November 19th, 2008 4:58 PM

Resiliency of hope

Hope Now is a non-government coalition of mortgage industry professionals whose primary goal is to prevent foreclosures. The group operates a toll-free hotline that provides free counseling and guidance to at-risk homeowners. Hope Now counselors are trained to help homeowners understand their particular situations, and the foreclosure prevention options available to them.  

It also manages a letter campaign that reaches out to individuals who may be in danger of losing their homes. These letters have successfully encouraged thousands of homeowners to contact their mortgage providers and negotiate loan workouts.

Promising milestone

In October, Hope Now announced that the mortgage industry had reached an encouraging milestone: 212,000 foreclosures were prevented, just during the month of September alone. The bulk of these preventions-some 113,000, were achieved with repayment plans; the remaining 98,000 involved loan modifications.

The industry, aided by the alliance's efforts, has averted roughly 1.6 million foreclosures this year, already exceeding the 1.5 million homeowners that received workouts in 2007.

An uncertain future

Despite the efforts of Hope Now and others, certain challenges continue to impede the progress of foreclosure prevention. It can be difficult, for example, for mortgage servicers to obtain approval to forgive debt or alter the terms of a loan. Because mortgages are pooled and sold off in shares, servicers may first have trouble tracking down who actually has the authority to approve the modification. And even when the right decision-maker is located, cooperation may not be forthcoming.

That may be one reason why repayment plans are outpacing loan modifications. The former gives the homeowner the right to pay back past-due amounts over time. In this scenario, no changes to the original mortgage are necessary. But homeowners must have sufficient income to participate.

Repayment plans and loan modification workouts aren't intended to be temporary stays against foreclosure; they're supposed to be long-term, realistic solutions. Creating such solutions can be problematic in situations where the home's value has decreased significantly below the loan balance, or when the homeowner simply doesn't have the income necessary to support the debt payments, even after the loan has been modified.

These factors are, unfortunately, still creating momentum for the foreclosure crisis. Realistically, Hope Now and the mortgage industry may not be able to stop that boulder-but they remain dedicated to pulling more and more homeowners out of its destructive path.

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