october 2007 do not cite or distribute without permission of nhs chicago
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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 October 2007 Do not cite or distribute without permission of NHS Chicago.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” - PowerPoint PPT PresentationTRANSCRIPT
Lessons from the Front LinesCounselor Perspectives on Default
InterventionsHomeownership Preservation Initiative (HOPI)
October 2007
Do not cite or distribute without permission of NHS Chicago
Goals
• Track perceptions of counselors on the “front lines”
• Look for positive changes in borrower-servicer relationships
• How much progress are we making, collectively?
Survey of Default Counselors
Source: NHS Default Counselor Survey 2007
• Emailed to 400 counseling professionals in May & October 2007 – approximately 1/3 response rate
May: 139 responses – 113 practicing counselorsOct: 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
Which best describes changes in demand for default counseling services in the last 6 months?
0%
10%
20%
30%
40%
50%
60%
Decreasedmore than50%
Decreasedby 10-50%
No change
Increasedby 10-50%
Increasedby 51-100%
Increasedby 101-200% ormore
Source: NHS Default Counselor Surveys 2007
Demand is accelerating.
Shift from Job Loss to ARMsWhat is the most frequently reported cause of default or
foreclosure among your clients?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Healthproblem/Illness
Job Loss Consumerdebt/expenses
ARM Resets Other
May Oct
Source: NHS Default Counselor Survey 2007 (104 experienced counselors)
Counselor Evaluation: Major Problems
Source: NHS Default Counselor Surveys 2007
What share of borrowers that you have seen involve fraud, loans that the borrower could never have afforded or 'exploding ARMs'?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Fraud Payments NeverAffordable
300+ BPS ARM Resets
May Oct
Most Common Outcomes Observed by Counselors
How common is each outcome for borrowers in default that you counsel?% Very Common
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Repaymentplan
Loanmodification
Foreclosureauction
Current withforeclosureprevention
loan
Forbearance Sale of home Refinance Current withown funds
May Oct
Source: NHS Default Counselor Surveys 2007
++ - -
Ratings of 22 Subprime Servicers
Source: NHS Default Counselor Surveys 2007
• 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 with2: Fairly good to work with3: Fairly difficult to work with4: 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
How helpful is it in creating loan workouts to have a designated contact?
Extremely helpful
53%
Very helpful24%
Somewhat helpful
18%
Not at all helpful
1%
Somewhat unhelpful
4% 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
Treatment of Counselors Improving
Source: NHS Default Counselor Surveys 2007
Best describes how you think the "typical" loss mitigation staff person feels about you when you are working with them on behalf of a client?
0%
10%
20%
30%
40%
50%
60%
They value myservices as a
fellow professional
They tolerate myrole but arerespectful
They barelytolerate my role
and not respectful
They are openlyhostile and
frustrated I aminvolved
May Oct
Flexible Options Are Being Used Enough?How often will any servicer or lender perform the following with your clients?
0%
10%
20%
30%
40%
50%
60%
70%
80%
Change an ARM intoa fixed rate loan
Reduce/write-downthe principal balance
Waive fees andaccrued interest
permanently
SometimesRarelyNever
Source: NHS Default Counselor Surveys 2007
Borrowers View Servicers PoorlyWhich best describes how borrowers in default view their
lender/servicer, in general?
Intimidated38%
Frustrated45%
Borrowers have no opinion
3%Angry13%
Positive 1%
Source: NHS Default Counselor Surveys 2007
Counselors: Recent Servicer EffortsWhich best describes changes you have observed among lenders/servicers working
with borrowers in default in the last six (6) months?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Much morerestrictive/harder to
work with
Somewhat morerestrictive/harder to
work with
No change Somewhat moreresponsive
Much moreresponsive
May Oct
Source: NHS Default Counselor Surveys 2007
Sign of improvement
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
Expectation for demand for nonprofit foreclosure services over the next year?
Demand will increase a lot
71%
Demand will increase a little13%
Demand will decrease a lot
14%
Demand will stay the same1%
Demand will decrease a little1%
Source: NHS Default Counselor Surveys 2007
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”
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
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