Foreclosure Prevention Programs

But first, Freddie Mac announced it has produced an anti-fraud, Internet video dramatizing a common foreclosure fraud scheme. The two-minute video posted on YouTube shows how scam artists get copies of foreclosure notices through city offices or a county courthouse, persuade distressed borrowers to give up the deeds by promising to solve their financial problems, and then use the deeds to secure new loans for themselves only to let them go into foreclosure and cause the borrower to end up losing the house.

Freddie said it decided to make the video after a recent survey found that one in four delinquent borrowers go to the Internet before their bank or lender for information about avoiding foreclosure, which is only slightly less than the 28 percent who call their mortgage lender and 32 percent who call their bank.

“With fraud reports on the rise, we are using every communication channel out there to warn borrowers about these fraudsters and urge borrowers to call their lenders when they fall behind on their mortgage,” said Ingrid Beckles, vice president, Servicing and Asset Management, Freddie Mac. “By working with our servicers, Freddie Mac is now helping an average of 1,000 delinquent borrowers a week avoid foreclosure through forbearances, repayment plans or other workout options.”

The National Foundation for Credit Counseling said it launched a Spanish-language version of its it debt advice Web site to help Spanish-speaking consumers understand credit and provide direct access to certified credit and housing counselors who speak their language to possibly help with any “work-out” tools for managing their debts. Countrywide Financial Corp. Countrywide Financial Corp. provided a grant to fund the development of the site.

New Hampshire announced it established a requirement mandating state-licensed mortgage lenders and servicers to designate a person with whom borrowers and the state’s banking department can speak with directly to address potential mortgage problems.

Additionally, the New Hampshire Banking Department reportedly set up a new hotline, 800.437.5991, through which it will assist borrowers with mortgage or foreclosure concerns.

The department is also continuing to hold Consumer Outreach sessions around the state to review borrowers’ mortgage documents and help address concerns about upcoming changes in their payment terms. The next session will be Thursday at the senior center in Lebanon, according to the announcement by the department and state governor.

Other efforts New Hampshire noted it has recently engaged in to help prevent foreclosures are an order requiring lenders and brokers to be clearer about their standards for subprime loans and risks borrowers may assume, and signing House Bill 365 into law, which aims to better protect borrowers from foreclosure rescue scams.`

New York City launched a not-for-profit organization, the Center for NYC Neighborhoods, to assist “homeowners at risk of mortgage foreclosure throughout the five boroughs,” Mayor Michael R. Bloomberg and City Council Speaker Christine Quinn announced. The initiative will assist 18,000 New Yorkers annually with the first-year’s projected budget of $5.3 million, which includes funding of $1 million from the administration via the Department of Housing Preservation and Development and $1.8 million from the City Council. The remainder of the funds are expected to be raised from private and foundation sources.

The center will be “the largest, most comprehensive program of its kind in the nation” and will operate as an independent entity that will fund “a major expansion and coordination” of counseling and referral services, legal assistance, loan remediation, preventive outreach and education, training, research and advocacy around subprime lending and mortgage foreclosures, according to the announcement.

Wolters Kluwer Financial Services announced today it is offering servicers a standard yet customizable set of documents and packages that enable freezing the interest rate of their borrowers’ adjustable-rate mortgages for a specified period or modify ARMS into fixed-rate or interest-only fixed-rate loans. Servicers can also opt for Wolters’ secure electronic delivery of completed document packages to borrowers and all other involved in order to send and receive messages, and have eSign capabilities for the borrower’s acceptance.

“Servicers can be confident our loan modification solutions will help them rapidly set up new loan terms for their borrowers and that any forthcoming regulatory or investor requirements will be quickly implemented to ensure on-going compliance,” Wolters said in the announcement.

California Gov. Arnold Schwarzenegger announced a new fund designed to help Oakland borrowers who don’t qualify for the rate freeze arranged by President Bush for subprime loans and for “fast track” procedures recently negotiated by the governor with four loan servicers. To qualify for the OneCalifornia Foundation Bridge Loan Fund, borrowers must occupy the home, have a stable income and no bankruptcies, attend financial planning classes and develop long-term savings and financial plans, among other requirements. The fund’s initial contribution of $1 million was donated by Kat Taylor and Tom Steyer, founders of OneCalifornia Foundation, which is associated with One California Bank.

U.S. Senator Harry Reid of Nevada announced that he sent President Bush a letter urging him to personally intervene and persuade Senate Republicans to stop blocking the FHA Modernization Act and Transportation HUD conference report, as these measures could help prevent as many as 200,000 foreclosures.

The FHA bill seeks to expand government-insured refinancing and first-time buying programs in the subprime or lower-income marketplace, while the Transportation-HUD conference report includes a $200 million increase in funding for foreclosure prevention counseling. Senate Democrats have attempted to pass the legislation, but Senate Republicans have blocked these bills twice in less than one month, according to a copy of the letter.

“Given that experts are predicting that your Administration’s subprime-rescue plan will only help about 10 percent of the two million homeowners at risk of losing their homes, it is critical that Senate Republicans allow us to pass other measures that will help more families,” Reid said in the letter.