Residential servicers could reach more troubled borrowers and improve their loan modification efforts if they relied more heavily on housing counselors, according to NeighborWorks America, a nonprofit.
Servicers have known this for years, but they still don't provide enough support for housing counseling centers that would allow them to handle a larger workload, said NeighborWorks spokesman Douglas Robinson.
"While they provide some support, more support from servicers is needed," Robinson said.
Since March 2008, NeighborWorks has funneled $475 million in congressional appropriated funds to housing counseling organizations that help homeowners work with banks on their mortgage problems. More than one million homeowners have gone through housing counseling.
Robinson said servicers should share information about their net present value tests with counselors instead of just rejecting a loan modification application and putting a house up for a foreclosure.
Right now the NPV tests are treated like a "black box," Robinson said, which is frustrating for counselors who don't understand why a borrower has been rejected for a modification.
