When she first started working as a homebuying educator in 2006, "it was a buyer's boom," says Gabriela Luna, now an educator and housing counselor at Tejano Center for Community Concerns in Houston, Texas. "Everyone was buying. There was so much support from all banks."
Two years later, everything changed. Banks started merging. On Sept. 15, 2008, Lehman Brothers declared bankruptcy. "It was the beginning of a really tough time," recalls Luna, who had moved from education to foreclosure counseling. For her clients, "it was chaos." Documents were misplaced by lenders. Banks were doing "dual tracking" and residents were exploring every option they could think of, including "Cash for Keys," a program where lenders offered cash for residents to vacate their homes quickly and leave them in "broom-swept condition." The program helped avoid foreclosure costs and residents used the financial assistance to relocate.
Luna remembers the people she helped – and the people she tried to help. She remembers the emotions. "There are grown men crying right in front of you," she said. "There was one young lady, she said that she just wanted to end it all, that it was too much for her. I remember her boy's birthday was coming up and she said she couldn't afford a cake. I remember because I bought her a cake." The woman was too distraught to pick it up.
Luna remembers phoning people to tell them their modified loans did not go through. Often, parents tried to keep the news from their families until they knew for sure they'd have to move.
But Luna remembers the cases where homeowners kept their homes, too. Tejano Housing counseled 512 clients that year and helped 175 of them get modified mortgages. Another 49 were able to bring their mortgages current, she says. Others refinanced or initiated forbearance agreements or sold their homes themselves. There were some she referred to legal assistance or other agencies. Dozens suspended or withdrew from counseling. And 40 went through foreclosure.
As she counseled, Luna offered what comfort when she could. "Don't look at it as a setback," she'd say. "Look at it as a comeback for something great that God has planned for you."
In homebuying classes and counseling sessions that she's conducted since that time, Luna tries to make sure that people know a house isn't everything. "We know the whole cycle, what can happen and what can go awry. A house does not determine whether you live or die. You simply start over."
In 2008 more than three million foreclosure filings were issued nationwide. September marks the 12th anniversary of the start of what's become known as the housing crisis. At NeighborWorks, President and CEO Marietta Rodriguez recently took to the radio airwaves to talk about lessons learned from that time, in hopes that some of the mistakes will not be repeated now, as COVID-19 spurs an economic crisis that housing officials are watching carefully and worriedly.
In the last crisis, there were "millions of people facing foreclosure that were stuck," Rodriguez says, adding that "nothing is worse than doing nothing." NeighborWorks joined with other nonprofits at the time to show people how to be proactive, to protect their credit and protect their assets. They're doing the same thing now, she adds.
Her lessons learned from 2008 include:
- If you can't keep up with your mortgage, reach out to lenders to see what resources are available. In 2008, "people were in financial distress, but they weren't reaching out," Rodriguez says. "They didn't know where to go." Many people did nothing, when there were programs that could have helped. She wants to make sure that people reach out to lenders now, early, to see what programs can provide relief. NeighborWorks network organizations nationwide can help them navigate what's ahead – and can help them get unstuck, she says.
- Collect the facts. Often, homeowners may have fears about entering mortgage forbearance programs with a lender, believing, for instance, that they'll have to repay everything at once. In fact, Rodriguez says, there are other possibilities, which may include adding payments to the back end of a loan. But any changes will require conversation and negotiation; they won't happen on their own.
- Seek assistance from a U.S. Department of Housing and Urban Development (HUD)-approved housing counselor. NeighborWorks organizations employ such counselors, Rodriguez says. To find one near you, visit NeighborWorks.org and search for a NeighborWorks organization by city or zip code. Times like these are both scary and emotional, Rodriguez says. "There's a lot of information and it can be quite confusing. It's hard to see through all of that anxiety and stress." But housing counselors, who have worked with people in similar situations, can be caring sources of knowledge and calm. They can help individuals "weather the storm," rather than go it alone, Rodriguez says.
Gabby Luna has her own lessons learned from that time. Like Rodriguez, she believes being proactive is key. Another thing that's important? Relationships.
"You have to network well," she says. "Know the home preservation leaders at each bank. Know the people; know the process." She recalls one instance in 2008 when a client was in the midst of trial payments for his modification loan. Meanwhile, the lender had continued toward foreclosure, something called "dual tracking." The client came to Luna holding a paper, an eviction notice. Luna knew who to call, she says. And the foreclosure was rescinded.
"He knew what it was," Luna says of the eviction notice. "He needed to know why. His wife was home, packing everything."
Luna recommends that homeowners keep track of everything when they make calls to mitigate foreclosure. "Where you're calling, who you're speaking to, their department and what was said. That always helps so much."
Another lesson she learned? "Self-care is very important for housing counselors," Luna says. It was important in 2008, when counselors burned out amid delivering so much bad news. It's important now, too. "You're taking in other people's problems. You need to take care of yourself before you can take care of others."
Luna says COVID has taken a toll on her. She is used to traveling and interacting with people. All of a sudden, that contact switched to the phone, and she began getting an influx of calls: People saying they didn't have enough to make ends meet or enough to eat and that they couldn't pay their bills. While there are programs set up to help, those programs are usually not there at the very beginning of a crisis, she says. "They don't happen immediately."
Meanwhile, concern about the spread of COVID kept the home repair program from continuing their much-needed work. "People having to shelter in place in an unhealthy home. You see the hardships all around you and there's absolutely nothing you can do."
These days, in Luna's office, they focus on pre-purchase counseling instead of foreclosure. Still, they get calls and try to direct people where to go. They're also still helping with home repairs from Hurricane Harvey and Imelda, a tropical storm that struck in 2019.
But she is still in touch with some of the people she helped back in 2008. "There's a bond that gets created as you go through that journey," she says. "If they're able to navigate it satisfactorily where they're able to keep their home, that connection is never lost."
