May 1 , 2006 —Kelly Besaw found a disturbing pattern as she researched city records in 2003 for Syracuse United Neighbors (SUN), a grassroots organizing group. In the southside and near-westside neighborhoods where SUN worked, 140 home foreclosures were pending in just 10 census tracts. In a follow-up survey of residents, Besaw discovered that subprime mortgage loans were a factor in between 65 and 70 percent of cases in those neighborhoods (and about 50 percent citywide). Many of the loans met the legal standard for predatory lending, while others were what Besaw calls “extremely subprime,” or more than two points above conventional mortgage rates.

To stem a tide of foreclosures, SUN enlisted the city of Syracuse and Home HeadQuarters, a Syracuse NeighborWorks® organization, to join in creating a foreclosure prevention program in 2004. The comprehensive effort, operated by Home HeadQuarters using city funds, attacks the problem with many tools: financial counseling, negotiations with lenders, foreclosure prevention loans, homebuyer education, and grassroots marketing.

“Some people who have lost their houses should not have, but they didn’t know how to go about getting help,” says Besaw, who became the program coordinator in 2005. Much of the help she offers is by advocating on the homeowner’s behalf for new loan terms. “I have had good results with lenders,” she says, “but I’m tough. You have to keep going back to them. It takes a lot of patience.” She also helps homeowners create a working budget and repair other credit issues.

Loans are available only to homeowners whose financial situation has stabilized. Each loan must be approved by a foreclosure advisory committee, a volunteer group of lenders, lawyers, city employees, residents and representatives of other nonprofits. “It’s an interesting mix of folks and you get many perspectives,” says Besaw. “One member has actually gone through foreclosure himself.”

The loan will be forgiven if the homeowner attends Home HeadQuarters’ quarterly counseling sessions on budget and credit for one year. “We do this to make sure they’re keeping the mortgage current and rebuilding their credit,” Besaw says.

Though the program has helped hundreds of homeowners, subprime and predatory loans remain a key factor in half of the city’s foreclosures, according to recent surveys by Syracuse University students. Besaw, a lifelong Syracuse resident, says the newest wrinkles are interest-only loans and stated-income loans (which require no documentation of income). “I’m very worried about the effect of those.”