Richard Godfrey is the executive director of Rhode Island Housing. The organization recently received a Justice Award from R.I. Attorney General Patrick Lynch for its work during the housing crisis. Godfrey recently took some time to speak about the impact of the housing crisis on the organization and its recent initiatives.
PBN: How have Rhode Island’s housing needs changed, and how have you responded to these changes since the 2008 crash?
GODFREY: Going into this recession, Rhode Island Housing’s primary focus was on the significant shortage of healthy homes, and the gap between low wages and high costs. But the worst housing crisis in decades forced us to change the way we do things.
Many lenders have disappeared or significantly tightened their lending guidelines. Rhode Island Housing has worked diligently to continue to assure a steady availability of mortgages so that families can take advantage of lower costs, and we can energize the real estate market.
Unprecedented numbers of Rhode Islanders are displaced or in danger of losing their homes, and Rhode Island’s unemployment rates remain at record highs. Additionally, with one out of every 10 jobs in Rhode Island in industries related to real estate or construction, it is very important that we invest in those industries.
We opened our HelpCenter in 2007 to face these challenges and since then have responded to more than 7,000 requests for help. And we used $45 million in federal stimulus funds to begin $300 million of construction last year, creating more than 1,000 jobs and over 600 homes that are affordable to working Rhode Islanders.
On another front, we are strategically planning for and investing in a stronger future for Rhode Island through KeepSpace: where neighbors meet, people work, children play. With money drying up and needs expanding, better outcomes per dollar invested are critical. KeepSpace is inline with President Barack Obama’s Sustainable Communities Initiative – even though our initiative preceded it. It will help strengthen Rhode Island’s economic future by bringing government agencies including Rhode Island Housing, nonprofit organizations, and private builders together to create thriving communities that embrace new energy, foster innovative technology, and attract talented, diverse and educated people positioned for the challenges of the 21st century.
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PBN: What can Rhode Island expect to happen in the housing markets through 2010?
GODFREY: Many factors have led us to cautious optimism for a slow recovery. Federal incentives have helped stimulate real estate activity, interest rates have remained low and prices have dropped. But with state and federal budget deficits mounting, many longstanding housing programs are being cut. Without these resources, we may lose ground on the progress that has been made by programs like Neighborhood Opportunities Program and the housing bond – Building Homes Rhode Island.
And, of course, it remains to be seen how much the flood damage will affect the housing market. Many Rhode Islanders who were already struggling to pay their mortgage now have additional family and financial stresses. Hopefully, FEMA will provide adequate assistance for home repairs and, if so, the process of rebuilding may actually put many people to work and increase sales of home goods.
If we find ways to continue to build momentum, facilitate positive, long-term change, and create opportunities for homes and construction-related jobs, Rhode Island should see slow but steady growth over the next decade. As jobs return, we will likely see home prices and values rebound solidly.
PBN: What role will Rhode Island Housing play in the recent award of $43 million from the federal government meant to fight foreclosures, and what can that money do for the state?
GODFREY: Our top priority in using the $43 million Rhode Island will receive from the U.S. Treasury will be to help unemployed families keep their homes. Although the Treasury Department has yet to release specific details, we are working with community partners to identify people and neighborhoods that have been hardest hit and will ask lenders in the state to partner with us to help even more families. We see this as an opportunity to help financially strapped borrowers reach long-term relief agreements with lenders. Sometimes a small amount of immediate cash can motivate a lender to make a deal.
While $43 million will provide help to thousands of Rhode Island families, many others will remain at risk. For the past two years we have seen more than 800 foreclosures filed each month. More families are way behind in their mortgage payments.
We urge those who are having a difficult time making mortgage payments to contact the Rhode Island Housing HelpCenter now at (401) 457-1130, rather than waiting until all the details are released. Eligible homeowners will need to complete a thorough financial disclosure form and participate in counseling with a HUD-approved agency. It often takes more than six months to reach an agreement that the homeowner and lender can accept. Rhode Island Housing will provide updates as the program evolves.
PBN: You and your partners recently kicked off a national campaign about loan-modification scams. Can you tell us about that?
GODFREY: The collapse of the mortgage markets and the downturn in the economy have led to a wide variety of mortgage-modification and mortgage-rescue scams. These scams often use high-pressure sales tactics to convince homeowners to pay high fees for “guaranteed” mortgage modifications, or, in some instances, to convince borrowers to unknowingly sign over the deed to their homes, based on a promise to save their home from foreclosure.
Rhode Island Housing was asked by FDIC to be a partner in the Loan Modification Scam Alert – a nationwide campaign by NeighborWorks America to educate homeowners about scams, help them avoid falling victim and encourage them to report suspected scams to authorities.
It is critical that homeowners who find themselves at risk of foreclosure contact an independent counseling agency, like the Rhode Island Housing HelpCenter, at the first sign of trouble. If you suspect a scam, you can call (888) 995-HOPE (4763) or visit LoanScamAlert.org.
PBN: Given all of our economic challenges, what advice do you have for people who are thinking about buying a home right now?
GODFREY: For many Rhode Islanders, now is a great time to buy a home. Prices are very low, especially compared to rents. So those who currently rent and have job stability are in a great position to buy.
Interest rates are also very low, but they are expected to go up as the year progresses. And the deadline for the federal government’s tax credit is right around the corner. Between now and April 30, qualified first-time homebuyers get an $8,000 tax credit, and sellers get a $6,500 tax credit if they buy another home. Therefore, both sides are very motivated.
The key is to buy smart. Homebuyers should be certain they understand a home’s true condition and title status. With many distressed properties for sale, hidden defects are more likely. People should understand everything before they sign anything and take advantage of mortgage products like our FirstHomes100+, which includes the cost to make repairs or renovations. Potential homebuyers can go to our Web site www.rhodeislandhousing.org to get a list of “100 Things to Know Before You Buy a Home.”
