SOURCE: Neighborworks America

NeighborWorks America

September 24, 2015 10:00 ET

Reliable Communication With Servicers Is Improving, but Remains Major Challenge for Counselors Helping Homeowners Avoid Foreclosure

WASHINGTON, DC--(Marketwired - September 24, 2015) - Housing counselors across the country working with homeowners to find an alternative to foreclosure for thousands of homeowners cite improving communications with servicers, but note that more needs to be done, according to the latest report on the National Foreclosure Mitigation Counseling program (NFMC). NFMC is a congressionally funded effort that has helped more than 1.9 million homeowners understand their foreclosure prevention options.

Efficient and timely communication with servicers is the challenge most frequently reported by counselors overall at 38 percent in the latest report, compared to 40 percent in the October 2013 report. The improvement is meaningful, however, counselors reported difficulty with contacting servicers due to staff changes and changing point of contacts, which is worrisome for the future.

Servicers have steadily been reducing the staff working in their loss mitigation departments as the absolute number of serious default and foreclosure cases declined. However, some experts are predicting that default and foreclosure cases could begin to increase as homeowner mortgage costs associated with some loan modifications begin to rise in the periods ahead.

"Servicer interactions with counselors have dramatically improved from a few years ago," said Nicole Harmon, NFMC vice president. "But we would like to see the trend line continue to improve, not flatten out. That is what would be best for homeowners and counselors."

Counseling Success

While challenges remain for counselors working with homeowners to avoid foreclosure, there are substantial program successes. Creating a more efficient counseling process ranks first among process improvements reported by counselors. Wider and better use of data management tools enabled counselors to assist more homeowners. These tools and improved housing counseling methods are driving superior homeowner outcomes. Research from the Urban Institute found that NFMC counseling:

  • Counseled homeowners are nearly three times as likely to receive a loan modification cure compared to non-counseled homeowners.
  • Counseling greatly increased a homeowner's ability to cure a serious delinquency or foreclosure.
  • Counseled homeowners were about 1.5 times more likely to not have their mortgage re-enter a troubled status after receiving a loan modification cure.

About NeighborWorks America

For more than 35 years, NeighborWorks America has created opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated more than $24.5 billion in reinvestment in these communities. NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.

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