Reaching Out, to 10 Million Borrowers

At the SourceMedia Loan Modifications Conference in Dallas, Nigel Brazier, president of Acqura Loan Services, who was one of the panelists discussing best ways to engage at-risk borrowers, said that rough estimates show 10 million borrowers may need or apply for a loan modification. Add to that the need to go through the process while ensuring face-to-face contact and long-term borrower engagement and the picture is clear: the degree of success for the Home Affordable Modification Program as well as non-HAMP modifications largely depends on the numbers. Realistically, how many borrowers can each servicer approach and help out? And how?

Recently, a survey conducted by MortgageOutreach.org, a website launched by Sorrento Capital, Irvine, Calif., found that one in every 10 Americans is struggling to make their mortgage payments. At the same time only 58% said they would call their bank to ask for help if they missed a payment and 15% would try to get back on track alone.

The provider of loss mitigation in partnership with consumer direct channels stressed that these findings suggest "an ongoing need for borrower-friendly educational resources."

"More than 50% of Americans know someone who has been affected by the current mortgage crisis yet nearly half of our survey respondents would still choose ignoring the problem to calling their bank. Consumers are confused and think their banks don't care," said Steve Ozonian, executive chairman of MortgageOutreach.org.

Simply put, the more knowledgeable borrowers became, the more premodification and preforeclosure debriefing work is done, the easier the process and the higher the probability to sustain homeownership. Also, monitoring borrowers' financial profile information is equally helpful to servicers.

Consumer Credit Counseling Service of Greater Atlanta is now collecting data on the reasons why people are seeking foreclosure prevention counseling, as a way to improve borrower data analytics.

In October CCCS found that 71% of the people counseled by the nonprofit credit counseling agency for foreclosure prevention reported unemployment or reduced income in their household as the reason for financial distress. More specifically, of a total of 5,922 borrowers who received foreclosure prevention counseling, 2,935 reported reduced household income and another 1,271 reported they were unemployed.

"While these numbers are not a surprise," Scott Scredon of CCCS said, "the percentage of people seeking our help due to unemployment or reduced income was roughly 60% a year ago, so it does appear to be a larger factor now."

As financial pressures for many homeowners grow, a more collaborative approach to borrower outreach is showing there is always room for improvement. The Financial Services Roundtable, Washington, which represents 100 of the largest integrated financial services companies providing banking, insurance, and investment products and services to the American consumer, reported it assisted over 2.9 million people during the third quarter.

Its Community Service 2009 industry effort created "to improve the communities in which we live and work" surpassed a yearend goal of helping over one million people, showing better data analytics can help create a more accurate picture of the real demand for counseling.

Apparently more resources are needed to tackle that demand. And one unpredicted resource during the third quarter of this year was the participation of over 80,000 financial services volunteers who helped process a total of 12,390 projects conducted nationwide.

Heightened public awareness about the crisis is shown in the success of fundraising efforts, which may represent an even bigger reserve to be tapped in the future.

Community Service 2009 raised $1.9 million for financial literacy efforts, which represent one of the main focuses of the initiative for the second straight year.

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