Mortgage counseling expands

Eight U.S. financial institutions and two California foundations have contributed $4.6 million to help mortgage counseling agencies beef up California staffs increasingly overwhelmed by borrowers trying to avoid foreclosure, a statewide housing group announced Monday.

The San Francisco-based California Reinvestment Coalition said the money will pay for two years' salary and benefits for 46 or more new counselors.

The positions will be spread across California's 80 federally certified nonprofit counseling agencies. Many new staffers are likely to land in Sacramento, said Alan Fisher, the coalition's executive director.

"Sacramento is one of the places that has been hit hardest, and we think they could come up large in our effort," said Fisher.

He said the money will help counselors assist about 70,000 California homeowners during the next two years. Fisher said hopes are that 25 percent to 40 percent of those counseled will be able to keep their houses.

He said potentially up to $10 million may be needed for new counselors in a state where 500,000 homeowners with risky loans face higher payments in the next 18 months.

Counseling agencies must submit applications to the coalition by Feb. 8. A screening committee from the coalition, mortgage industry and the foundations will make decisions in late February and make the money available in March, Fisher said.

Monday's announcement followed one in December that NeighborWorks America would administer $180 million in new government funding for counseling nationally. Some of that money is also expected to reach Sacramento, said Pam Canada, executive director of NeighborWorks local counseling affiliate.

Fisher said the biggest donation – $1 million – came from New York-based brokerage house Merrill Lynch.

Merrill Lynch spokesman Bill Halldin said his company's interest stems partly from its purchase last year of First Republic Bank, which does business in the Bay Area and Los Angeles. He said Merrill Lynch believes "education and counseling are vitally important in today's housing market.

Other financial institutions donating included Wells Fargo & Co., HSBC-North America, Wachovia Bank, Comerica Bank, Countrywide Financial Corp., Citibank and Bank of America.

"This adds capacity to those nonprofits that are on the front lines every day," said Al Arguello, a Los Angeles-based executive for Bank of America, which contributed $500,000.

The San Francisco Foundation and California Community Foundation also contributed to the initiative.

"We're thrilled about it. This is capacity-building money we desperately need," said Martha Lucey, president and chief executive officer of Fresno-based By Design Financial Solutions.

The firm counsels struggling borrowers in many of the state's hardest-hit housing markets, including the Central Valley.

"We're in need of it," Lucey said. "The demand for our housing counseling services significantly outpaces our counseling capacity."

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