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Homeowners fight foreclosure through crowdfunding

(MoneyWatch) Can a crowd save a house?

Homeowners facing foreclosure certainly hope so. Struggling borrowers are turning to new crowdfunding sites to raise money from friends, family and even strangers to keep up with their mortgage payments.

Ruth Caspary, 45, has launched a crowdfunding campaign on GoFundMe after losing her job in 2009 as a visual effects artist. Finding a new job was tough, so instead she joined her husband's dance instruction business, "Salsa with Juan," as a marketing manager and dance instructor.

Although her new career reduced her income, the two made ends meet for a while through the business and various side jobs. But late last year they started falling behind on the mortgage payments for their three-bedroom Oakland home.

This spring, Caspary received a letter that her home would fall into foreclosure on August 3 unless she could catch up on her mortgage payments, totaling $15,000. The couple tried working with their lender, but to little avail. So last month, Caspary and her husband, Juan Gil, decided to ask for help.

"I just figured we'd reach out to our community and sort of bare our souls," Caspary said.

She's not alone. Listings asking donors to "Help save my children's home" and "Help avoid foreclosure" are popping up across dozens of fundraising websites like GoFundMe, Indiegogo, FundRazr and GiveForward. Unlike Kickstarter, the popular crowdfunding site known mostly as a place where artists, inventors and entrepreneurs can raise funds for creative projects, these sites allow people to request funds for any purpose. The site then take a cut of the donations ranging from 4 to 10 percent.

Most of these crowdfunding sites were established for people who needed a platform to help them organize fundraising for a specific cause, whether for an athlete raising money to compete in a national competition or a family asking for help paying off medical bills after an emergency.

"Some of the earliest campaigns were split in half," GoFundMe CEO Brad Damphousse said. "On one side you had life's most exciting chapters: weddings and honeymoons and youth sports and education and travel -- the fun stuff. On the other you had the really challenging times: an accident or an illness and associated medical expenses. It really was split from the get-go, and we've seen that trend continue."

In contrast to a health crisis, and fairly or not, foreclosures are often regarded as an avoidable crisis. That may explain why homeowners so far are struggling to raise money. In the 100 or so campaigns on GoFundMe, less than 1 percent have been successful. On other sites like Indiegogo and FundRazr, not a single home has been saved.

Caspary said she has detected some skepticism regarding her fundraising campaign, with one friend calling it "trust fund" and others pointedly refusing to donate. Yet her campaign is one of the most successful, having raised more than $7,500 and passing the halfway mark of the couple's fundraising goal.

Indeed, Caspary is far from discouraged, even as the time ticks down for her to send the money to the bank. The community has rallied around them, offering emotional support and help with promoting the business and finding them more work, she said.

"It's just nice to me that people acknowledging what we're going through, and also that they're willing to help us grow," Caspary said. "If you've been good to your community, they will be good to you."