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Comptroller Dugan on Preserving Homeownership

Reducing Foreclosures Through Non-Profit Partnerships


Sustaining Homeownership and Communities

Innovative Partnerships to Prevent Foreclosure

Foreclosure Provisions of the Servicemembers Civil Relief Act

GSEs Use Technology for Loan Mitigation

_Loss Mitigation

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Compliance Corner

News from the Districts

Innovative Partnership to Prevent Foreclosures

Daniel Kent, construction foreman, Robert Kent, housing director, and Community Development Manager Sylvester Pomerlee inspect plans for homes in Indianola, MS being built under USDA's self-help program.

Bus-side advertisements are just one of the tools used by the Dallas HOPE program to encourage homeowners having trouble meeting their mortgage payments to contact a counseling agency.

About 50 percent of homeowners enter into foreclosure proceedings without having made contact with their mortgage lender, however a new nonprofit founded with $20 million in funding from GMAC-RFC hopes to lower that figure substantially.

The Homeownership Preservation Foundation (HPF) is spending $7 million of GMAC-RFC's funding over three years to operate a national toll-free telephone hotline, (888) 995-HOPE, connecting homeowners facing foreclosure with foreclosure prevention counselors available 24 hours a day, seven days a week.

The counseling is provided by the Credit Counseling Resources Center (CCRC), an alliance of three HUD-certified nonprofit credit counseling agencies (Auriton, Novadebt, and Springboard), managed by HPF. CCRC counselors provide free advice that addresses a homeowner's urgent needs concerning the potential or actual foreclosure action.   

Following the counseling session, the homeowner receives a written copy of the action plan that was discussed and agreed upon during the telephone counseling session.   In addition, the counselors will, if appropriate, coordinate or facilitate communication between the homeowner and his or her mortgage lender or servicer.

Lenders also could benefit from publicizing the hotline number, says Homeownership Preservation Foundation President and Executive Director Walt Fricke, because a typical single-family foreclosure costs the mortgagee upwards of $50,000 per property. If the property is left vacant and unsecured, the local municipality may also lose as much as $33,000 in direct costs, plus thousands of dollars in depreciating property values, according to a study from the Joint Center for Housing Studies.

Along with foreclosure counseling, the CCRC counselors are trained to help the consumer find other resources for employment counseling and health-related services.

To enhance the effectiveness of the hotline and free counseling, the Foundation is also partnering with local government and nonprofit groups in Chicago, Dallas, Atlanta and Detroit to publicize the program locally.

In Dallas, CCRC worked with city officials, the Federal Reserve Bank, the U.S. Department of Housing and Urban Development, Fannie Mae, and more than a dozen mortgage lenders, mortgage insurers, and other local nonprofit counseling agencies.

A campaign to publicize the foreclosure prevention program, called Dallas HOPE, included distribution of thousands of flyers, postcards and statement stuffers, as well as DART bus-side advertising, refrigerator magnets, free seminars, and public service announcements.

In Detroit, the program followed a similar path, bringing together the city, local nonprofits, and lenders to help Detroiters facing foreclosure regain financial stability.

Since CCRC was formed four years ago, its HUD-certified counseling agencies have provided foreclosure prevention advice to more than 40,000 homeowners. Fricke says that about half of those borrowers eventually work out their problems. That success rate makes it clear that when local officials, local and national lenders, and nonprofit counseling agencies come together, thousands of troubled borrowers benefit.