While housing counselors across the country report improved communications with servicers in the area of helping struggling borrowers avoid foreclosure, there is still more work to be done, according to a report released Thursday from the National Foreclosure Mitigation Counseling (NFMC) program.
NFMC is a congressionally-funded effort launched in December 2007 to address the foreclosure crisis by making more housing counselors available to families at risk of losing their homes to foreclosure. In slightly less than eight years, NFMC has helped approximately 1.9 million homeowners understand their foreclosure prevention options. The funds are distributed by Washington, D.C.-based community development non-profit and grant maker NeighborWorks America to grantee organizations, which in turn provide the housing counseling services. The report released Thursday was NFMC's 11th report to Congress.
“Servicer interactions with counselors have dramatically improved from a few years ago,” said Nicole Harmon, NFMC vice president. “But we would like to see the trend line continue to improve, not flatten out. That is what would be best for homeowners and counselors.”
The challenge most reported by counselors in NFMC's report was efficient and timely communication with servicers (38 percent), which is down slightly from 40 percent in the NFMC's report from October 2013. Frequent staff changes among servicers and changing points of contact resulted in problems for counselors when trying to contact servicers.
Servicers have greatly reduced staff numbers in loss mitigation departments, however, due to substantial declines in serious defaults and foreclosure cases. Some experts are predicting that foreclosure cases and defaults could rise again due to an increase in costs associated with loan modifications.
Despite the challenges for counselors communicating with servicers, substantial program successes have been reported. According to the Urban Institute, the following outcomes have been associated with NFMC program counseling:
Homeowners who receive NFMC program counseling are almost three times more likely to receive a loan modification than homeowners who do not have the counseling
The chances of a struggling homeowner's ability to cure a serious delinquency or foreclosure greatly increased with counseling from NFMC
Homeowners who receive counseling are one and a half times more likely to keep their loans current (not have their loans enter troubled status) after receiving a loan modification
Click here to see the NFMC's full report.