Consumers Are "Unaware" That Lenders Can Help Them Avoid Foreclosure

A new survey from Freddie Mac says that 57% of delinquent homeowners are unaware of so-called “workout” options that could help them avoid foreclosure.

Here’s the messed up part… 57% is an improvement.

That percentage was down from the 61% reported in the first Freddie Mac/Roper survey in 2005.

“Efforts to get borrowers to call lenders and counselors are starting to work,” said Ingrid Beckles, Freddie Mac’s VP of Servicing and Asset Management.

But, she added, “Too many at-risk borrowers are still unaware their servicers routinely provide alternatives.”

Maybe Consumerist should start a program called, “Inform Your Clueless Friend…”Every time we post survey results that indicate that people are not in possession of basic information, you’d call your most clueless friend and tell them about the digital TV conversion, or that they should pro-actively call their lender and try to negotiate if they ever find themselves broke and about to be tossed out on the street. Think that would help?

Many unaware of mortgage help: Freddie Mac [CNNMoney]
(Photo:Getty)

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  1. howie_in_az says:

    You’d think the lenders would be sending notices out to those who fall behind in their payments with this sort of info. Guess we know where the lenders stand on things.

  2. qwickone says:

    @howie_in_az: Agreed, lenders should be letting people know that these options exist. But then again, maybe they are but people are too scared to open the mail from their mortgage company when they know theyre behind

  3. HRHKingFriday says:

    Well its a chicken and egg thing. Kind of like applying for unemployment benefits. You can get them until you are officially unemployed, but it takes so long to get them that its almost not worth the trouble.

  4. RvLeshrac says:

    @HRHKingFriday:

    Uh… it takes about a week to get UI, two weeks to get your first check.

    @howie_in_az:
    @qwickone:

    Or perhaps the people should call the lender and discuss it with them. The onus of responsibility falls on the person who is borrowing money, not on the person lending the money. If you can’t pay up, you need to find out what can be done about it.

    With regards to “scared to open the mail…”, they need to suck it up and, again, take some responsibility. There may be mitigating circumstances, but anyone who would simply ignore the problem is a fool.

  5. shadow735 says:

    Sorry but you cant fix stupid or lazy, “I don’t want to deal with the situation” if people are that dense to not call their mortgage company and tell them they are having trouble keeping up with payments, or that they are behind and need to know how to get caught up then that is very, very sad.
    You cant fix something it you bury your head in the sand.
    Its common sense if you dont pay your mortgage payments you will lose your home.
    If people really wanted to keep their homes they would do everything possible to make that happen.
    In order to find out what things they can do they would naturally need to contact their mortgage company.

  6. lockdog says:

    My sociologist wife would talk about this in terms of cultural capital. You don’t need to know that these options exist, what you need to know is that you can call and ask. You would think that everyone would know this, but that often isn’t the case. Plus, for someone to call and ask a bank for help requires getting over the shame in needing to ask for help. Partner families in the process of getting a Habitat house must (in addition to holding down one or two jobs) put in hundreds of hours of “sweat equity” which acts as their downpayment. In addition to helping build their own house some of that time is classes. We teach the basics; family financing, nutrition, parenting skills, etc, but also have a big section about some things you wouldn’t think people would need to be taught, such as, how to clean your gutters, or what to do if the power company makes a mistake on your bill (instead of just not paying it). It all seems common sense to us, but for many people have live in (squalid) rentals for years (if not generations) this stuff is totally foreign. SO, its easy to see how people might not know that banks have these options, or be so ashamed of needing them that they don’t find out until it is too late.

  7. LilKoko says:

    Many people WERE calling the banks. The banks were saying — and I paraphrase — “Screw you.”

    Then everyone started hearing about how convoluted this banking mess is. Then a lot of borrowers realized that nothing they could do was going to make a difference, and enough people were saying to the bank — and I paraphrase — “Screw me? All right, take the keys. Good luck getting your money bank.”

    And the banks are now crying like babies because guess what? They can’t get their money back, and they have debts, too.

  8. Me - now with more humidity says:

    I know one loan servicer — Wilshire Capital — who won’t even talk about modifications or workouts until the borrower is at least 4 payments behind. Their CSRs aren’t allowed to give out the phone number to loss mitigation until then. And when you get them, finally, they’ll tell you they can’t make mods because they don’t own the loans and can’t tell you who does.

    I just got screwed in a short sale because they took 4.5 months to make a decision about it and the buyer walked. The file went through 6-8 reps in that time — one had to be fired because of his lack of ethics. They demanded that we resubmit the file 5 times. Nevermind that the lender on the HELOC second agreed to the short sale in less than 15 days. The servicer on the first screwed themselves, ’cause they’re getting the house back.

  9. MrEvil says:

    @LilKoko: Yeah, like every single interest-bearing depository account the bank has on its books. Even a checking account is considered a debt the bank owes (since they have to give you your money if you ask for it or close the account).

  10. Stanwell says:

    The lenders DO send out notices… and phone calls, and in some cases notes on the front door asking the mortgagers to call in to discuss options. I work in subprime collections for a major mortgage lender, and i can tell you that if mortgagers don’t know there are workout options available, it’s not from lack of trying on the lenders part.

  11. TVWRITER1 says:

    Any advice for someone who contacted their lender and were told to go f**k off? My best friend just got this response (not in so many words) from his lender who said make your payments or bye bye. And this is in So. Cal. where housing prices have dropped sharply.

    Any advice would be greatly appreciated.

  12. rhombopteryx says:

    The title of this post should have “help” in quotes.

    The lenders aren’t doing @#$%@#$%N in these cases – only 3% of loans facing 2007 rate resets got any kind of modifications according to Moody’s ratings serv… -and that’s an improvement from the previous 1%. The bank is about as likely to LOOSE all records of your mortgage as it is to work it out with you. The “workouts referenced in the article are “repayment plans” consisting of little more that “pay up all past-due amounts, and some additional fees, and we’ll call it good until you are late next time.” That’s not avoiding foreclosure.

  13. hyperboles says:

    Speaking as someone who previously was a collector for mortgages (way before the boom and subsequent bubble burst) and as a borrower who attempted to contact their lender for help, I can say that these “routinely provide[d] alternatives” are crap. We’re not behind, but had concerns and tried to research what options are available to us, so that we could pro actively handle mortgage on our home. Essentially, we were laughed at, and told that there was nothing we could do until we proved that we were seriously in trouble by falling behind and ruining our credit. The “services” they did describe as available to us, should we fall behind were laughable, in that they cost so much in fees and extra interest that they do nothing but compound the issue.