Counselors can aid those facing foreclosure
Page | 1 | 2 |

Letters from Hope Now and Project Lifeline urge delinquent borrowers to call either their servicers or Hope Now's hot line: (888) 995-HOPE (4673). Callers to the Hope Now hot line are referred to nonprofit agencies.

How counselors help
Counselors have access to supervisors who can make decisions on proposed repayment plans or mortgage modifications. In effect, the nonprofit counselors do the same job as the phone answerers in the mortgage companies' loss-mitigation departments: They collect the necessary information, evaluate it and propose a workout plan to a supervisor. (See "What you need to get foreclosure help" to know what documents you need.)

A workout might entail forbearance, in which the borrower repays the past-due amount by paying extra every month for a year or two, or it might be a modification, in which the terms of the loan contract are changed. A mortgage might be modified by freezing or lowering the interest rate, by extending the final payoff date, or even by forgiving a portion of the debt.

"Everybody gets individual treatment," says Jessica Cecere, director the Consumer Credit Counseling Service of West Palm Beach, Fla. "The plans, the solutions -- everyone doesn't wear a size 8, so we're going to pull out all the stops to figure out what shoe fits."

The process requires a lot of personal financial information.

"What we're trying to do is understand what it is they can afford, given their current situation," says Thomas A. Kelly, spokesman for JP Morgan Chase. "We don't want to modify their loan or work out some agreement that they can't afford."

The same philosophy prevails at ESOP, where Jones says, "We don't build sky castles for them." Sometimes people can no longer afford their houses because the adjustable rate went up sharply, or because of job loss, illness, divorce or other misfortune. In such cases, "our suggestion is to seek some other means of having a residence," Jones says.

The hot spot
ESOP and about 15 other agencies use the Hot Spot Card, an information-gathering form developed by Chicago's National Training and Information Center. In addition to asking the questions you would expect -- the loan number, how far behind the borrower is on payments and how much house payment the borrower could afford every month -- the Hot Spot Card asks about lender malfeasance: Has the collections department called too early in the morning or too late at night? Has it refused to accept a payment?

Four servicers -- Chase, CitiMortgage, Ocwen and SPS -- have formal partnerships with NTIC affiliates to accept Hot Spot Cards, says Gail Parson, director of NTIC's Save the American Dream campaign.

"Because it has gone well with the group that we're working with, many times counselors will send Hot Spot Cards to other lenders," she says. It's an example of nonprofit agencies not only doing the jobs of mortgage servicers' front-line people, but of suggesting more efficient ways of doing those jobs.