Jay Harding and his wife bought their three-bedroom, South Kingstown ranch in 2006, while he was doing environmental work on oil wells in Indonesia and the economy was humming.
By 2010, after Harding had come home to work for the Rhode Island National Guard at a much lower salary, the house was deep underwater, the family was burning through savings to make $2,000 monthly payments and the interest-only mortgage they had taken out through Columbus Credit Union was about to readjust.
“We realized we were not going to be able to make the payments if the situation didn’t improve,” Harding said. “So I called our lender and asked what we could do.”
From that point, Harding entered the new and often bewildering world of loan modification and assistance, an evolving collaboration between banks and the government to plug the flow of foreclosures that started after the housing bubble burst.
After more than a year of looking for help, and being rejected by two different programs, Harding last year qualified for assistance from the Hardest Hit Fund Rhode Island, a $79 million federally funded, state-administered program that has allowed him to keep his house.
But the long, twisting road Harding traveled highlights how complicated the effort to prevent foreclosures has become and how difficult it is evaluating the effectiveness of public and private foreclosure-prevention measures.
Both in Rhode Island and nationally, foreclosures have slowed this year despite fears of a new spike following the settlement of foreclosure-abuse litigation.
In Rhode Island and across the country, lenders and those working with them describe a greater willingness than ever to help borrowers if it will avoid foreclosure.
And lenders have a strong incentive to avoid foreclosure as repossessed properties sold at auction typically bring a much lower price than all other transactions, especially if those homes have sat vacant.
But even now, what lenders have been willing to do often hasn’t been enough and it’s often taken federal grants like the Hardest Hit Fund to help homeowners like Harding avoid foreclosure.