Foreclosed, but not forewarned: subprime mess will put pressure on charities.

Subprime mortgage interest rates have been frozen, hurray! Problem solved. Crisis over. Right?

Fat chance. And the ongoing subprime mortgage crisis is going to--no, already has--landed squarely in the lap of the nonprofit sector due to years of government and corporate "see no evil" inaction. Get ready for impacts on a wide swath of nonprofits that will be expected to deal with the craters in the government's ill-considered, derisory response to the biggest housing, banking, and financial markets crisis since the savings & loan scandals of the 1980s.

The plan, announced by President George W. Bush and Treasury Secretary Henry Paulson this past December, brazenly divides subprime mortgage holders into winners (who will be protected under this deal) and losers (the people who will still face foreclosures and evictions).

For subprime homeowners who got their mortgages between 2005 and the middle 2007 and are current in their mortgage payments but likely can't meet the demands of much higher (say, 11 percent) adjustable rate mortgage (ARM) increases, they are theoretically eligible for a five-year freeze in their low introductory "teaser" interest rates. During that time, those homeowners can get help with refinancing into more affordable long-term mortgages. But, look at who's not covered:

* Homeowners who are or have been delinquent on their current mortgages for more than 60 days on at least one payment during the past year;

* Homeowners who the banks and servicers deem able to pay the higher exploding ARM rates; and,

* Homeowners who got their mortgages from banks and mortgage servicers that have not signed on as members of the so-called Hope Now Alliance working with The Department of the Treasury on this plan.

What's the importance of the list of homeowners left by the wayside? It is that millions of homeowners won't be assisted in this deal. They will still likely face foreclosures. Even the "winners" in the White House announcement might find themselves receiving less than a fix to their situations.

The whole thing might implode, anyhow, due to opposition from investors and from the public at large. Almost half of those polled believe that subprime borrowers shouldn't be "bailed out."

How does the subprime mortgage crisis end up on the shoulders and programs of nonprofits? Take your pick:

* Action Research: The phenomenally powerful reports of groups like the Center for Responsible Lending (CRL) and others during the past year or two counted the numbers of subprime mortgage holders likely to face foreclosures in the near term--and the significant proportions of African-American and Latino and immigrant families in that count. They are models of the intersection of solid research and public policy advocacy.

With the White House's half-baked solution to the subprime mess, geared to help investors and the markets, but not troubled middle and lower income homeowners, nonprofits again will have to make sure that the public and Capitol Hill legislators pay attention to unsolved parts of this picture.

* Policy Advocacy: Rep. Barney Frank (D-Mass), Chairman of the House Banking Committee which is examining various legislative solutions, noted that the five-year, interest-rate freeze is like "kicking the can down the road." But the nation has to figure out what to do to solve this problem more comprehensively in that period. Community reinvestment, fair housing, and civil rights organizations will need big-time support to meet this advocacy challenge.

* Elections: Compare the subprime mess to the savings and loan scandal or the Enron-inspired corporate meltdowns of the beginning of the new millennium. The subprime disaster can and will be among the very top domestic issues in the upcoming national elections. Without engaging in inappropriate electioneering, election-related education activities will be required of nonprofits to counter the likely deluge of self-serving public relations from the financial markets.

Government officials who were asleep at the switch watching the subprime mess crest should be called on the carpet. The Bush/Paulson plan for limited voluntary actions that help only a small slice of subprime borrowers shouldn't be permitted to take the place of desperately needed legislation and regulation to control subprime and predatory lending abuses.

* Ideology: Part of the hidden back story is that some portion of these homeowners shouldn't have been. We've jimmied with interest rates, closing costs, documentation requirements, and eligibility to make some families into homeowners--because of an ideology that homeownership is good and renting is automatically bad--when they didn't have the financial or familial where withal to be homeowners.

As a result, even with multiplying epicenters of foreclosures, some municipalities apparently prefer evictions and illusory property resales, rather than maintaining people in their homes as renters or lease-purchase occupants or working with nonprofit partners to experiment with alternative forms of homeownership such as community land trusts or limited equity cooperatives. Nonprofits are going to have to take the lead to undo this ideological bias and find ways of keeping people in their homes and protecting neighborhoods from the instability of skyrocketing rates of vacancies and abandonment.

* Counseling: For subprime homeowners in the "winners" category and for future home purchasers eager to avoid the same plight, pre-purchase and post-purchase homeownership counseling will be needed. When the White House announced the Hope Now coalition's toll-free phone number for counseling, there were 45,000 calls in the first three days alone--despite the fact that President Bush actually announced the wrong telephone number. But the six national nonprofits designated by the Hope Now Alliance to field those calls had only 180 trained counselors available, a number they had hoped to increase to 250 by the end of the year. (An update of the numbers trained was not available at deadline.) The staff and resource challenge for the entire field is obvious.

* Corporate Responsibility: The Hope Now plan gives all of the bankers and servicers in the coalition a kind of carte blanche, as if they're blameless in this, or perhaps that they're even sort of heroic in temporarily freezing rates for a million or so homeowners.

Truth be told, some of the subprime mess is related to predatory lending practices, and much of it to mortgage brokers who induced homebuyers to take loans that they shouldn't have taken. The mortgage process is daunting and confusing to most people, especially when faced with fast-talking brokers whose overriding interest is in closing the deal.

Nonprofit watchdogs will have to do more than sign partnership deals with lenders such as Countrywide (the biggest subprime lender recently bailed out by Bank of America); they will have to lead the way in sorting out which corporations and which corporate practices should be held responsible and accountable.

* Funders: There is no surplus of foundation funding for civil rights, for fair housing, for affordable housing, for community development. The proportions of foundation grant dollars going to these purposes are in the single digits and in recent years have been on the decline. Nonprofits providing services and support to families who have lost their homes, trying to acquire and maintain foreclosed properties so that neighborhoods don't go downhill, and offering counseling to help homeowners refinance their mortgages, will be hard pressed ff relying on existing resources.

Since foundations have been such vigorous promoters of low-income homeownership, they should redouble their efforts to nonprofits that will be in the from lines of making sure these homeowners--and the neighborhoods they live in--don't suffer the brunt of the nation's unregulated free-for-all with subprime mortgages.

Rick Cohen is the former executive director of the National Committee on Responsive Philanthropy in Washington, D.C., and edits the Cohen Report online. His email is rcohen51@verizon.net