NeighborWorks Report Says Servicers Are Overworked

Servicing company employees involved in foreclosure prevention and loan modifications are "understaffed and overworked," according to a survey of housing counselors by NeighborWorks America, a quasi-governmental entity that trains counselors. The most common complaint by counselors involves lengthy response times by servicers. After formulating a workout proposal for a troubled homeowner, some counselors (17%) said it can take servicers 45-60 days to respond. Mortgage Bankers Association vice president Michael Fratantoni said servicers are hiring for open positions. "We are hearing they are having trouble getting qualified personnel," he said. Counselors also note in the survey that servicers repeatedly lose faxes or mailed documents and they end up talking with different representatives each time they call. The NeighborWorks semi-annual report to Congress points out that only 6% of homeowners who receive counseling lose their home in a foreclosure — 74% are still in their homes and 20% sold their homes in a short sale or negotiated a deed in lieu that transfers the property to the lender. Nearly 60% of homeowners seeking counseling pay more than 50% of their income toward housing costs. Nearly half (49%) of homeowners seeking help have lost their job, up from 41% in the previous six-month period ending October 31. "Only 7% reported they were in default because their loan payment increased," the semi-annual report says.