So now we’ve got Hope Now.
It’s the Bush Administration’s answer for distressed homeowners.
With over 2 million mortgages due to be reset soon, these borrowers, many of whom are sub-prime, could use all the help they can get.
Hope Now is mainly a counseling service for people who are about to go into foreclosure. It is designed to inform them of the dangers they are facing.
Will Hope Now provide enough help?
Here are some of the problems as we see them.
1. Statistics show only about 50 percent of distressed homeowners who go into foreclosure actually contact their lenders to try to work something out.
The first stage for solving any such problem is communication.
Since these borrowers are either too intimidated to go to their banks for help, or they don’t understand what to do, they can easily lose their homes to foreclosure.
No government program can help those distressed homeowners who don’t ask for help.
2. There aren’t enough qualified counselors around to take the calls that do come in.
Now there can be as many as 1,500 to 3,000 incoming calls per day, depending upon media coverage.
Having skilled people working the phones who understand foreclosure-prevention and can aid distressed homeowners is proving to be very difficult. Salaries paid to such counselors are too low to attract business professionals who are probably best qualified to help.
3. New Hope is really only a band aid.
It can not stop the foreclosure process. All it can do is warn the distressed homeowners. This modern financial equivalent of Paul Revere’s ride could save some from the brink, but too many of them will still fall into foreclosure anyway.
The real problem has not been addressed.
That was the misunderstanding of the mortgage process and how adjustable-rate mortgages work.
The Bush Administration’s helping hand is really too little, too late. Distressed homeowners really needed the counseling before they signed on the dotted line.