Austin Kilgore | 12.29.08

The Hope Now alliance announced it will enhance and expand its services and expects to help facilitate more than 2 million loan modifications next year.

Included in its 2009 plans are at least 30 additional homeowner workshops, which alliance officials believe will increase the number of homeowners who attend workshops by more than 50 percent. Plans are also being prepared for web-based resources to supplement the telephone-based Hope Hotline for homeowners to start the foreclosure prevention process, and other tools to provide consumer counseling like phone-a-thons.

The group will also increase its outreach and public information to reach more homeowners in danger of losing their homes.

According to Hope Now projections, from January to November, 2008, the alliance prevented 2.2 million foreclosures with nearly 950,000 mortgage modifications, and received more than 1 million calls to the Hope Hotline. More than 500,000 at-risk homeowners responded to the 2.9 million letters Hope Now distributed. The 18 percent response rate is six times more than the typical response rate loan servicers receive when they send their own mailings.

Hope Now officials are crediting the Streamlined Modification Program, a collaboration between Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) that is a faster modification approval process that went into effect December 15, and June's creation of uniform guidelines amongst Hope Now members to create a faster and easier foreclosure prevention process, and an agreement for dealing with second liens, which had previously stalled attempts to hasten the prevention process.

“The mortgage lending industry has shown enormous flexibility and commitment in the face of this past year’s constantly changing economic outlook,” Mortgage Bankers Association COO John Courson said. “The plans Hope Now has for 2009 demonstrate clearly that the whole mortgage lending industry will continue to serve the needs of homeowners no matter what the situation.”

But despite the optimism of Hope Now supporters, critics warn that not enough at-risk homeowners are receiving loan modifications, and many modifications backfire because payments on the modified loans are actually higher than original payment.

According to research by the National Association of Consumer Bankruptcy Attorneys (NACBA), Hope Now worked out loan modifications resulting in lower monthly payments for 266,087 homeowners; loan modifications with the same or higher monthly payments for 226,667 families; and 780,000 short-term repayment plans.

“The American home mortgage foreclosure crisis has gone from the danger zone to the full-blown crisis stage,” NACBA president Henry Sommer said. “The number of foreclosures is growing rapidly and is reaching well beyond the subprime world to the American middle class. Despite a proliferation of voluntary programs, we are not seeing evidence of a meaningful number of sustainable loan modifications.”