Consumers Value the Guidance of a Trusted Independent Ally

The Distressed Homeowner’s Advocate:
HPF Provides Independent, Neutral Counsel:
Helps Homeowners Make Informed Decisions to Avoid Foreclosure

Statement by Colleen Hernandez
CEO, Homeownership Preservation Foundation
March 6, 2011

While there is little agreement from various sectors about what caused the current housing crisis or what will solve it, there is nearly unanimous agreement that consumers, in order to resolve their issues, need to reach out for help, to understand their situation, to navigate a course through the mortgage maze, to be in touch with their servicers, and to make the changes in their lifestyles and their budgets in order to stay in their homes.

The Homeownership Preservation Foundation recognizes that need and has, since its inception in 2004, served those distressed consumers. HPF is able to provide counseling free-of-charge, 24/7×365 in 170 languages, through the financial support of public sources and the mortgage investment industry.

Logic would suggest that funding for this service should come primarily from the investor, the party holding the risk in the transaction, since they stand to gain if foreclosure is avoided. The majority of the funding for the counseling service comes from private label investors and the GSEs in the form of guidance provided to their servicers that allows the cost of counseling to be included among other costs that servicers incur in servicing the loan.

It is also reasonable to assume that a nonprofit organization heavily engaged in the mortgage industry would benefit from having mortgage industry leaders on its board of directors. This is a complex and dynamic environment. The better the combined team of staff and board understands the current realities, the better they can work to the benefit of homeowners.

At the same time as HPF seeks to understand the mortgage market and its challenges and make important connections that benefit the consumer, it is imperative at all times that, as the counseling is offered, there is only one fundamental guiding principle — that HPF is offering advice that is in the best interest of the homeowner.

The interesting reality is at that all parties in this transaction — industry, government, HPF, and the consumer — strongly prefer that this service be offered by an independent, neutral, nonprofit third party. While it may be counterintuitive to think industry would pay for the service and not guide its outcome, the reality is that the whole country knows that consumers don’t trust their lenders and thus consumers aren’t reaching out for help at a time when they desperately need help. They don’t know whom to trust. Banks know they cannot be that trusted third party. So they have worked actively with HPF, Treasury, the HOPE Now Alliance, and others to build consumers’ trust in HPF and the Homeowner’s HOPE Hotline. And now that consumers know they can trust the Homeowner’s HOPE Hotline, 5,000 homeowners a day are calling for help, many because they heard about it from a friend or relative.

How does HPF ensure its independence? Five ways:

1. HPF chose a non-profit leader, myself, Colleen Hernandez, to be the CEO in 2006. I have 25 years of experience working with homeowners, serving a charitable mission.
2. HPF chose seven of the top nonprofit HUD-approved credit and housing counseling agencies to offer the service through their combined workforce of 600 certified counselors. These agencies have charitable missions focused exclusively on providing caring and compassionate guidance to distressed consumers.
3. HPF provides quality control — daily, monthly and weekly — that examines the counseling sessions and asks questions such as: did the counselor establish the purpose of the call, listen actively, educate the homeowner about foreclosure options, set a positive tone, and provide the counselor’s direct telephone number? All of these and 50 more criteria are focused on ensuring that the homeowner knows the counselor is on their side, seeking the best possible resolution of their problem.
4. HPF asks homeowners if they feel well-served by this independent non profit. Homeowners who receive counseling from the HPF network of nonprofit housing counselors validate every month that this service is not only valuable but is in their best interests and provides an ally for them in dealing with their lender. HPF counsels approximately 30,000 families a month. We get email addresses for 70% of them, email them a customer satisfaction survey, and receive 1,500 responses each month. 70% of those counseled would recommend this service to a friend or relative. Only 21% are satisfied with their interactions with their servicers. 55% said their servicer offered no assistance prior to this nonprofit housing counseling. Clearly these consumers value the guidance of a trusted independent ally.
5. HPF asks our stakeholders in government, the community and industry to do due diligence on us to verify that our service is independent and of consistently high quality. As a result of their due diligence and their desire to make resources available to their constituents and consumers, the Hotline telephone number appears on 4,927 government websites, is prominently featured by the 40 top lenders, is recommended by U. S. Department of Treasury and U.S. Department of Housing and Urban Development, and is featured prominently by the national nonprofit intermediary, NeighborWorks America.

The fact is, if this central service didn’t exist, America would be clamoring for its creation and mandating that investors pay for it. That’s already happened, to the benefit of more than 4 million homeowners who have reached out and received help and guidance from a trusted independent ally.