Foreclosure - Foreclosure Counselling And Its Effectiveness

Foreclosure Counselling

April 10th, 2008

A new bill will be allocating billions towards foreclosure counseling expenses but will that address the problem? $15 billion rescue bill is waiting in the Senate wings. Of that $100 million will be for foreclosure counseling.

Jim Carr of National Community Reinvestment Coalition is feeling upbeat about any efforts that will iron out the problems of foreclosure victims and the lenders avoid losses. But housing advocates allege that this alone will not help. The counselors are doing the best they can but a similar response is not coming from the servicers. Most of the lenders and their servicers are hesitant about making major changes without which the house owners will not be able to stand up against foreclosures. This is the opinion of Bruce Marks of Neighborhood Assistance Corporation of America.

The sanction of $100 million will be in addition to the $180 million emergency foreclosure counseling funds that had been sanctioned by the Congress last autumn, and about $40 million annually sanctioned by HUD.

HUD gives foreclosure training to its counselors. Since 2004 there has been a 10-fold increase in the numbers seeking training, said Doug Robinson of NeighborWorks responsible for administering the HUD funds. Despite this only a quarter of the borrowers who had approached Hope Now Alliance (coalition of lenders and community groups supported by the government) have been able to modify their loans. The others were able to get extra time to become current. This does not solve the basic problem – or even attempt to do so. Lenders are tough nuts to crack but nevertheless the counselors are managing to make some headway. For instance Jenelle Dame of ESOP, Cleveland, has regular meetings with lenders like Countrywide Finance to discuss specific cases. After handling many cases she now knows which lender will respond to which tune. This has made the going easy although gaps still remain and there is still a lot to be done.

The additional funds have made it possible for help organizations to reach more families and help them more effectively. With the proceeds ESOP could set up five new offices in the Ohio region. Other agencies are now being trained to emulate them.

The National Foundation for Credit Counseling has a staff of 843 counselors and hopes to be able to help 60,000 counselors this year. With extra money it is now hiring another 141 assistants to serve another lot of 10,000 foreclosure victims.