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A newsletter of the Napa Valley Community Foundation
December 2009
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Second in a series of three special
issues
Yesterday, we talked about the twin goals of the Safety
Net Grant program we launched last December:
- to provide short-term assistance to our
most vulnerable residents
- to help low- and middle-income families
preserve assets like homes and savings, which can
serve as a bulwark against slipping into
poverty.
How effective have we been in meeting these two
goals? The answer lies in stories and statistics,
because giving away money, in our experience, is
both an art and a science.
What the data says so far is powerful. Particularly with
regard to our grants to assist local families facing
home foreclosure.
By the end of this year, roughly 1,200 households in
Napa County will have received notices of default, the
first step in the foreclosure process. It is estimated
that one-third of these homeowners may be eligible
for a loan modification that could keep them in their
homes.
A nonprofit program built with our Safety Net funding
has:
- provided 400 households with education
about the foreclosure process, bankruptcy and
foreclosure rescue scams
- served 109 families to date with intensive
mortgage counseling
- applied for loan modifications on behalf of
29 of these families and
- completed 19 loan modifications so far,
with 10 still pending.
Finding your way through the mountain of paperwork
and the multitude of financial institutions involved with
any particular mortgage is extremely complex, even for
sophisticated borrowers. For instance, only four
percent of homeowners nationwide that are
participating in a federally-sponsored program have
received final loan modifications.
By carefully screening applicants and providing skilled
legal counseling to them at every step of the loan
modification process--in both English and
Spanish--the nonprofit program we funded has been
a resounding success. Nineteen out of 29
homeowners (65 percent) have completed the loan
modification process. As a result, they are not
homeless. They
have preserved their most valuable asset. And, they
are not creating demands on an already strained
social services system.
The challenge we face now is sustaining this highly
effective program, and finding ways to serve more
people--especially since mortgage data indicates
foreclosures will continue at a high rate for the next
two years.
One of the reasons we wish to do so: According to the
Joint Economic Committee of the U.S. Congress, the
average foreclosure costs nearly $78,000. This
includes costs borne by homeowners, financial
institutions, neighbors, and local governments. It
does not include the cost to a community's network of
social service providers, both public and private, or the
emotional cost to the families who've lost their
homes.
So a program that cost $100,000 to operate has
already generated a minimum of $1.5 million in
benefit, a return-on-investment of 1,400 percent.
Tomorrow: our plan going forward, and how you can
help.
Terence Mulligan
President
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