Los Angeles Homeowners Hit With Foreclosure May Get Chance to Have Home Loans Modified Through $1 Million Pilot Program Developed by Legal Services and Others Offering Banks Incentive to Write Down Loan Balances
Legal Services E-lert
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Author: Tony Castro
Source: Los Angeles Daily News, "Saving Souls, Homes"
Date: June 19, 2010
The Los Angeles Daily News writes: “No stranger to the divine, Father John Lasseigne says he's on a holy mission to save not only the souls of his parishioners in Pacoima, but their homes as well. That mission is a $1 million city pilot program aimed at helping troubled homeowners in the northeast San Fernando Valley where one out of every nine homes is in foreclosure. The money will be used to coax lenders to write down loan balances and answer the prayers of homeowners who owe far more on their houses than they're worth. ‘It's the Holy Grail of our foreclosure prevention loan modification program,’ says Lasseigne, of Mary Immaculate Church in Pacoima. . . . Next month, that pilot program will go into effect. Thirty Northeast Valley homeowners will get no-interest loans from the city Community Redevelopment Agency that will be paid directly to lenders who have agreed to reduce the mortgage principal to current market value. But it has not been a slam-dunk achievement. ‘The biggest impediment was that banks don't want to do principal reduction,’ said Yvonne Mariajimenez, deputy director of [LSC-funded] Neighborhood Legal Services, which was involved in negotiating the deal with lenders. Mariajimenez worked with Tom Holler, lead organizer for One LA, a countywide public interest group affiliated with the Industrial Areas Foundation, to organize hundreds of homeowners in the Pacoima area and track their loan modification applications with lenders. . . . Bank of America will be the lender participating in the pilot program, according to Holler and Mariajimenez, but the actual homeowners who will benefit are still being screened. . . . If the program succeeds, Holler and Mariajimenez said, it will give additional life to other attempts at homeowner mortgage principal reductions, including future programs using $700 million allocated to California under the Troubled Asset Relief Program.”