Counselors can aid those facing foreclosure
|By Holden Lewis Bankrate.com
Homeowners who fall behind on their house payments are told to do one of two things to avoid foreclosure: Call the lender or contact a nonprofit counseling agency. The second option often is better.
Some customers have reported wait times of almost three hours when they call their mortgage companies. By contrast, nonprofit agencies say they waste less of their clients' time because they don't put borrowers on hold as long, minimize phone tag, keep records about their conversations with clients, and don't ask for a bunch of paperwork in one call and a bunch more in a later call.
Hundreds of nonprofit agencies offer housing counseling. One of them is Cleveland's East Side Organizing Project, or ESOP. When homeowners turn to ESOP, it's usually after they have gotten nowhere with their mortgage companies, says James Jones, ESOP's director of intake.
"They have tried to be proactive and be in contact and straight with the lender. In many cases, they get bounced around," Jones says.
Here's what sometimes happens: When borrowers get through to someone at the mortgage servicer's loss-mitigation department, they are given a list of information to gather and told to fax it in.
"They're given a number to call back, and they call that number back and they get somebody entirely different," Jones says. The first person at the mortgage company might have asked for tax forms and pay stubs; the second person might ask for bank statements.
Jones says: "The homeowner is being bounced around, and of course the impression is that they're trying to take my house away from me. These are examples of the frustration homeowners go through when they're trying to be proactive."
No boom in training
Mortgage servicers complain that around half of foreclosures proceed without the borrower contacting the lender. But that statistic is suspect to anyone who has called a mortgage servicer for the second day in a row, only to find that the company has no record of the previous day's call or of the documents that were faxed. A rapid increase in delinquencies has outpaced mortgage companies' ability to hire and train employees to deal with the problem, resulting in poor customer tracking, long wait times and inconsistent service.
"The servicing business was not prepared for what happened in the last 18 months," says Doug Robinson, spokesman for NeighborWorks, a government-sponsored nonprofit that, among other things, indirectly pays housing counselors. This fiscal year, NeighborWorks will distribute $180 million in taxpayer money to state and local housing agencies to train and pay the salaries of foreclosure prevention counselors.
The NeighborWorks funding comes out to about $325 to $375 per family that receives counseling. People in the industry don't describe that as a government bailout of mortgage servicers, but it's hard to escape the conclusion that it is. Every time the government shells out $350 to counsel a family facing foreclosure, that's $350 that the mortgage company didn't have to pay its own employees to talk with that customer.
Mortgage servicers, government officials and nonprofits have embarked on publicity campaigns in recent months to tell homeowners that
foreclosure-prevention help is available. The Hope Now Alliance --
a coalition of mortgage servicers, the federal Treasury and Housing departments, and nonprofit counseling agencies -- has mailed a million
letters to troubled homeowners in four batches since November. In February, Hope Now announced Project Lifeline,
which was pitched as a way to "pause" foreclosures --
but only if delinquent borrowers call within 10 days of receiving their notification letters.