Lessons from the Front Lines: Counselor Perspectives on Default Interventions

Neighborhood Housing Services of Chicago, founder of the Home Ownership Preservation Initiative, sponsored a series of surveys of mortgage default counselors in May and October 2007. The results suggest there are substantially increasing demands on the mortgage counseling field. One in three counselors have seen their client volumes more than double in 2007 alone. Much of the increase in demand is due to borrowers with adjustable rate or other loans that are unaffordable. Weaknesses in the housing market make finding solutions challenging without loan workouts from lending institutions and servicers. There are some signs financial institutions are offering more alternatives to foreclosure, but many counselors feel more aggressive restructuring of existing loans is necessary. Counselors report many borrowers fail to seek help or communicate with their lender when alternatives to foreclosure are appropriate, largely due to borrower’s high levels of stress and anxiety. The most significant issue raised in these surveys is that when counselors have gained the trust of a borrower and can help facilitate a solution, too often they cannot efficiently make connect with a lender. Lenders or servicers offering hotlines or specially-trained staff to work with counselors are deemed to be more successful from a counseling perspective.