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New hat for loan arranger

He once made a living on adjustable-rate mortgages. Now in a new job, he says he's out to save homeowners from the whole mess.

February 09, 2008|Andrea Chang | Times Staff Writer

Darren Hendon worked in the mortgage business for years. He sold many home buyers on adjustable-rate loans with low-interest "teaser" rates that rocket higher, typically after two years.

He was laid off last April as the housing slump and credit crisis pinched demand for loans. Now, wearing a crisp-collared shirt emblazoned with the words "Financial predators beware!" Hendon is helping borrowers get out of the kinds of loans he once sold. And, once again, he has plenty of clients.

"I never thought that I was selling anything that was bad," he says. "I thought I was being part of the solution, and I guess I eventually was part of the problem."

Amid the rising tide of foreclosures, lenders across the country are under pressure to modify hundreds of thousands of adjustable-rate loans to more affordable terms. Some of the biggest lenders are steering struggling borrowers to nonprofit groups like Neighborhood Assistance Corp. of America, where housing counselors such as Hendon determine whether a new deal can be hammered out.

On a recent day at his Inglewood storefront office, Hendon, 40, has his hands full.

His first client is Carol Richards, 47, who is hoping to keep her lender from foreclosing on her three-bedroom North Hills home. She bought the house for $355,000 in 2004, then refinanced in 2005 and again in 2006.

Richards' loan papers stipulated monthly payments of $3,700, but Richards says her broker insisted that was a typo and that her actual payments would be $1,000 less. In fact, $3,700 was the correct amount.

Shortly afterward, the adult novelties company that Richards worked for went out of business and she lost her job. Then she underwent jaw surgery -- and says she had to pay $16,000 out of pocket for the procedure because her insurance wouldn't cover it.

Although she is now working again in a sales job, Richards tells Hendon that she is unable to pay the mortgage on the home she shares with her 83-year-old mother. She wants to refinance into a fixed-rate loan and is hoping to pay about $1,600 a month.

"I've depleted my savings trying to keep my house," Richards tells Hendon. "That's my main concern right now, protecting my mom and making sure she's OK and that she has a home. . . . I can live anywhere by myself, but it's not just me."

Hendon opens a program on his computer in which he records Richards' income, expenses and assets, angling the screen so that she can follow along. He also scans many of the documents Richards has brought with her -- years of mortgage statements, paycheck stubs and correspondence with her lender -- and adds them to her electronic file.

"Your situation is nothing to be embarrassed about," he tells her. "We're going to stop this sale. It's not going to happen."

Hendon has several possible solutions. Neighborhood Assistance qualifies borrowers for new loans or refinancings with Bank of America Corp. and Citigroup Inc. It has also partnered with Countrywide Financial Corp. and other lenders to perform "workouts" for borrowers who are facing foreclosure, in which the terms of the loan are restructured.

Options include getting the lender to lower the monthly payments by extending the length of the loan, or negotiating a lower interest rate.

Lenders will sometimes lose money in a workout, Hendon acknowledges, but not as much as they might in a foreclosure -- especially with housing prices continuing to fall.

Neighborhood Assistance is paid by lenders for approved loans and some workouts, and, like most mortgage brokers, Hendon earns a salary plus commission.

At the end of the 90-minute meeting, Hendon asks Richards to compile a budget of her expenses and provide some additional documents.

The completed file will be submitted to the nonprofit's Home Save department for review, but Hendon thinks Richards' odds are good because she is able to show steady income from her new job. (Indeed, Hendon is able to secure a 30-day postponement on the auction date of Richards' home, although a workout plan has not been finalized.)

Hendon's next client is Joel Marroquin, 29, who has fallen behind on the mortgage on his Victorville home.

Like Hendon, Marroquin is a former loan officer for a mortgage company. But he was laid off last year after home sales plunged and he didn't close any deals for three months.

Now a salesman, Marroquin and his wife, a baby-sitter, have been unable to make their $2,926 monthly payments. They are about $30,000 behind. "It's a little bit of embarrassment," he says.

The lender, EMC Mortgage Corp., has already offered a workout deal of its own that would require the Marroquins to pay $9,000 of the money they owe upfront. As part of the deal, the lender offered to lower their monthly payments to about $2,300.

Marroquin is hoping that Hendon can help him do better. He says he doesn't have the $9,000 and can't afford to pay much more than $2,000 a month.

Hendon tells Marroquin that he will try but that it is unlikely he can negotiate a workout better than the one EMC already offered.

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