Reducing Foreclosures

U.S. Treasury Secretary Henry Paulson praised the membership of the HOPE NOW Alliance for unanimously adopting the Project Lifeline plan unveiled last week. That plan — which had the backing of Bank of America Corp., Citigroup, Countrywide Financial Corp., JPMorgan Chase, Washington Mutual and Wells Fargo & Co. — provides a 30-day extension for borrowers who are at least 90 days past due.

“Now that all HOPE NOW members have signed on, more than 90 percent of the subprime servicing market and nearly 70 percent of the entire mortgage servicing market is committed to this coordinated method of reaching more homeowners,” Paulson said in a statement.

Operation HOPE logged 7,263 telephone calls to its 877-592-HOPE hotline within 24 hours of its announced launch — though the call center was capable of only 5,000 calls daily. The effort is a partnership with the Los Angeles City Council and staffed by volunteers, employees and mortgage industry professionals.

“Currently, we are providing guidance to 2,279 homeowners,” Fred D. Smith, managing director of HOPE Coalition America, said in the statement.

Wells Fargo will donate $1.5 million to support foreclosure counseling for borrowers in owner-occupied, single-family dwellings in cities and states with high delinquency and foreclosure rates, an announcement Friday said. NeighborWorks America, the National Foundation for Credit Counseling and the Housing Partnership Network will each receive $500,000 from the grant.

“The funds from Wells Fargo provide much needed support for nonprofit housing counselors to continue their work keeping people in their homes,” NeighborWorks Chief Executive Officer Kenneth D. Wade said in the statement. “Demand for counseling services is stretching resources and is only expected to increase as more mortgages reset to higher and often unaffordable amounts this year.”

The board of The New York Times Neediest Cases Fund recently announced the launch of the Subprime Neediest Program with a $1 million contribution. The program is expected to assist 100 New York borrowers who are facing foreclosure, as well as tenants in foreclosed properties. Emergency assistance will be provided for moving costs, first month’s rent and security deposits.

“So far we see no attention paid to the plight of people about to be pushed out onto the street,” Jack Rosenthal, president of The New York Times Company Foundation, said in the press release. “This program will help families in need.”

Guaranteed Rate, Chicago Bancorp, Professional Mortgage, Inc., and Perl Mortgage have committed to finance $200 million in mortgages for struggling Illinois borrowers with credit scores of at least 580, the state’s governor announced. The FHA-guaranteed loans will have interest rates between 5.75 percent and 8.00 percent, loan fees of no more than $1,000 and no income requirements.

The state also announced the launch of the Illinois Statewide Foreclosure Prevention Network which was funded with a $370,000 grant. The program will provide free counseling and mitigation assistance for borrowers facing payment resets or foreclosure.

Eight Ohio cities analyzed by Community Research Partners over the past year will face more than $60 million in costs because of properties left vacant from the foreclosure crisis. The cities studied were Cleveland, Columbus, Dayton, Ironton, Lima, Springfield, Toledo and Zanesville.

The report indicated there were an estimated 25,000 vacant and abandoned properties in the eight cities. An estimated $49 million is being lost by the cities and schools in property tax revenues, while annual costs to the city are $15 million.

Computer Sciences Corp. announced it has developed a new counseling portal that provides a common platform for mortgage servicers and nonprofit consumer counselors. Dubbed EarlyResolution Counseling Portal, the platform enables servicers to make loan data readily accessible to participating credit counselors.

“With these automated capabilities, counselors will be able to handle a higher volume of inquiries and reduce training time and costs,” Computer Sciences said. The “technology will also streamline loss mitigation referrals to servicers by recommending workout options for delinquent borrowers that are consistent with servicer guidelines and in compliance with investor rules.”

The Federal Trade Commission testified last week that foreclosure rescue fraud has jumped 75 percent from 2006 to last year, the agency announced. Among the scams mentioned in the testimony were deceiving borrowers into signing over their houses and falsely promising to negotiate on behalf of delinquent borrowers.

“Borrowers typically pay thousands of dollars but end up losing their homes and the money,” the FTC said.

Comptroller of the Currency John C. Dugan is calling for banks to receive credit under the Community Reinvestment Act for community development investments in areas plagued by growing foreclosures. He also recommended that the CRA be applied to non-bank lenders “which played a significant role in the subprime crisis.”

Speaking to the National Association of Affordable Housing Lenders, Dugan said such a program would encourage loans in more communities with higher levels of foreclosures.