National Foreclosure Mitigation Counseling Program Update December Grantee Production Congressional Report Training Efforts Counseling Efforts Questions
Program Update As of December 10, 2008: Training over 3,000 training scholarships provided over 4,400 certificates awarded in foreclosure-related courses over 1,500 e-learning certificates earned in Foreclosure Basics Counseling 217,000 homeowners have received 233,000 units of counseling throughout the nation.
Program Update Primary Reason for Default (as of Sept 15, 2008) Primary Reason for DefaultPercent Reduction in Income26% Loss of Income15% Increase in Loan Payment9% Medical Issues8% Poor Budget Management Skills8% Increase in Expense4% Divorce/Separation4% Death of Family Member2% Business Venture Failed2% Other24%
Program Update Loan Type of NFMC Clients (as of Sept 15, 2008) Only 22% of mortgages nationwide are ARMs, while 72% are fixed- rate mortgages
Program Update Loan Type of NFMC Clients Compared to Loan Type of All Homeowners (as of Sept 15, 2008) Sources: Mortgage Bankers’ Association National Delinquency Survey, June 2008, and NFMC Program Reported Data
Program Update Loan Status at Intake (as of Sept 15, 2008) Loan StatusPercent Current28% Days Late22% Days Late19% Days Late9% 121+ Days Late22% Grantee Production Congressional Report Training Efforts Counseling Efforts Questions
Program Update Outcomes (as of Sept 15, 2008) OutcomeUnitsPercent Currently receiving foreclosure prevention/budget counseling 21,930 22% Initiated forbearance agreement/repayment plan8,7978% Counseled and referred to another social service or emergency assistance agency 8,602 8% Mortgage modified4,9865% Pre-foreclosure sale3,6453% Brought mortgage current3,0013% Bankruptcy1,7192% (continued)
Program Update Outcomes (as of September 15) OutcomeUnitsPercent Withdrew from counseling1,5301% Counseled and referred for legal assistance1,4161% Mortgage foreclosed1,2421% Entered debt management plan8981% Sold property/chose alternative housing solution6531% Mortgage refinanced4930% Executed a deed-in-lieu1360% Obtained partial claim loan from FHA lender860% Received second mortgage530% Other10,59310% Ended counseling after Level One – outcome unknown35,29134%
Program Update Counseling Challenges (from 1 st Quarterly Report) Communication with Servicers Servicer responses routinely took from 45 to more than 60 days Loss mitigation departments understaffed and overworked Documentation faxed or mailed to servicers was lost repeatedly and counselors had to send documentation multiple times Counselors were connected to a different representative each time they called who proposed different solutions and requirements Mortgage Restructurings Loan modifications, forbearance and principal write-downs offered less than repayment plans Servicers generally had a limited understanding of PSA requirements which lengthened the time to obtain a decision about borrowers’ options Refinance plans offered were not affordable to borrowers Lack of PSA incentives for servicers to refinance mortgages
Program Update Counseling Challenges (from 1 st Quarterly Report) Borrower Resources Lack of borrower follow-through with counselors Job losses Rising gas and food prices Falling housing values leaving borrowers “upside down” Borrowers obtaining loans that were not affordable in the first place General lack of knowledge about mortgage products and loan terms. NFMC Program Reporting Too much information required on each borrower Time requirements too great Difficulty in initial set-up of computerized reporting systems
Program Update Successful Counseling Strategies (from 1 st Quarterly Report) Outreach Reaching borrowers early - before they were 60 days delinquent - increased the likelihood of a successful outcome Reach out to at-risk homeowners via employers, faith communities, foreclosure fairs, flyers and postcards, door-to-door visits and cable access tv & other press coverage Client Preparation Require clients to bring all documentation to their first meeting Set realistic expectations with clients Conduct group orientations or workshops before one-on-one meetings Use the Internet to share preliminary information to allow for triage
Program Update Successful Counseling Strategies (from 1 st Quarterly Report) Counseling Processes and Services Have counselors available evenings and weekends or at all times Requiring clients to create a crisis and/or long-term budget Contact the servicer with the client present; Escalate difficult cases to more experienced counselors or legal assistance Provide rescue funds that will catch client up on their mortgage (Not with NFMC funds) Communication with Servicers Use HOPE NOW list of loss mitigation department phone numbers Analyze refinancing plans provided by servicers to ensure borrower feasibility Follow up with servicer within 24 to 48 hours to ensure they had received electronically-transmitted documents