Announcement of New Effort to Help Struggling Home Owners

Ken Wade, CEO, NeighborWorks America
October 10, 2007

Good morning.  I am Ken Wade, CEO of NeighborWorks America. NeighborWorks America is a Congressionally chartered nonprofit supporting over 235 local independent organizations across the nation that are dedicated to creating opportunities for people to live in affordable homes, improve their lives and strengthen their communities.

NeighborWorks has a long history of helping families achieve sustainable homeownership. To date we’ve assisted nearly 150,000 families in making the choice to purchase homes, to choose responsible mortgage products and to adopt the budgeting and financial practices that will enable them to stay in their homes.

Unfortunately, many other families did not have the benefit of upfront education and counseling — assistance in determining whether homeownership is the right decision and what price house and what mortgage product works best for that family.  Many of those families got into situations that were not sustainable — whether due to budget, house price, mortgage product or other factors.

The rise in foreclosures and families struggling to pay their mortgages is well documented – as Secretary Paulson has described.

In addition to creating challenges for families, increasing foreclosure also can have a devastating impact on communities — resulting in an increase in abandoned and vacant properties, a decline in property values, an increase in crime and reduced investments in the community. In Chicago, for example, research documented that for every foreclosure in the immediate neighborhood, a house value falls at least $2,000. So in a modest-income neighborhood, a few foreclosures can have a devastating impact on the home equity and property values of the remaining homeowners.

NeighborWorks America has been active in foreclosure prevention over the last 3 years through our Center for Foreclosure Solutions.  We have built alliances, launched an outreach effort, trained hundreds of counselors specifically on foreclosure and supported many local coalitions and communities in the development of their strategies to provide alternatives to foreclosure.

We are excited to be here today to move forward our joint efforts on foreclosure prevention.   NeighborWorks America, in all its programmatic activities, seeks to mobilize private, public, and nonprofit resources to strengthen communities across the country — we often refer to is as the three-legged stool.  Each leg is essential — the public sector cannot do it alone; the private sector cannot do it alone and the nonprofit sector cannot do it alone — but together we can achieve remarkable results.

Today, we are taking a next step in enhancing this private-public-nonprofit alliance to build on the strong efforts many of us are already making in fighting foreclosure.  We are pleased that the mortgage market participants who are part of the HOPE NOW Alliance have committed to adopting some of the best practices that can make a real difference in helping nonprofit counselors assist families in avoiding foreclosure, such as dedicated teams of loss mitigation professionals to work directly with counselors. 

The HOPE NOW Alliance has identified the need for us to all work together to develop a sustainable funding model for quality phone and face-to-face counseling.  Many details have to be worked out, but we are excited by the commitment of everyone here today to address this critical challenge. With HOPE NOW, we have a tremendous opportunity to bring together the resources of all three sectors — public, nonprofit and private — to address this national challenge.

A critical component of the private participation in the HOPE NOW Alliance is the commitment of the American Securitization Forum to work with servicers and counselors to break down some of the barriers that have existed to helping families avoid foreclosure. We are also pleased that the American Securitization Forum is working to allow counseling expenses to be reimbursed under certain circumstances — a critical step forward to addressing the ever present resource challenges.

As counselors, we know that we can continue to improve our service to our customers and our efficient use of resources. NeighborWorks is committed to joining with other counselors to develop standardized data elements and metrics so that we can be even more effective in our alliance with homeowners and with servicers.

We will be also working on identifying and implementing the best business processes to help us serve many more homeowners and avert as many foreclosures as possible.

Finally, we will keep an active dialogue with servicers so that we both continue to improve our business processes and enhance each others’ efforts.

Averting foreclosures and saving our communities will take all of us working together. The HOPE NOW Alliance is critical in bringing servicers, investors, counselors and the public sector together to achieve our joint goal of sustainable homeownership.

Thank you. It is now my pleasure to introduce Michael J. Heid, co-president of Wells Fargo Home Mortgage and vice chair of the Housing Policy Council.