Housing counselors pioneer new ways of reaching distressed homeowners
The Obama Administration’s Making Home Affordable Program has been widely commended as a thoughtful tool for sustainable communities by ensuring homeowners hold a loan they can afford. While there have been some wrinkles in the detail of the program, the largest concern has been the challenges associated with ensuring those who would benefit and are eligible make use of the program.
In July testimony to the U.S. Senate Committee on Banking, Housing and Urban Affairs, William Apgar, the Senior Advisor to U.S. Department of Housing and Urban Development Secretary Shaun Donovan, noted the value nonprofits can play getting the word out and in helping to expedite the processing and approval of modification applications.
Non-profits have been playing that role in the Chicagoland area, with hundreds of clients reaching out to them for assistance to complete the application process. Some groups are moving beyond traditional methods for reaching clients, such as one-on-one counseling meetings, by holding “mega-events” and monthly walk-in days where large numbers of homeowners are assisted with completing and submitting an application for loan modifications in one day.
Homeowners are advised in advance of what paperwork to bring, analysis and assistance with application completion is done on the spot, and only those applications deemed complete and accurate are submitted. Neighborhood Housing Services (NHS) of Chicago and Spanish Coalition for Housing held several of these days in 2009.
NHS of Chicago has hosted “mega-events” in the City and suburbs serving hundreds of homeowners at one event and including key private and public partners like JP Morgan Chase, the City of Chicago, Illinois Housing Development Authority and the Chicago Community Trust. Through three events in 2009, NHS of Chicago processed and submitted approximately 885 Making Home Affordable applications. This compares to the average of 321 clients NHS’ office based staff provide counseling to each month. Many applications from these events are still pending; however, NHS has been given the green light that 85 of their applicants will receive trial modifications.
Spanish Coalition for Housing has supported these “mega-events” with NHS of Chicago and has processed hundreds of applications via their own local efforts by rotating a monthly walk-in day at one of their three offices every month. As a result of these efforts, 980 homeowners submitted applications for a MHA loan modification. Many applications are still being processed, but 384 loan modifications have been confirmed, 180 of these for suburban homeowners.
A recent study showed that 82% of the individuals attending these NHS of Chicago events reported they had contacted their lender previously, 48% indicated they had contacted their lender four times and 56% reported they had attempted to apply for a loan modification on their own prior to coming to the borrower outreach event. Despite innovative efforts to promote Making Home Affordable on the part of many in the industry, the study suggests large numbers of homeowners having a difficult time working through the process on their own.
Building off pre-existing relationships, trusted third parties, such as HUD-certified non-profit counseling agencies, are able to provide valuable follow-up services by interfacing with servicers directly to troubleshoot issues or concerns with submitted applications and to track and monitor processing times on behalf of the borrower.
As a part of the Regional HOPI effort, Housing Action Illinois is working to bring less resourced and smaller HUD-certified agencies together with larger more established groups like Spanish Coalition for Housing and NHS of Chicago to develop mid to long-term plans to expand these borrower outreach activities in underserved communities, such as the south suburbs.