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Front-line Counselor Perspectives on Default Interventions in Homeownership Preservation

Explore the evolving roles of default counselors in preserving homeownership by assessing counselor feedback, borrower-servicer relationships, and demand trends. Survey data reveals challenges, successes, and areas for improvement in default intervention strategies.

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Front-line Counselor Perspectives on Default Interventions in Homeownership Preservation

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  1. Lessons from the Front LinesCounselor Perspectives on Default InterventionsHomeownership Preservation Initiative (HOPI) October 2007 Do not cite or distribute without permission of NHS Chicago

  2. Goals • Track perceptions of counselors on the “front lines” • Look for positive changes in borrower-servicer relationships • How much progress are we making, collectively?

  3. Survey of Default Counselors • Emailed to 400 counseling professionals in May & October 2007 – approximately 1/3 response rate May: 139 responses – 113 practicing counselors Oct: 78 responses – 61 practicing counselors • In total served 25,000 clients last 12 months • 30% work at organizations with >5 “default counselors” • 82% provide counseling directly • remainder oversee staff conducting counseling Source: NHS Default Counselor Survey 2007

  4. Which best describes changes in demand for default counseling services in the last 6 months? Demand is accelerating. Source: NHS Default Counselor Surveys 2007

  5. Shift from Job Loss to ARMs Source: NHS Default Counselor Survey 2007 (104 experienced counselors)

  6. Counselor Evaluation: Major Problems Source: NHS Default Counselor Surveys 2007

  7. Most Common Outcomes Observed by Counselors ++ - - Source: NHS Default Counselor Surveys 2007

  8. Ratings of 22 Subprime Servicers • Rate each institution's loss mitigation department based on your experience in the last 6 (six) months. • 1-4 scale: 1: Very good to work with 2: Fairly good to work with 3: Fairly difficult to work with 4: Very difficult to work with • Average: 2.5 – between fairly good-difficult • No changes from May to October – but more variation for each lender • Range 1.0 to 3.7 - experiences uneven • Key finding: Within institutions counselors have varied experiences. • Even the ‘best’ have issues/problems as identified by counselors Source: NHS Default Counselor Surveys 2007

  9. How helpful is it in creating loan workouts to have a designated contact? Reduces time on hold, making call backs, etc by 15.4 minutes per client. Saves counselor serving 100 clients 3.2 days in client service time per year. Source: NHS Default Counselor Surveys 2007

  10. Treatment of Counselors Improving Source: NHS Default Counselor Surveys 2007

  11. Flexible Options Are Being Used Enough?How often will any servicer or lender perform the following with your clients? Source: NHS Default Counselor Surveys 2007

  12. Borrowers View Servicers Poorly Source: NHS Default Counselor Surveys 2007

  13. Counselors: Recent Servicer Efforts Sign of improvement Source: NHS Default Counselor Surveys 2007

  14. Why do borrowers fail to contact their lender when they have trouble making payments? Don't know lenders can provide options 53% Too depressed/stressed 26% Think they can get by on their own 12% Lenders mistreat them (write in) 10% Most counselors wrote about multiple problems. Consistent with borrower surveys and interviews Source: NHS Default Counselors Surveys 2007

  15. Expectation for demand for nonprofit foreclosure services over the next year? Source: NHS Default Counselor Surveys 2007

  16. Counselor Feedback • “problems are becoming overwhelming for the counselors as well…we need to work better together” • “lenders need to realize we can play a ‘broker’ like role because we may have real relationships with people and more accurate information” • “immediately patch us through to the decision makers rather than wasting our time” • “create a better system for accepting authorization forms. A 24 hour delay, in many cases, is too long” • “need to bypass the gorillas in collections” • “create special processes/products if a nonprofit is involved—like we did on originations”

  17. Looking Forward: More Work to Be Done • Some evidence counseling-lending relationship getting better; more modifications being made • But housing values and surge in demand are challenges • Improve connections between counselors & lenders • Increasing need for services • Expand use of modification strategies • Disseminate innovations more evenly across institutions • Borrowers need to better understand options & overcome emotional responses produced by: Do not cite or distribute without permission of NHS policylabconsulting.com

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