This article first appeared in the St. Louis Beacon. - The foreclosure numbers are staggering, acknowledges Colleen Hernandez, president and executive director of the Homeownership Preservation Foundation that manages 888-995-HOPE, a national hotline for Americans seeking counseling assistance.
"I've been with the foundation for two years, and when I joined we were getting about 40 calls a day. Now we're getting between 3,000 and 4,000 calls a day, which is sort of a barometer of how serious the problem is,'' Hernandez said in during a phone interview with the St. Louis Beacon.
More than 250,000 calls have been fielded by the hotline in the first quarter of 2008, fueled by the growing crisis that analysts say will affect 3 million American homeowners.
Homeowners in the St. Louis area seeking foreclosure help can contact the United Way, which will put them in touch with the St. Louis Alliance for Homeownership Preservation, a coalition of nonprofits pooling their expertise. The alliance includes: ACORN, Better Family Life, Beyond Housing, Catholic Charities and the Urban League. The numbers to call are: 2-1-1 from a Missouri home phone or 1-800-427-4626 from Missouri or Illinois.
Homeowners who call the national hotline may be referred to the local agencies for more specialized help or, possibly, financial assistance. The national hotline has no money available, Hernandez emphasized.
Hernandez said efforts to convince people to call for help sooner rather than later are paying off. About one-third of the hotline's callers aren't yet 30 days delinquent on their mortgages, which means more options. She points to an industry statistic that half of the people who lose their homes to foreclosure don't talk to their lenders.
"It's stunning that the trust is so little that they just feel like there is no point,'' Hernandez said. "When the research was done to ask people why they hadn't talked to their lender, most of them said, 'There's no point. They have no flexibility in dealing with me. If I don't come up with the money, they're going to take my house. If I call, they'll just know more about my situation and just take my house faster.' That is not accurate, but people really believe it.''
The foundation's partners include community-based nonprofits, local and federal governments, government agencies and mortgage companies.
The foundation also works with the HOPE NOW Alliance, an effort backed by the U.S. Department of Treasury and the U.S. Department of Housing and Urban Development that attempts to get lenders and nonprofit housing counselors to work together. The alliance was put together by the Bush administration after the collapse of the sub-prime mortgage market.
By the Numbers: the HOPE Hotline
- 245,310 - calls to the hotline in 2007
- 250,000 - calls to the hotline in the first quarter of 2008
- 13,274 - calls from Missouri homeowners in 2007
- 10,858 - calls from Missouri homeowners from January to May 2008
- 18,184 - calls from Illinois homeowners in 2007
- 21,097 - calls from Illinois homeowners from January to May 2008
Profiles of Callers
- 50 percent of calls in the first quarter of 2008 were related to adjustable rate mortgages
- The annual income of callers is rising: 41 percent of callers had an annual income of $42,000 or more in the first quarter of 2008
Source: the Homeownership Preservation Foundation
Hernandez fielded questions about the hotline and its efforts on behalf of homeowners.
Q. What can I expect if I call the hotline?
Hernandez: About 30 percent just have a question: Do you speak Spanish? How do I reach my loan servicer? Those calls are handled at the call center, located in Spokane, Wash.
Not everybody who calls us wants counseling. In fact, nobody calls and says, "Hi, I need counseling." Some people say, "I'm in trouble, can you help?" but a lot of people call because they just have a question.
Seventy percent of the calls are passed on to counselors. Of those, half go to full-fledged counseling sessions. People tell their stories, and the counselor listens for however long it takes - 10 minutes or an hour and a half, or however long it takes for the person to go over the whole story of why they're behind in their mortgage.
And the important thing about that is the contrast to the interaction they have with their servicer. The servicer is just calling and saying, "I want my money.'' And whatever the story is, they don't care. They just want their money.
Q. What information should people have available when they call?
Hernandez: We ask that they have their loan documents in front of them, the most recent delinquency letter, their servicer's name and loan number.
Counselors will go over the rest with them -- income, expenses. And in going over that, very often people become awareness of how they're spending money and the choices that they're making. Maybe they can make some different choices by either generating more money or spending less money and dedicating more money to their mortgage.
The next step is to look at their options: loan modification or forbearance or a repayment plan. Or it could be that they're better off ... well, sometimes people will say, "Well, what do you think? I don't really want this house, it's a big burden, I think I should sell what do you think?''
Sometimes, they don't have good options. They're not going to be able to maintain that mortgage for whatever reason: Either it was too much to start with or they've had a major setback. But the distance between what they earn and what they owe is huge, and so they work with the counselor who walks them through what a short sale looks like or what a deed in lieu looks like.
The final step is that they are connected to their servicer because the reality is that the servicer is the only person that is able to make a deal with them.
Q. Do you work with states and local agencies?
Hernandez: Some state foreclosure hotlines use us because we are 24/7 and offer 20 languages. Others use us for overflow or in off hours.
Sometimes, homeowners may be eligible for a local program -- foreclosure programs developed over the past year or so through state housing agencies, city governments and even philanthropists who set up a local rescue fund. The counselors at local agencies are more in tune with that and better able to help. We keep a referral base of the local counselors and keep it up-to-date so we know who's got the capacity to deal with it and who has special programs that may be of interest.
If at the end of counseling people either want, need, or ask for additional service there are groups like St. Louis' Beyond Housing around the country - the NeighborWorks affiliates - who receive calls from us. So, we transfer the file, we give the homeowner the name and number of the additional service that is available and then we give the homeowners contact information for the counseling agency so that either the homeowner calls them or they call the homeowner.
At first we were only sending to NeighborWorks. Local people were buried with local traffic and said don't send us calls. That changed when Congress passed the National Foreclosure Mitigation Counseling Act last fall which the president signed into law making available an additional $130 million for counseling all over the country through HUD intermediaries and state housing agencies.
Q. What issues send people into foreclosure?
Hernandez: Upward of 30 percent of the people who fall behind on their mortgage are having a health issue that has impacted their ability to pay their mortgages.
Over 60 percent of the people who call us have an income problem: They were laid off or they lost their overtime or they were using two incomes in their family to support the mortgage and now they only have one, due to divorce or whatever. So, (it's) the income and employment factor.
Very often the telephone counselor can deal with the issues for why they're behind in their mortgage, make connection and help them get back on their feet, but for the deeper problems like health crisis, psychological problems or workforce issues, if there are resources in their community, that's where we try to hook them up.
Q. How do you help people deal with their lenders?
Hernandez: We help people get ready to talk to their lender, to understand the language, understand their options and their realities -- to come to grips with what their best bet is for retaining their house or avoiding foreclosure. If there is a foreclosure sale that's pending, a date that's set, then we make telephone contact, but otherwise we email the lender. We send the file over to the servicer, and we tell people if you don't hear back from your servicer within a week call us back. If they call back, then we attempt to get the servicer on the phone and flag their case and say, "You really need to pay attention to this.''
Q. Who are your counselors?
Hernandez: We contract with 10 large HUD-approved nonprofit credit-counseling agencies around the country, and they employ all together 450 counselors dedicated to the HOPE hotline. Our core foundation staff is only seven people, but our contract staff through the 10 contract agencies is 450.
Our counselors introduce themselves, first name and last name, give their direct phone number, the nonprofit agency they're affiliated with, explain the purpose of counseling, setting the expectation. This isn't a rescue fund; it's a counseling process.
At the end of the session, the counselor mails the homeowner a client action plan summarizing the steps they've agreed to take.
Q. Do you have more clout with lenders than homeowners do?
Hernandez: We do. We have more clout with the lenders. We've worked nationally through the Hope Now Alliance and with other counselors and have said to the lenders you've got serious problems. The first one: We can't reach you. So they did get together special designated portals of entry for counselors. That was progress.
We told them people aren't calling because you're not showing flexibility. So, now they send out 250,000 letters a month to delinquent borrowers who are 60 days delinquent and have had no contact with their lenders. In that letter they use the word flexibility. And they say call us or call the hotline.
Now, they are putting more emphasis on loan modification. The volume is staggering. The whole sub-prime meltdown -- when you look at how out of control it got -- really is staggering. They're doing better on access, outreach and putting more emphasis on modification.
Q. Your statistics show that 36 percent of callers were able to work out a loan modification, but was it enough to keep them in their homes?
Hernandez: In terms of really knowing what happens as a result of the counseling, we don't have the data. It's frustrating because it's perfectly reasonable for somebody like you to say, "Well, what happens?'' We only know what the homeowner tells us.
It's hard to know whether that modification is going to be enough to keep them in the home. It'll be interesting to see a year from now if all these modifications that are supposedly happening, if people were able to sustain them. With the macro economy and unemployment on the rise and gas prices -- we see a real impact of gas prices and food prices on being able to sustain these plans they're coming up with, with their lenders.
Q. What was the impetus for your foundation?
Hernandez: The Homeownership Preservation Foundation was created in 2004. The founder was GMAC ResCap, a lender. They made a lot of sub-prime loans, and they saw that when people got into trouble the lender couldn't reach them. So if a borrower was delinquent on their mortgage and the lender would write them and call them, people weren't responding. And they thought to themselves, "This is really serious. There's no way for us to work out an arrangement with people if we can't contact them. Maybe they don't want to talk to us; maybe they'll talk to a third-party, neutral nonprofit. Let's set up a hotline and advertise so people will know there is professional free help available that isn't connected to the lenders.''
Download a Foreclosure Survival Guide from the Federal Reserve Bank of St. Louis.