Counselors Reaching More Struggling Homeowners than Ever Before But Still Battling Slow Loan Modifications

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

For obvious reasons, there has been an influx of homeowners seeking foreclosure help over the last year from NHS of Baltimore and similar agencies. Our housing counselors are seeing 30- 40 new people a month, on top of the cases they continue to follow up and work on. According to NeighborWorks America’s report to Congress on the National Foreclosure Mitigation program, counseling agencies are reaching more homeowners than ever before, in an attempt to help them keep their home. However, the desperately needed loan modifications are not coming in nearly as fast as hoped.

The introduction of the Making Home Affordable loan modification program is supposed to help ease the worries of servicers and encourage them to offer more modifications, based on a three month trial to see if the homeowner can handle it. Although the program is making headway in this arena, it still has a huge gap to fill. According to CNNMoney.com, only 9% of eligible, delinquent borrowers have been put into trial modifications, and according to NHS of Baltimore's counselors, servicers can still take more than a month to grant a loan modification.

CNNMoney offered 5 simple and often technical reasons why modifications tend to take so long.
1. Faxing of documents: important information gets lost or cut off, delaying the process for the homeowner. “We have to really be on top of following up with the servicers because if paperwork gets lost in the process or was not received, they often do not tell us,” says Rena Somar, Homeownership advisor, NHS of Baltimore.
2. Multiple forms need to be filled out: homeowners must complete several forms for the servicer, as well as the underwriter.
3. Outdated documentation: often times, homeowners’ bank statements and pay stubs become out of date while their application is being processed, requiring them to hunt down and submit new documentation.
4. Poorly trained personnel: servicers are hiring so many new personnel to handle the influx of applicants and they often do not have time to properly train them.
5. Unclear modification offers: some homeowners who never applied for a modification to begin with are receiving offers from the servicers, but the terms and new monthly payment are unclear so people disregard it.