HOPE NOW for Foreclosures

To help stem the foreclosure crisis nationwide, the HOPE NOW alliance announced it sent letters to more than 200,000 delinquent borrowers that will include a toll-free number borrowers can call for free help. This mailing, expected to start Nov. 19 and be complete by Nov. 30, will be the first of several outreach efforts to take place over the next few months.

“This is only the first step, and this is a top priority for all those involved,” said the Housing Policy Council, an alliance member, in the announcement. “We want to show people that help is available. If you receive a letter, we strongly encourage you to call your mortgage company for help.”

In a separate announcement, the Mortgage Bankers Association, also a member of the alliance, applauded the letter campaign.

“We have found that delinquent borrowers often don’t know who to call when they fall behind on their mortgage payment,” MBA said in the announcement. “Often, the last person they want to talk to is the person they owe money. This outreach effort provides borrowers with a trusted source, independent of their lender, who can help them determine how to get back on track.“

In recent testimony before the House Committee on Financial Services, Treasury Under Secretary for Domestic Finance Robert K. Steel focused on the foreclosure situation and the efforts of the HOPE NOW alliance, which was spearheaded by the HUD Secretary and Treasury Secretary as part of President Bush’s foreclosure prevention initiative and consists of four counseling organizations, 17 servicers and lenders, three investor groups and 10 trade associations, that aim for a unified strategy in assisting borrowers, according to a document of Steel’s testimony.

“Largely because of lax underwriting in recent years, especially in the subprime market, a higher than usual number of homeowners will face delinquency during the next year and a half,” Steel said. “In total, over 2 million subprime mortgages are expected to reset in the next 18 months.”

While some will be able to afford the higher payments, others will qualify for refinancing into fixed-rate loans, and some will not be able to avoid foreclosure, the “the challenge is for lenders to identify the homeowners … who with a bit of assistance can stay in their homes.”

He said the alliance decided to itself send the letters after finding that a national direct mail campaign in which servicers encouraged at-risk borrowers to call for help had limited success because troubled borrowers do not want to hear from their lenders. Other actions the alliance is engaging in address foreclosures include developing a standard process and cross-industry technology to improve communication between servicers and counselors, expanding the capacity of an existing national counseling network, developing standard measures for monitoring servicers’ loss-mitigation performance or evaluating counselors’ effectiveness, and having counseling fees reimbursed from securitization transactions, Steel said.

Such reimbursement “is extremely important,” Steel said. “Historically, counseling was funded by the government and independent foundations. Now the securitization issuers and investor community have recognized the important role counseling plays in avoiding foreclosure and is willing to fund quality counseling.”

The National Foundation for Credit Counseling announced that almost 70 percent of the 1,089 visitors to HousingHelpNow.org who in October completed the Mortgage Reality Check, a self-diagnostic test designed to help borrowers asses their financial situation and take any necessary steps on their mortgages, received a recommendation to seek immediate advice or counseling. Meanwhile, only 18 percent received a suggestion to review homeownership responsibilities and 15 percent did not represent an immediate risk.

Among other findings, 28 percent owe more on their mortgage than their house is worth and 40 percent believe that refinancing will solve their problems. These two findings, “when placed side by side, conjure a very troubling picture for the American consumer,” and “further indicates, in all likelihood, that the current housing and mortgage crisis is very likely to get much worse before it gets better,” the foundation said.

To provide financial help and counseling for troubled borrowers in New Jersey, various financial institutions and government agencies have teamed up as the New Jersey Homeownership Preservation Effort, according to an announcement by the state’s Department of Banking and Insurance and Department of Community Affairs.

The assistance reportedly includes more $433 million in mortgage refinancing under the New Jersey Housing and Mortgage Finance Agency’s Homeownership Preservation Refinance Program, a $30 million pilot program for families earning up to 140 percent of the state’s median income, and the creation of a task force to continue to develop solutions for foreclosure issues.

The New Yorkers for Responsible Lending coalition announced it recently wrote a letter to Gov. Eliot Spitzer urging him to include foreclosure prevention funding in his executive budget. The group recommended a state loan remediation fund to provide $100 million for borrowers who are not eligible for public or private loan assistance, $5 million to support housing counseling and education, and for New York State Banking Department to collect county foreclosure data and make it publicly available.

“With more than 50,000 foreclosure actions filed in New York State last year, and the numbers expected to get much worse, we need the Governor to step up and stem the crisis,” said Kirsten Keefe, an Empire Justice Center attorney, in the announcement.

The Los Angeles Neighborhood Housing Services announced a press conference today in which Rev. Jesse Jackson urged Los Angeles at-risk borrowers to take the first step to avoid losing their home by calling 888-995-HOPE. The organization, which says a family loses a home to foreclosure every hour in Los Angeles, is one of the number of agencies that partnered to recently establish the Los Angeles NeighborWorks Center for Foreclosure Solutions.