Lenders’ reps go door to door trying to help delinquent borrowers

To open a dialogue with delinquent borrowers whose homes might be saved from foreclosure, some lenders are going to extraordinary lengths, including hiring companies such as National Creditors Connection Inc. of Orange County to knock on the doors of customers who are still hiding from them.

Although the name may sound like that of a collection agency, it’s not. Rather, the Lake Forest firm employs a variety of tools and resources to make field contacts with tardy borrowers in an effort to resolve their problems, one way or another.

Over the years, says Jay Loeb, NCCI’s vice president of loss mitigation, firms like his have tried all kinds of ways to get people to talk to their creditors, beyond the usual letters and phone calls.

They’ve sent prepaid $10 to $20 gas cards that can be activated only if the customer calls the lender’s toll-free number. Now the company’s 2,000 field reps are going door-to-door nationwide. And it is working, at least most of the time.

Some people won’t come to the door, Loeb says, but most “are happy to see us.”

So why haven’t they responded to lenders earlier?

“They’re afraid,” Loeb says.

Michelle Jones, a counselor at the Consumer Credit Counseling Service of Greater Atlanta, agrees. “It’s a scary and confusing period” for troubled borrowers, she says. “They’re just not thinking as clearly as normal. Some are embarrassed, some are very angry.”

In many cases they simply don’t know where to turn.

First come the letters and phone calls from their lenders, begging them to call for help.

Next they are bombarded with offers of assistance from dubious outfits that consumer activist Robert Strupp of Baltimore’s Community Law Center calls the “modsters,” claiming that they can persuade lenders to rework borrowers’ loans.

Then they hear warnings that these so-called loan-modification experts are nothing but scam artists.

Hiring firms such as NCCI is one way to reach troubled borrowers. But at a time when lenders are still unable to connect to nearly half their reclusive customers, practically anything goes.

Last October, SunTrust Banks tried mailing ornamental Halloween pumpkins to a group of borrowers who were more than 90 days behind in their payments. Attached to each pumpkin was a $200 gift card that could be activated only by calling the bank. When a borrower called, he would be advised of his workout options.

In another SunTrust campaign, the lender sent cellphones that could call only one number: its loan servicing department.

Those ideas met with some success, but the experts say the best results still come from knocking on doors.

“Door-to-door outreach is a critical component” of Philadelphia’s Residential Mortgage Foreclosure Diversion program, says Kerry Smith, an attorney in Community Legal Services of Philadelphia’s consumer unit. The program is a novel court-ordered “timeout” that places a temporary stay on foreclosure actions.

The program doesn’t guarantee that borrowers will save their homes, but it does “create some space” so they can at least collect their thoughts and reason more clearly, Smith says.

One interesting aspect of the Philadelphia plan is that servicers are required to schedule conciliation conferences with borrowers with a loan officer present who has the authority to modify a mortgage on the spot.

Unfortunately, even when a conference is scheduled, one-third of borrowers fail to appear, according to Smith. But of the nearly 4,400 who did show up, nearly one-third saved their homes.

Georgia’s CCCS also has compelling statistics, suggesting that consumer counseling may be the missing link in dealing with the foreclosure crisis.

In an early intervention program with Freddie Mac in 2008, half of the 92,500 delinquent borrowers who were sent letters agreed to counseling. And one-third of those were able to avoid foreclosure.

“Counseling works,” says CCCS’ Jones. It gives people in crisis a trusted resource to help them understand their situation and prepare for the next step, she says. “Typically, they come to us with a huge shopping bag of unopened mail and say, ‘Here are my bills.’ ”

Educated as a clinical psychologist, Jones says troubled borrowers “are much more receptive to us than their lenders. It’s pretty amazing, actually. They are willing to open up, even on the phone.”

lsichelman@aol.com

Distributed by United Feature Syndicate.