Freddie Mac and 13 national and local non-profit organizations have announced a pilot effort to convince discouraged delinquent borrowers to pursue mortgage workouts that can save their homes and steer clear of foreclosure. Freddie Mac's new Borrower Help Centers in Chicago, Phoenix, San Bernardino and Washington, D.C. are designed to provide free, confidential one-on-one "holistic" mortgage counseling to delinquent Freddie Mac borrowers. The company is also launching a separate Borrower Help Network offering similar counseling over the phone to targeted Freddie Mac borrowers across the nation.
Both efforts rely on non-profit organizations with strong reputations to contact and work with Freddie Mac borrowers who may be eligible for a modification but never called their lender or became frustrated or uncertain of the process and gave up trying.
"We know that fear and frustration are keeping thousands of borrowers from getting the help they're eligible to receive," says Ed Haldeman, chief executive officer, Freddie Mac. "So we're going to address the problem head-on by working together with nonprofit partners. These organizations are trusted and valued sources in their communities, and we believe they can make the difference in keeping families in their homes and out of foreclosure."
Holistic financial counseling goes beyond mortgage issues and also includes an assessment of borrower debt and credit issues that could affect a borrower's ability to stay current on a mortgage after a modification. Borrowers in some stage of foreclosure are 60 percent more likely to keep their homes than other borrowers, according to a recent study from NeighborWorks America.
Groups participating in the Borrower Help Center and Borrower Help Network include the National Urban League, National Council of La Raza (NCLR), HomeFree-USA, local Neighborhood Housing Services in Chicago, Phoenix, and Ontario, California, and other local community organizations.
"NCLR's partnership with Freddie Mac on this program means that distressed minority homeowners can access effective, personalized housing counseling from trusted community organizations. This effort will strengthen our ability to replicate best practices and succeed in helping more Latino families stay in their homes," said Janet Murguia, president and CEO of NCLR, the largest national Hispanic civil rights and advocacy organization in the United States.
"The National Urban League looks forward to working with Freddie Mac on this important project as we collectively seek to test enhancements to the home retention continuum that prioritize client counseling and best utilize trusted community groups in order to help more minority borrowers avoid unnecessary foreclosure," states Marc H. Morial, president & CEO of the National Urban League. "The Borrower Help Network is a critical response to the housing crisis and its design is clearly linked to comprehensive and sustainable neighborhood stabilization, which remains the ultimate objective."
In 2009 Freddie Mac helped nearly 250,000 borrowers avoid foreclosure through loan modifications, forbearance, repayment plans and other workouts, including modifications under Making Home Affordable. Freddie Mac accounts for nine percent of all seriously delinquent mortgages, but finances almost 23 percent of America's residential mortgages.
The free Borrower Help Centers in Chicago, Phoenix, Washington, D.C. and California's Inland Empire have already started contacting delinquent borrowers identified by Freddie Mac for appointments. In addition, delinquent borrowers who know Freddie Mac owns their mortgage can also schedule free appointments by contacting the Borrower Help Center in their community.
Counselors at each Borrower Help Center are trained to review Freddie Mac and Making Home Affordable workout requirements with their clients. Counselors will also provide one-on-one guidance to help borrowers apply for modifications, supply missing information or documents needed to move an application forward, and work with Home Retention Services, a wholly owned subsidiary of Stewart Lender Services Inc., to help borrowers effectively connect with their servicers.
At the same time, the counselors will work with the borrowers on other outstanding debt and credit issues, such as credit card debts or auto loans, that may also be causing financial distress.
Borrower Help Centers in Chicago are being staffed by Neighborhood Housing Services of Chicago and the Latin United Community Housing Association (LUCHA), and in Phoenix by Neighborhood Housing Services of Phoenix and Chicanos Por La Causa. Neighborhood Partnership Housing Services in Ontario, CA and Home Free USA in Hyattsville, MD, a Washington, DC suburb have also opened Borrower Help Centers.
In a parallel effort to reach distressed borrowers located outside of the initial target areas, Freddie Mac is launching a separate Borrower Help Network consisting of eight national and local non-profit organizations.
Together, they are launching a national phone campaign to make contact with delinquent Freddie Mac borrowers who have stopped responding to their lenders. Counselors will provide free holistic counseling, and help borrowers explore and understand their mortgage modification options.
The Borrower Help Network also will work with Home Retention Services to connect borrowers with their servicers for a mortgage modification or other foreclosure alternative.
Participating organizations include the National Urban League and its chapters in Broward County, FL and Hampton Roads, VA, NCLR and NCLR Affiliate Network members--Southwest Housing Solutions in Detroit and New Economics for Women in Los Angeles. The Metroplex Economic Development Corporation in Dallas, Korean Churches for Community Development and Boat People SOS, which works with Vietnamese Americans through 15 branches across the country, are also participating in Freddie Mac's Borrower Help Network. For more information, visit freddiemac.com/avoidforeclosure.
For more information, visit www.freddiemac.com.