Foreclosure Prevention – Assisting Borrowers

Foreclosure prevention strategies have been the subject of increasing policy debate as the downturn in the economy and depreciation of home prices in some markets have made it more difficult for homeowners to make timely payments on their mortgages. In addition, refinancing has not been an option for some homeowners who owe more on their mortgage than their homes are currently worth.

A homeowner may face foreclosure for many reasons, but most commonly it is due to an extreme change in their life situation — job loss, death, divorce, prolonged illness and others. Loan servicers generally begin the foreclosure process when payments become three or four months late, depending on the mortgage terms.

MBA members are committed to keeping people in their homes, and no MBA member wants a family to be foreclosed upon. Mortgage loan servicers are providing loss mitigation to eligible borrowers in distress, and the most common alternatives to foreclosure include forbearance and repayment plans, loan modifications, short sales and deed in lieu of foreclosure.

MBA encourages borrowers who cannot make, or anticipate that they will soon not be able to make, their mortgage payments to contact their servicer immediately to ask for help.

MBA is a founding member of HOPE NOW, an alliance of credit counselors, mortgage market participants, and mortgage servicers to create a unified, coordinated plan to reach and help as many delinquent borrowers as possible. HOPE NOW efforts, including the 1-888-995-HOPE hotline, provided by the Homeownership Preservation Foundation, come at no cost to the borrower and are provided by counselors approved by the Department of Housing and Urban Development (HUD). Borrowers should avoid sources that offer help at a fee, as there should never be a cost associated with putting the borrower in touch with HUD-approved counselors or their servicers. Loan servicer members of the HOPE NOW alliance report that, as of December 2008, approximately 3.2 million homeowners have received loan workouts since July 2007.

Additionally, MBA, through its Home Loan Learning Center, has created a Foreclosure Prevention Resource Center. This Web site provides information for borrowers at-risk of losing their home, including a list of lender and servicer contact numbers with hours of operation. In some cases, special member company Web sites or email addresses for borrower assistance are also provided.

Issues Update
3/9/2009 MBA Comment Letter, Hope for Homeowner Program
2/18/2009 MBA Summary on Homeowner Affordability and Stability Plan
2/3/2009 MBA Testifies on H.R. 703, Hope For Homeowners
11/19/2008 MBA Urges the Continuation of FHASecure
9/17/2008 MBA Comments on FHASecure
2/13/2008 MBA Comments on FHASecure
7/25/2008 MBA Testimony-A Review of Mortgage Servicing Practices and Foreclosure Mitigation
2/11/2008 MBA Testimony-Effects of the Subprime Mortgage Crisis in New York City and Efforts to Help Struggling Homeowners