Nonprofit Counselors: Missing Link Between Borrower and Servicer?
By: Esther Cho 09/09/2012
Delinquent borrowers oftentimes make themselves as elusive and unavailable as possible when it comes to communicating with their servicers. During a panel at the Five Star Conference, industry experts discussed the reasons behind the difficulty in reaching borrowers.
Colleen Hernandez, CEO and president of the Homeownership Preservation Foundation (HPF), explained three main reasons why borrowers won’t respond or reach out to their servicer.
For one, when borrowers don’t have the money to bring their account current, then for them, it seems pointless to contact their servicer.
“They think that their servicer wants money, and, since a struggling homeowner often doesn’t have that money, they think, ‘What’s the point?’” said Hernandez in a follow-up email interview. “Additionally, many homeowners believe that calling their servicer will actually speed up the foreclosure process.”
A second reason is borrowers don’t know who to trust. With the countless scams that exist to target struggling homeowners, it can be difficult to know who is there to truly help.
Hernandez said that when she Googles foreclosure prevention every morning, she’s amazed by those who have morphed from yesterday’s name to today’s name based on headlines.
Hernandez said the third reason borrowers don’t reach out is they need help with more than their mortgage. Instead, they need a financial advisor who can look at the entire picture.
Additionally, Hernandez said, “What homeowners typically don’t understand is that, more than anything, servicers want performing loans and are often willing to explore ways in which they can bring a loan back to performing status and avoid a costly foreclosure.”
For borrowers, however, they are oftentimes in a situation where their loan has been sold several times to different servicers, in addition to the scammers reaching out to them.
To help borrowers get the information they need as they maneuver their way through confusing terrain, HPF is able to act as a bridge between borrowers and servicers.
“While many servicers now send out letters advising delinquent borrowers to contact them directly, they also recommend that homeowners contact a nonprofit housing counselor, like those available by calling the Homeowner’s HOPE Hotline at 888-995-HOPE. Homeowners often feel more comfortable speaking with someone who doesn’t have any ‘skin in the game’ and is providing honest, non-judgemental advice on what their options are, the potential impact on their family and their finances, and a lifeline to call for future questions,” said Hernandez.
Besides enlisting the help of a third-party counselor, another strategy to ensure borrowers get the information they need is face-to-face contact.
Jay Loeb, VP of Strategic Development at National Creditors Connection, explained that after the phone calls and letters have gone out and neither has worked, face-to-face contact can be another solution to engage borrowers.
[Editor’s note: The Five Star Conference is hosted by The Five Star Institute, DS News’ parent company.]