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Foreclosure Prevention Resources Continue Expanding

Recent foreclosure prevention activity

February 5, 2008


As millions of dollars flow into foreclosure prevention programs nationally, other efforts also include workshops, booklets and resource centers. But despite the collaborative environment, two organizations are battling over what is being done by servicers to avoid foreclosures.

The Bush Administration, which has proposed a 2009 budget of $3.1 trillion, has allocated less than $0.1 billion for foreclosure counseling services at 2,300 housing counseling agencies, the U.S. Department of Housing and Urban Development announced Monday. The allocation is just a small fraction of the $38.5 billion proposed overall for HUD.

Senators John Kerry and Senator Gordon Smith proposed a provision to the economic stimulus package that would allow states and local governments to issue up to $10 billion in additional bonds over the next three years to be used to refinance borrowers out of foreclosure. States and local governments can only issue bonds to finance first-time borrowers under current law. An estimated 80,000 loans would be refinanced under the program.

HUD Secretary Alphonso Jackson and Chicago Mayor Richard Daley last week visited a Chicago site where a foreclosure prevention workshop was planned, according to a announcement from the housing agency. HUD claims it has helped prevent 3,400 Illinois foreclosures through FHASecure -- a program it says will prevent as many as 300,000 foreclosures nationally by the end of this year.

Jackson said he was troubled that so many delinquent borrowers are in denial and won't contact their servicers. The workshop was intended to inform borrowers about available options to avoid foreclosure.

North Carolina officials announced $300,000 would be provided to reimburse home counseling agencies that help borrowers avoid foreclosures. The state, which projects its foreclosures to rise by as much as 20 percent this year, called on delinquent borrowers to use the HOPE Now Hotline and noted more information is available at www.ncforeclosurehelp.org.

Delinquent borrowers in California are being courted by Springboard Nonprofit Consumer Credit Management, which said it is a "leading" HUD approved counseling agency. The Riverside-based organization announced it recently hired 45 additional foreclosure prevention counselors, customer care representatives, and managerial staff and plans more hires.

Ohio will provide $2 million for foreclosure counseling to 24 organizations through the Foreclosure Prevention Housing Counseling Program. The grants will assist 9,000 low- and moderate-income households at risk of losing their homes to foreclosure.

The Center for Responsible Lending issued a statement disputing the Mortgage Bankers Association's contention that it understated foreclosure prevention activities taken by servicers and calling for passage of legislation that would enable bankruptcy judges to modify mortgages in Chapter 13 bankruptcies.

"CRL is not inflating the subprime problem," the statement said. "Permitting court-supervised loan modifications on primary residences that otherwise would go into foreclosure will likely help five times as many families as the Treasury's plan -- roughly 600,000 families who would otherwise lose their homes."

Freddie Mac and Roper Public Affairs and Media released a report that indicated 57 percent of delinquent borrowers don't realize their lenders may offer alternatives to help them avoid foreclosure -- thought that was an improvement from 2005. The report indicated one problem is servicers' inability to reach borrowers -- with about one-quarter of borrowers choosing to avoid dialogue with servicers.

Freddie said late paying borrowers have indicated that the elimination of automated phone systems could make communication easier. About that same share said they look online for mortgage information first. Most of the surveyed borrowers felt financial institutions don't want to work with people who are struggling financially -- though nearly as many "said they feel comfortable contacting their lenders ... and believe their lenders treat them fairly."

MBA announced it has joined Fannie Mae, the National Black Church Initiative and 13 African American denominations to create a guide for foreclosure prevention. The booklet will list counseling agencies, private lenders and a host of other resources to help borrowers avoid foreclosure.

MortgageDaily.com has compiled a table that includes dozens of local and national resources for foreclosure prevention. The foreclosure prevention information is located at www.mortgagedaily.com/ForeclosureResources.asp.

NeighborWorks America reported that more than 200,000 borrowers have called the HOPE NOW foreclosure prevention hotline since June. The hotline is managed by the Homeownership Preservation Foundation and includes Bank of America, Countrywide Financial Corp and Wells Fargo among its many participants.

Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: [email protected]

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