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May 2016

Take 5

Patty Hasson, president and

executive director of Clarifi,

discusses housing issues facing

people seeking counseling

Page 2

Survey Says

The HLP survey of the nation’s top

nonprofit housing counseling

agencies shows surprising results

Page 3

Boulder Again

Mark Cole participates in

the Conference on Consumer

Financial Decision Making

Page 4

Ditech, HLP Join Forces to Reach Distressed Homeowners Eligible for Mortgage Principal Forgiveness

Ditech Financial and HLP have agreed to implement a first-of-its-kind consumer out-

reach effort to help distressed homeowners eligible for the Federal Housing Finance

Agency’s (FHFA) new Principal Reduction Modification Program.

Ditech’s proactive approach will include outreach and assistance through the HLP collab-

orative communication platform. HLP’s platform is designed to integrate HUD-approved

non-profit housing counselors seamlessly and securely with Ditech’s mortgage servicing

operations, enabling counselors to more easily help homeowners who may qualify for

the program.

Ditech will begin sending letters this summer to approximately 6,400 homeowners who

may be eligible for the program. HLP will work with nonprofit housing counseling agen-

cies to contact these homeowners to make certain they are aware of the program, answer

any questions and assist them in applying.

“We are committed to rolling out FHFA’s Principal Reduction Modification Program to

reach and provide personal assistance to eligible homeowners whose loans we service,

in an effort to help them avoid foreclosure and stay in their homes,” said David Schneider,

President of Ditech.

“Our objective is to increase the number of families and individuals taking advantage

of this program. HLP’s advocacy consortium, along with its broad connections with

the housing advocacy community, will allow Ditech to provide our customers access

to HUD-approved nonprofit housing counseling in an effort to prevent foreclosure. We

intend to do our part by forgiving loans to prevent foreclosures when that is the right

option for the eligible homeowner. HLP’s platform will be an integral part of our effort to

reach and assist those who are eligible for the loan forgiveness program.”

The FHFA estimates that approximately 33,000 distressed homeowners meet the pro-

gram’s criteria for this foreclosure relief alternative. Residential mortgage servicers must

solicit their borrowers for a Principal Reduction Modification no later than October 15,

2016. Fannie Mae and Freddie Mac will offer principal reduction to certain seriously

Are there any new trends in housing among the consumers you counsel?

We’ve seen a significant increase in delinquency rates

among older homeowners with reverse mortgages, espe-

cially in Philadelphia; the number has more than doubled

recently. These homeowners face foreclosure because

they haven’t paid their property taxes and insurance. Un-

fortunately, most received a reverse mortgage before

HUD’s financial assessment rule went into effect requiring

a homeowner to demonstrate their ability to pay taxes and

insurance. Most of these people are in low-income house-

holds without much equity left in the home. These are

difficult cases and take a lot of time to reach a solution.

How well are consumers managing their finances?

For those interested in buying a home, they are often laser-

focused on taking all of the necessary steps to reach their

goals, especially when it comes to improving their credit

scores. We’re also seeing a lot of improvement on how

people manage their debt and most have fewer credit card

balances. Unfortunately, most have not saved as much

money as they will need. So while they can still buy a home

with less than a 20 percent down payment, it will cost them

more than if they were better prepared.

What are the primary reasons people don’t qualify for homeownership?

Low credit scores continue to be a problem, as well as a

lack of savings. Even though most clients are employed

again, it often is not at the same salary as their previous

job. Student loan debt is another barrier impeding home

ownership.

How is technology helping your organization?

It’s helping us empower our clients. Last fall, we launched

an online portal—MYClarifi—where people can schedule

their own appointments. Once they become a client, their

financial action plan is on the portal, so clients and coun-

selors can track their progress on a secure site. More than

1,100 people registered on the portal in 2015 and we will

expand it in 2016.

Describe the benefits of HLP.guru and how it helps fulfill your mission.

HLP.Guru gives consumers the opportunity to see their

credit score and makes it easy to find ways to improve it.

It’s also a great way to determine their borrowing capac-

ity from a trusted source. People are always looking for

trusted sources online, so we are very excited about this

partnership with HLP.

HLP.Guru has the right pieces in place. A five-year study by

the Philadelphia Federal Reserve and Clarifi showed that

people who received pre-purchase counseling and educa-

tion increased their credit scores by 16 points. For many

people, such an increase could be the difference between

qualifying for a mortgage loan or not.

Patty Hasson is president and executive director of Clarifi,

a 50-year-old nonprofit counseling agency based in

Philadelphia that serves consumers in Pennsylvania, New

Jersey and Delaware. Clarifi recently partnered with HLP

for their housing counselors to serve as “gurus” that will

help people qualify for a homeownership through the

HLP.Guru app.

A new HLP survey of the nation’s nonprofit housing counseling agencies shows that 83 percent believe pre-purchase housing counseling will be the service that drives their growth during the next three years.

Providing financial literacy and capabilities to help people improve their financial condition was the second highest ranked service, at 72 percent. Reflecting the return to a more normal housing market, loan modifications were cited by only 41 percent of the agencies.

HLP conducted the survey in April among its 1,100 counseling agen-cies across the nation. HLP Executive Vice President Mark Cole says these regular surveys help HLP better serve housing counselors.

“With more people seeking to buy a home and fewer facing fore-closure, the landscape and funding for counselors are changing dramatically,” said Cole. “Counselor feedback helps us build better technology solutions and improve effectiveness with other stakeholders. HLP.Guru and our recent collaboration platform for Freddie Mac are two examples of how listening to counselors has led to new tools for the sector.”

In addition to services that will propel agencies forward in the future, the survey focused on two other categories: the benefits of using HLP and areas for improvement.

In terms of key benefits, the counseling agencies pointed to HLP’s ease of use and the ability to connect with mortgage servicers. Approximately 84 percent of respondents said they could easily see the status of their cases in HLP; 74 percent said HLP enables them to improve their communications with mortgage servicers.

Other key benefits included security and the ability to quickly move toward a resolution for their clients. Better security of a client’s personal information was cited by 59 percent, while 56 percent said turnaround time for their cases is faster.

“Tracking the process (of a homeowner’s loan) is very useful, as well as the ability to prove receipt of documents with a timeline,” said one respondent.

Approximately 26 percent of the counseling agencies also cited HLP as playing a role in producing better outcomes for their clients.

“We’re pleased that counselors also single out HLP’s direct role in helping more families keep their homes,” said Cole. “That success is central to our mission and drives us to continuously explore ways to improve our services.”

While there is broad adoption of and satisfaction with the HLP plat-form, HLP also asked counselors how it can continue to improve and their responses were overwhelmingly focused on two issues.

First, 88 percent wanted all mortgage servicers to participate in HLP. This lack of participation costs counselors extra time and expense, and risks frustrating borrowers who have turned to a counselor for help.

“There are many more second tier servicers now than in the past,” said one respondent. “In California, the Hardest Hit Fund program has more than 200 active servicers.” To remedy this situation, another respondent said, “All servicers should be using HLP.”

Second, while most participating servicers respond promptly, approximately two-thirds of the counseling agencies cited a lack of timely communication or follow-up by servicers on their cases as the second biggest opportunity for improvement.

“Some servicers do not reach out to counselors by phone to get a better understanding of what they need from the client,” said one counseling agency. This dramatically increases the odds that a financially fragile homeowner will slip deeper into delinquency and end up in foreclosure.

Pre-Purchase Counseling Key to Future Growth,Say Housing Counseling Agencies

Future Growth of Counseling Agenciespre-purchase counseling

financial literacy/capabilities

loan modifications

post-purchase education

72%

41%

38%

HLP Benefits

2016 SURVEY RESULTS

easy to see status

improves communications

better client data security

faster case turnarounds

improved client outcomes

Opportunities to Improvenot all servicers participate

lack of servicers follow-up

trouble intergrating with agency software

too complicated

83%

84%

74%

59%

56%

88%

67%

19%

7%

26%

mark.cole@hlp.org | 202.803.7933 | 100 International Drive | 23rd Floor | Baltimore, Maryland 21202

HLP at 2016

Consumer Financial Decision

Making Conference

For the seventh consecutive year, Mark Cole

was a speaker at the annual Boulder Summer

Conference on Consumer Financial Decision

Making, which was held from May 22-24 at

the University of Colorado.

The conference provides a unique, multi-disci-

plinary setting for the presentation of research

and exchange of ideas. It features thought

leaders representing a broad range of fields

and industries—academia, financial services,

government, nonprofits, think tanks and reg-

ulators—that work on the issues related to

consumer financial decision making. Cole has

made presentations on personal finance and

consumer behavior at the conferences. The

conference is co-sponsored by the Center for

Research on Consumer Financial Decision

Making at the University of Colorado and by

the Leeds School of Business.

delinquent, underwater borrowers whose homes’ values are less than the

amount of the mortgages owed, in order to help them avoid foreclosure and

stay in their homes.

The new program is a one-time offering for borrowers whose loans are owned

or guaranteed by Fannie Mae or Freddie Mac and who meet specific eligibility

criteria. The modification will be available to owner-occupant borrowers who

are 90 days or more delinquent as of March 1, 2016, whose mortgages have

an outstanding unpaid principal balance of $250,000 or less, and whose

mark-to-market loan-to-value (MTMLTV) ratios exceed 115 percent (after cap-

italizing amounts in arrears).

“In the past it was operationally prohibitive for residential mortgage servicers

to effectively and securely utilize the advocacy world in loss mitigation,” said

Cam Melchiorre, CEO of HLP. “HLP’s primary feature has conclusively over-

come this process burden through its centralized, neutral communication hub

and its open architecture. This framework enables secure collaboration and

rapid deployment of foreclosure relief programs among major stakeholders

in the residential mortgage finance industry and supports HLP’s mission as a

social enterprise to assist consumers to achieve and sustain homeownership.”

Ditech will also promote HLP’s national consumer-direct portal, known as

Homeowner Connect, as an approved channel for eligible consumers who

prefer to self-engage and submit the required information via the internet.

Homeowner Connect was developed and deployed in 2012 to comply with

the National Mortgage Settlement, which encouraged servicers to support a

national, independent web-portal for consumers who choose to use this type

of communication channel in seeking mortgage foreclosure relief.

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