Nonprofits Are the Front Line Addressing the Mortgage Crisis

Certain specialized charities are in a unique position to help as home-foreclosure rate have soared over the past three years.

Contrary to what the popular press is saying about the crisis, they are the primary players of the necessary triumvirate of business, government and charities needed to address the foreclosure crisis effectively in every community.

As the press readily reports, you need the banks to be flexible with the product features of the offending mortgage to help avoid foreclosure. Often, you need the government -- city, state, or national -- to create regulations (or the threat of regulations) that ensure that all banks are adjusting mortgage pricing and packaging appropriately.

Yet, "...housing counselors who work for social-service and community development agencies, such as Catholic Charities and the National Urban League, are on the front lines in the effort to keep people from losing their homes," according to a recent article by the Chronicle of Philanthropy. These counselors are needed to identify the problem as early as possible, ideally before the mortgage has entered into foreclosure. Often they have the right relationships and the depth of services to effectively help families out of trouble. Most people don't realize that banks are not staffed or trained to provide the one-on-one counseling needed to help homeowners address the problem once it emerges.

The country is scrambling to strengthen and supplement the infrastructure of these specialized charities. NeighborWorks America, a Washington based community development association with 240 affiliates nationwide, received a $180 million grant from a federal appropriations bill last December. The article describes the Homeownership Preservation Foundation, a "five year old Minneapolis charity financed largely by the lending industry." Its 24-hour hotline (888-995-HOPE) has experienced a ten-fold increase in volume due in part to help from the Ad Council, a New York charity that produces public-service advertisements.

Foundations and donors need to identify the existing specialized charities in their communities and leverage their efforts right now as another 2.2 million or more families face foreclosure over the next few years. If we can strengthen the front line of the battle, government and the banks will be far more effective in their efforts to address the problem.

Carla E. Dearing