Surge in Homeowners Seeking Counseling Who Are Current on Their Mortgages Signals Possible New Wave of Foreclosures, HPF Study Finds
Percentage of Calls to HPF’s HOPE Hotline From Current Homeowners Who Cannot Meet Their Expense Obligations More Than Doubles
Only 40 Percent of Callers Qualify for HARP 2.0
WASHINGTON, D.C., JULY 12, 2012 – The Homeownership Preservation Foundation (HPF), an independent national nonprofit dedicated to helping distressed homeowners navigate financial challenges and avoid mortgage foreclosure through its Homeowner’s HOPE™ Hotline at 888-995-HOPE™, announced today that the percentage of callers seeking counseling who are current on their mortgages is up 70 percent this year, signaling a possible new wave of foreclosures.
Half of those counseled by the HOPE Hotline this year report that they remain current on their mortgage payments but say that a mounting inability to meet expenses could cause them to default. More than 75 percent of those current borrowers had credit scores well above the subprime threshold when they took out their mortgages; however, many are now at risk for default as factors such as a reduction in income and increased credit card usage have badly eroded their fiscal health.
“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 crises, and various recession-related issues – have seen their economic situations severely deteriorate,” said Colleen Hernandez, CEO of HPF. “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.”
Ms. Hernandez said that only about 40 percent of HOPE Hotline callers who are current with their mortgage payments appear to qualify for the expanded Home Affordable Refinance Program (HARP 2.0), a federal program designed to allow homeowners with loans backed by Fannie Mae and Freddie Mac to refinance at a lower interest rate. The program is aimed at homeowners who are current on their mortgage payments but owe more than the value of their properties.
“There is a perception out there that the HOPE Hotline is only for emergencies, but the reality is that if you are running a budget deficit and are nervous about payments on a monthly basis, you’re already in an emergency. It’s best to call the HOPE Hotline and address your housing situation as soon as possible.”
“This foreclosure crisis is far from over,” Ms. Hernandez warned. “As lenders are learning to comply with new servicing 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 pretty rapid clip.”
About the Homeownership Preservation Foundation
The Homeownership Preservation Foundation (HPF) is an independent national nonprofit dedicated to helping distressed homeowners navigate financial challenges and avoid mortgage foreclosure. HPF guides consumers onto the path of sustainable homeownership and develops innovative solutions to preserve and expand homeownership. Through its Homeowner’s HOPE™ Hotline, 888-995-HOPE™, HPF provides comprehensive financial education and confidential foreclosure prevention counseling for FREE, 24 hours a day, 7 days a week, 365 days a year, in over 170 languages. Since 2007, HPF has served more than six million distressed homeowners, an average of 5,500 each weekday, who depend upon HPF as a trusted, neutral source of information and assistance. For more information about the Homeownership Preservation Foundation or the Homeowner’s HOPE™ Hotline, please visit www.995hope.org.
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