Ohio mortgage counseling agency invites homeowners to stop paying 'underwater' mortgages

CLEVELAND - It's a mortgage counseling agency called Empowering and Strengthening Ohio's People (ESOP), and it's asking qualified "underwater" Ohio homeowners to stop paying their mortgages.

The group is instructing homeowners, who owe more on their houses than what they're worth, to hold their mortgage payments in an escrow account until their lender agrees to restructure their home loans.

Cuyahoga County homeowners like Sally Fluker, who owes more $50,000 on a house that is now appraised at less that $12,000, are taking part in the mortgage strike.

"We want to get the attention of these lenders," said ESOP Director of Communications, Deonna Kirkpatrick. "This is first time a mortgage strike has been attempted in the U.S., we believe it will get banks to the bargaining table in addressing these underwater mortgages."

Kirkpatrick told NewsChannel5 that 39 percent of Cuyahoga County homeowners owe more on their homes than what they're currently worth.

"The strike is modeled after a court supervised process used in Ohio to resolve tenant complaints about a landlord," said Kirkpatrick. "In this mortgage strike, participating homeowners will send money orders, covering their regular principal and interest payments, to a local attorney to hold in escrow until the homeowner instructs lawyer/escrow agent when and how to release it."

"The attorney, who is only providing an escrow service, has agreed to verify the monthly payments of interest and principal for the mortgage servicer."

Kirkpatrick told 5 On Your Side homeowners must meet the following criteria to participate in a mortgage strike:

- Must make full payments into an escrow account on the Mortgage, and cover the taxes and insurance
- Must be “Underwater”
- Must comply with Strike Rules for handling monthly payments into escrow
- Must understand and accept the risks involved in participating as a mortgage striker

Kirkpatrick couldn't confirm if the "mortgage strike" process was legal, and admitted taking part could have a negative impact on the homeowners credit rating.

Ultimately, ESOP would have liked to add housing court participation in managing the escrow accounts, but admitted that legally, it's something that could not happen.

"Homeowners who are underwater need to stand-up for themselves, and lenders need to share in the responsibility of dropping housing values," said Kirkpatrick.

ESOP is a HUD-certified foreclosure prevention counseling agency, that has 10 offices across Ohio to help urban, suburban and rural homeowners.  The group has been offering mortgage counseling and foreclosure prevention since 1999.