Hope Now Expands Membership and Services

Hope Now, the national alliance created by the mortgage industry, investors and nonprofits to maximize outreach assistance to foreclosure-risk homeowners, continues to expand membership, which currently includes over 20 servicers who represent 90% of the subprime market.

Among the new additions are Carrington Mortgage Services, IndyMac Bank, Litton Loan Servicing, Merrill Lynch: Home Loan Services/Wilshire, Morgan Stanley/Saxon and Ocwen Loan Servicing.

"We want to have a truly broad and effective alliance," said Hope Now executive director Faith Schwartz.

One of the most effective ways the alliance has assisted borrowers is through letters and its hotline.

In January, the nation's largest mortgage servicers sent at-risk mortgage borrowers the third round of Hope Now letters, which "encourage homeowners who may be experiencing difficulty paying their mortgage to call the Homeowner's HOPE Hotline for immediate help. These letters encourage homeowners to call their mortgage company, or the hotline to discuss their workout options.

"We have already seen from the preceding two rounds of letters that this is working," Ms. Schwartz said. "This is a top priority for all involved in Hope Now."

In 2007, Hope Now sent a total of about 500,000 letters. In November alone, approximately 233,000 letters were sent to at-risk homeowners. Back in November over 16% of these borrowers - and far more than the normal 2%-3% response rate - responded by contacting their servicer. The January mailing is the third round of letters. A total of 250,000 letters were mailed out in December.

The data used were provided by nine of the largest servicers handling 4.1 million loans, or approximately 58% of the outstanding subprime loans as of September 2007.

Preliminary data on the subprime loan modifications and repayment plans indicate the industry assisted 370,000 homeowners during the second half of 2007, which includes 250,000 formal repayment plans and 120,000 modifications. Mortgage servicers were modifying subprime loans during the fourth quarter at triple the rate of the third quarter, the company said. On an annualized basis, 10.4% of subprime borrowers were helped with 39% of delinquent borrowers assisted in the second half of 2007.

"The number of borrowers being helped is accelerating rapidly," Ms. Schwartz said. "Hope Now, which leverages the work already being done by servicers, is a program that yields significant results."

The Hope Now study showed results similar to those found by a previous report of the Mortgage Bankers Association. The MBA found 148,000 subprime homeowners were helped, including 120,000 formal repayment plans and 28,000 modifications showing that modifications made in the third quarter were double those made in the first quarter.

While none of these borrowers had recently contacted their servicer prior to the Hope Now mailing, the company said 21% of those who received a letter in November improved or maintained their delinquency status by making at least one payment, 43% of those who responded to a letter by contacting their servicer engaged in active mitigation activity by the end of December and nearly half of these actions involved modifications.

"Loan modifications are just one option for distressed homeowners," said Steve Bartlett, president and CEO of the Financial Services Roundtable. The earlier customers call "the more options are available."

Following efforts to maximize its impact, in January Ms. Schwartz testified before the California State Senate Banking, Finance and Insurance Committee at a hearing on foreclosure avoidance plans giving an update on Hope Now.

"Servicers are working closely with credit counselors and homeowners to ensure all options are explored to avoid foreclosures and we are committed to an aggressive system of finding solutions for borrowers," she said. "Our top priority is to keep people in their homes and to avoid foreclosures whenever possible."

Representing a coordinated, national effort by servicers, investors, nonprofit housing counselors, and industry participants Hope Now aims to enhance communication with borrowers and to offer them workable options to avoid foreclosure.

Its stated mission is to maximize the preservation of homeownership while minimizing foreclosures, and assist borrowers who need some help to be able to remain in their homes. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/