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October 2007 Do not cite or distribute without permission of NHS Chicago

Lessons from the Front Lines Counselor Perspectives on Default Interventions Homeownership Preservation Initiative (HOPI). October 2007 Do not cite or distribute without permission of NHS Chicago. Goals. Track perceptions of counselors on the “front lines”

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October 2007 Do not cite or distribute without permission of NHS Chicago

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Front LinesCounselor Perspectives on Default InterventionsHomeownership Preservation Initiative (HOPI) October 2007 Do not cite or distribute without permission of NHS Chicago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