address the need, Congress in December authorized $180 million for foreclosure counseling. Agencies have to apply either through a state’s housing agency or to a national nonprofit that’s managing the funds, but they don’t expect to get their hands on the money until at least April. To provide some relief until then, the Nevada Legislature’s Interim Finance Committee has authorized $100,000 for Consumer Credit.

Now the state’s Mortgage Lending Division has put that on hold because it wants to see information that Consumer Credit CEO Michelle Johnson says would violate client confidentiality agreements.

In the meantime, Johnson has been able to hire two additional counselors, including Sellers, by using some reserve funds and by cutting other services.

Counselors are swamped by homeowners who want them to talk to lenders to resolve the issue, draw up a budget, figure out refinancing or a home sale option, or just listen to their problems.

Rebollal, who heads the educational programs for Neighborhood Housing Services’ East Las Vegas office, had big plans for 2008. With her office focused primarily on helping first-time home buyers, Rebollal had planned to start prevention services that would help clients learn to save money, make affordable home improvements and avoid trouble with lenders.

Now that’s on hold.

Since August, Rebollal and another counselor have had to bone up on foreclosure counseling and work 15-hour, emotionally draining days.

“Every time someone closed on a house we rang a bell here,” Rebollal said. “Now we have to ring a bell every time we save someone from foreclosure.” That doesn’t happen very often.

Foreclosure counseling requires patience all around, including the time needed for the counselor to connect with the lender on the homeowner’s behalf. Then the counselor must try to persuade the lender to help a client, only to be told, more often than not, that there’s no satisfying solution.

“Every waking moment you’re thinking, ‘What can I do for this client?’ or ‘What is the government going to do about this?’ ” Rebollal said. “I feel like I’m handicapped. There’s not much I can do.”

Some clients’ needs are met. They just wanted some guidance on how to save money, an objective voice of reason, someone to communicate with their lender or to help them figure out what to do next.

But all too often, counselors are forced to stand by as clients slowly lose their homes.

One person who had gone to Rebollal’s office, for example, had raised the $3,700 needed to save her home from the auction block. But furnace repairs set her back $1,000. Counselors asked the lender whether an initial $2,700 payment would keep foreclosure at bay. The lender refused to guarantee it so the client didn’t send the money. She lost her home.

Counselors such as Rebollal would prefer that government or lending companies come up with longer-term solutions. But in the meantime, they say, more money for additional counseling should help with triage.

“We try to put a Band-Aid on the situation,” Rebollal said. “We’re talking about stalling, not solving the real problem. We help as many people as we can.”

Sellers, who used to sell subprime loans, is finding some redemption through her counseling.

“It didn’t feel right when you put people in homes that you knew they couldn’t afford,” Sellers said. “I feel like I’m making up for that stuff now.”