Hope Now Alliance

"Not to be confused with the "Give Hope Now" campaign of the American Red Cross Disaster Services."

The Hope Now Alliance is a cooperative effort between the US government, counselors, investors, and lenders to help homeowners who may not be able to pay their mortgages. Created in 2007cite web | title=HOPE NOW Alliance Created to Help Distressed Homeowners | url=http://www.fsround.org/media/pdfs/AllianceRelease.pdf | publisher=Hope Now Alliance | date=2007-10-10 | accessdate=2008-07-06] in response to the subprime mortgage crisis, the alliance claims to have helped over 1 million homeowners avoid foreclosure through January 2008. Critics of the alliance contend that the assistance provided does not go far enough,cite news | title=Hope Now's numbers don't add up to much help | url=http://money.cnn.com/2008/04/10/real_estate/Hope_Now_Feb_stats/?postversion=2008041016 | first=Les | last=Christie | publisher=CNNMoney.com | date=2008-04-10 | accessdate=2008-07-06] and that not enough homeowners are being helped.cite news | title=Housing relief efforts slow as pace of foreclosures rise | url=http://money.cnn.com/2008/04/28/real_estate/Hope_Now_workouts_slow/ | first=Les | last=Christie | publisher=CNNMoney.com | date=2008-04-28 | accessdate=2008-07-06]

Creation

On August 31, 2007 President George W. Bush asked Housing and Urban Development Secretary Alphonso Jackson and Treasury Secretary Henry Paulson to work with mortgage lenders, foreclosure counsellors, the Federal Housing Administration, Fannie Mae and Freddie Mac to launch a new "foreclosure avoidance initiative".cite web | title=President Bush Discusses Homeownership Financing | url=http://www.whitehouse.gov/news/releases/2007/08/20070831-5.html | publisher=Office of the Press Secretary | date=2007-08-31 | accessdate=2008-07-06] These discussions led to the creation of the Hope Now alliance, which was announced by Secretary Paulson on October 10, 2007.cite web | title=Statement by Secretary Henry M. Paulson, Jr. on Announcement of New Private Sector Alliance – HOPE NOW | url=http://www.ustreas.gov/press/releases/hp599.htm | publisher=U.S. Department of Treasury | date=2007-10-10 | accessdate=2008-07-06]

At its inception the Alliance was comprised of lenders representing 60% of all outstanding mortgages in the United States, counseling services, trade organizations and a group representing investors in mortgage backed securities. Additional organizations joined over the following months.cite web | title=HOPE NOW Announces New Membership | url=http://www.fsround.org/hope_now/pdfs/NewMembersFaith.pdf | publisher=Hope Now Alliance | date=2007-10-18 | accessdate=2008-07-06] cite web | title=HOPE NOW Lists All Alliance Members' Service Numbers | url=http://www.fsround.org/hope_now/pdfs/7-25JanuaryRelease.pdf | publisher=Hope Now Alliance | date=2008-01-29 | accessdate=2008-07-06]

trategy

The Alliance promotes a national 24 hour toll-free telephone number (known as the Homeowner's HOPE Hotline), through which the Homeownership Preservation Foundation (an Alliance member) offers free counseling to homeowners concerned about foreclosurecite web | title=Hope Now - Hotline Services | url=http://www.hopenow.com/hotline_services/hotline_services.html | publisher=Hope Now Alliance | accessdate=2008-07-06] It also encourages homeowners in difficulty to contact their lender directly, and provides on its website a list of contact for member organizationscite web | title=Hope Now - Mortgage Lender Directory | url=http://www.hopenow.com/loan_services/servicer_directory.html | publisher=Hope Now Alliance | accessdate=2008-07-06]

Beginning in October 2007 mortgage lenders & servicing companies within the Alliance reached out to homeowners with past due accounts via mail, advising them of the Alliance and the assistance available. Over 200,000 letters were sent in the first batch, with additional mailings occurring in November, January & February 2008. In total one million letters have been sent.cite web | title=HOPE NOW: Fourth Round of Letters to At-Risk Homeowners Being Sent | url=http://www.fsround.org/hope_now/pdfs/14-20FebruaryRelease.pdf | publisher=Hope Now Alliance | date=2008-02-20 | accessdate=2008-07-06]

Relief options

Hope Now describes the assistance that it provides to homeowners as loan workouts. These workouts either result in establishing a repayment plan with the homeowner to bring them up to date, or a loan modification where the terms of the mortgage are modified in order to make it more affordable for the homeowner.

Results

Since first being mentioned in December 2007, the Homeowner's HOPE Hotline received more than 140,000 calls in 2007 (including over 45,000 in the first three days), and an average of 3,200 calls per day in January 2008cite web | title=888-995-HOPE Hotline Averaging More Than 3,000 Calls a Day | url=http://www.fsround.org/hope_now/pdfs/3-15JanuaryRelease.pdf | publisher=Hope Now Alliance | date=2008-01-16 | accessdate=2008-07-06] cite news | title=Industry group touts loan workouts | url=http://news.moneycentral.msn.com/ticker/article.aspx?Feed=AP&Date=20080303&ID=8272165&Symbol=WFC | publisher=The Associated Press | date=2008-03-03 | accessdate=2008-07-06]

Criticisms

The main criticisms leveled at the Alliance include claims that it has not been effective at addressing the increasing problem of foreclosures in the United States, with recent figures indicating that the rate of foreclosures rising faster than the increase in homeowners helped.cite news | title=Growth in foreclosure sales outpaces workouts | url=http://www.inman.com/news/2008/07/2/growth-in-foreclosure-sales-outpaces-workouts | publisher=Inman News | date=2008-07-02 | accessdate=2008-07-06] cite news | title=US foreclosure filings surge 48 percent in May | url=http://ap.google.com/article/ALeqM5iX9fLTOpmlsstkmiryfTbwDovc0QD919BNJ80 | author=Zibel, Alan | publisher=The Associated Press | date=2008-06-13 | accessdate=2008-07-06] It has also been noted that the majority of assistance provided by the Alliance has been to establish repayment plans, rather than actually modifying the terms of the mortgage.cite news | title=Workout programs come under fire | url=http://www.chicagotribune.com/classified/realestate/advice/chi-re-foreclose-rate-0622jun22,0,7677030.story | author=Zibel, Alan | publisher=The Associated Press | date=2008-06-22 | accessdate=2008-07-06] Concerns about the limitations of data collected by groups such as Hope Now led the Office of the Comptroller of the Currency to undertake its own investigation into foreclosures.

Alliance membership

A current list of Alliance members is available [http://www.hopenow.com/members/members.html here]

ee also

*Subprime mortgage crisis

References