Workout Solutions in CA Outpace Foreclosure Sales 2-1

Through October 2009, more than 279,000 California homeowners received mortgage workout solutions compared to about 139,000 foreclosure sales in the state this year.

This shows that workout solutions outpace foreclosures in sales 2-to-1 in California, according to Faith Schwartz, executive director, of the Hope Now alliance, who testified before the State Assembly Select Committee on the Safety and Protection of At-Risk Communities in California.

“Nearly 500,000 California homeowners are delinquent on their mortgage by 60 days or more, these homeowners need assistance and it is a significant challenge,” said Ms. Schwartz.

At the same time the number of workout solutions offered demonstrates that help is being provided and the mortgage servicing industry has made a serious commitment to helping distressed borrowers avoid foreclosures.” Hope Now members are supporters and participants in President Obama’s Home Affordable Modification Program. Ms Schwartz testified that the Treasury Department has reported that on average, over 20,000 Homeowners are approved for HAMP trial modifications every week, saving homeowners $550 a month for their mortgage. Hope Now’s goal is to turn as many trial modifications into permanent modifications as possible.

HAMP is not, however, the only useful loan workout tool that servicers are using to help borrowers. In 2009, 2.6 million homeowners nationwide received a non-HAMP mortgage workout, which prevented foreclosure.

Since mid-2007, that number is 5.8 million homeowners. Workout solutions include loan modifications, repayment plans, extended forbearance, and if none of those solutions work, deed-in-lieu and short sales.

Hope Now has held several events for California borrowers who are in danger of losing their home, where they are given the opportunity to meet face-to-face with their loan servicer. To date, Hope Now member servicers have helped over 10,000 California borrowers avoid foreclosure via these events.

“Hope Now has also launched a Web portal, Hope LoanPort with six counseling agencies, six nationwide servicers and a mortgage insurer. Hope LoanPort housing counselors can submit completed borrower applications and supporting documents for HAMP directly to servicers and track the status to more quickly give homeowners the answers they need,” she added.

The mortgage servicers initially participating in the Hope LoanPort include American Home Mortgage Servicing Inc., JP Morgan Chase Manhattan, GMAC Financial Services, SunTrust, PNC Mortgage and Saxon Mortgage.

The organization is working with the Cabrillo Economic Development Corp. in Ventura, Calif., in the portal’s first phase. It is expected to launch nationwide in early 2010.

In Irvine, Calif., Neighborhood Partnership Housing Services says it will begin using the CounselorDirect Web-based software to streamline the loan modification process for consumers.

NPHS, a HUD-approved nonprofit counseling organization, and a top-producing NeighborWorks Charter Member, will use this technology to both speed up the loan modification process and make it easier for homeowners to understand available foreclosure prevention programs such as Making Home Affordable.

Using CounselorDirect, NPHS can prequalify homeowners and send a completed borrower intake package directly to a counselor for faster processing — all at no cost to the homeowner. In addition, the software offers a host of advice and information on the process and timelines for modification or other relief — freeing NPHS from the flood of calls and allowing them to allocate resources to processing cases.

The Software as a Service technology uses a proprietary probability meter that accurately predicts the likelihood of a successful loan modification based on the unique financial makeup of each user. Few homeowners understand that they can be denied for simply being off by as little as $10 in either direction from their lender’s unique “sweet spot.”

The meter will also identify a user’s eligibility for the Making Home Affordable program. The meter works in real time and moves up or down as each piece of financial data is entered into the online financial worksheet. The probability meter varies based on the specific lender and helps the homeowner identify the necessary lifestyle and budgetary changes they may need to make in order to qualify for their lender’s modification programs.

“With the passage of SB94 in California, and similar legislation in other states, nonprofit housing counselors have seen a spike in demand for their service,” said Andy Firoved, CEO of CounselorDirect. According to Jed Davis, president of NPHS, the technology has eliminated the lengthy data collection process that occupied a material portion of counselors’ time.

“By implementing CounselorDirect, we have significantly improved our productivity and increased the number of available counseling sessions,” he said. “Most importantly, our counselors are now able to focus the majority of their efforts on foreclosure prevention counseling, rather than compiling paperwork, which is the most effective use of their time.”

In 2008, due to the high foreclosure rates in the Inland Empire, NPHS increased its staff capacity and provided one-on-one foreclosure prevention counseling to 800 families and prevented more than 160 foreclosures.