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Hope Now faces big challenges
By
Joe Light, Money Magazine staff reporter
NEW YORK
(Money) -- A key component of the Bush
Administration's plan to help troubled
homeowners is already under pressure:
finding qualified counselers.
U.S. Treasury Secretary Henry Paulson has
pointed to the Hope Now Alliance - a
coalition of nonprofits, lenders, and
investors - as a focal point of the
Administration's plan to prevent millions of
foreclosures.
The Alliance has a hotline (1-888-995-HOPE),
in place since 2004, where homeowners can
get over-the-phone foreclosure-prevention
counseling.
But before the number became the main go-to
for the Alliance, calls into the HOPE
hotline had already skyrocketed.
According to the Homeownership Preservation
Foundation, which runs the hotline, the
number of calls to the center has nearly
doubled in each of the past two quarters.
In June 2006, the foundation recorded about
100 calls per day. In June of this year,
that number had risen to 1,200 per day. Now,
the center handles about 1,500 a day with
bumps of up to 3,000 per day after major
media coverage. Those numbers only include
first-time callers. Many homeowners require
several calls to get complete counseling.
The Homeownership Preservation Foundation
has almost tripled the number of counselors
it has staffing the lines since the
beginning of the year, to 180.
"There's just too much demand and too few
skilled housing counselors," said Rick
Harper, director of housing for the Consumer
Credit Counseling Service of San Francisco.
The counseling service is one of six
organizations nationwide that handle calls
from the hotline. "When people are in
crisis, you need to be there to pick up the
phone the first time, because they might not
come back again," he said.
Harper's organization has seen the number of
counseling requests it gets more than
quadruple in the past six months.
TalkBack: Is the 'freeze' a good idea?
If a phone consultation isn't sufficient,
callers are referred for a face-to-face
session with NeighborWorks America, a
nationwide network of counseling agencies.
Some of NeighborWorks' local agencies are
already overwhelmed. Wait times for an
appointment vary widely, from a day or two
in some locations to several weeks for
hard-hit areas like Ohio.
Officials from NeighborWorks and the
Homeownership Preservation Foundation
recognize the strain put on their networks,
but funding, hiring, and training new
counselors isn't an easy process.
The Hope Now Alliance estimates that it
costs between $12,000 and $18,000 (see
correction below) to identify and train each
counselor, before factoring in equipment
costs, said Laurie Maggiano, the deputy
director of asset management for the
department of Housing and Urban Development.
The Alliance hopes to offset part of those
costs through a $200 million congressional
appropriation.
Lenders will fund the phone counseling
sessions themselves on a per-session basis
beginning on Saturday, according to the
Homeownership Preservation Foundation.
Even with the funding in place, the
Homeownership Preservation Foundation and
local counseling agencies might have to
scramble to find and train counselors to
handle demand.
At the Consumer Credit Counseling Service of
San Francisco, recent college graduates and
experienced counselors have salaries between
$30,000 and $40,000. The low salaries make
it difficult to recruit real estate or loan
professionals who might be best suited to
help homeowners in trouble, Harper said.
"It's hard for them to take the salaries we
can pay them. You need someone who really
wants to help. It's talking to one person
after the other who are in foreclosure, and
that can be traumatic," Harper said.
And once a willing counselor is found, they
still have to be trained. Housing counselors
with NeighborWorks need a baseline
certification, though until now those
certifications focused on help with buying a
home rather than foreclosure prevention.
Jason Zavala, who runs a homeownership
education company and is slated to teach a
foreclosure course next week, said that
counselors seem to mostly come from other
areas of the nonprofit industry. Many of the
counselors, who originally helped get
low-income homeowners into homes, are
scrambling to become foreclosure-prevention
counselors, he said.
"They are outrageously inundated with these
kinds of requests," he said. "There's not
enough funding or people to meet this
demand."
NeighborWorks will launch its foreclosure
prevention certification course next week at
a training session in Portland. The five-day
course, which has about 140 students, is
booked to capacity. About 60 more students
plan to take some sort of
foreclosure-prevention class.
"As an industry, we're all looking to find
ways to strengthen capacity," said Jayna
Bower, director of the NeighborWorks Center
for Homeownership Education and Counseling.
To speed the process of counseling
homeowners, the Hope Now Alliance is
developing a Web-based tool that can take
homeowners' loan data from the servicer and
spit out options that are helpful to the
homeowner and likely to be approved by the
investors who hold the mortgage. That tool
is still in the process of development.
When threatened with default, most
homeowners seem to rather duck and cover
than ask their bank for help. According to a
2005 Roper study, 50% of homeowners who
enter foreclosure never spoke with their
lender.
Conclusion
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of the many that suffer from insurmountable
debt and wonder if bankruptcy is an option?
Give us a call at (203) 924-6700 or
contact us.
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