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Increase in Calls to HOPE Hotline Could Signal Next Foreclosure Wave

A surge in increased calls to the Homeowners HOPE Hotline, which helps distressed homeowners navigate financial challenges, could signal a possible new wave of foreclosures according to a report released by the ""Homeownership Preservation Foundation"":http://www.995hope.org/ (HPF).


The independent nonprofit reported that calls to the hotline from homeowners who are current with their mortgages are up 70 percent this year. Of those counseled, half stated that ""mounting instability"" to continue payments could cause them to default. More than 75 percent of those current borrowers had credit scores above the subprime threshold when they took out the loan.

However, factors like job reduction and increased credit card spending could have caused those numbers to drop.


Colleen Hernandez, CEO of HPF, said there are a number of issues that could be affecting homeowners who were initially considered ""low risk"".

""We are seriously concerned about the rise in homeowners who were classified as low risk when they took out their mortgages, and as a result of a combination of circumstances-job loss, healthcare crisis, and various recession-related issues-have seen their economic situations severely deteriorate,"" Hernandez said in a statement. ""This could result in the proverbial ‘second shoe to drop' for the housing crisis, especially considering the limited options available to homeowners who are struggling but not yet delinquent.""

While the ""Home Affordable Refinance Program"":http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx/ (HARP 2.0), a federal program designed to allow homeowners with loans back by Fannie Mae and Freddie Mac to refinance at a lower interest rate, may be an option for some, Hernandez said that only 40 percent of callers appeared to qualify.

""This foreclosure crisis is far from over,"" she warned. ""As lenders are learning to comply with new service standards set in place by the National Mortgage Settlement and the Consumer Financial Protection Bureau (CFPB), make no mistake that notices of default are once again landing in mailboxes across the country at a rapid clip.""

Hernandez also advised homeowners to not wait until an emergent situation to contact the HOPE hotline.

""If you are running a budget deficit and are nervous about payments on a monthly basis, you're already in an emergency,"" she explained. ""It's best to call the HOPE Hotline and address your housing situation as soon as possible.""

About Author: Sara Ortega


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