A unique approach
Nonprofit Borrower Outreach
As part of its charitable mission, Polaris Counselors, Inc., a California nonprofit public benefit corporation (“Polaris”) has refined a compliant counseling outreach program to assist troubled borrowers to achieve meaningful success in resolving delinquent loans with their mortgage investors and servicers. In so doing, mortgage investors and servicers benefit from renewed and cooperative engagement with borrowers, many of whom have been hard to reach.
Polaris fulfills its mission by providing credit counseling and borrower outreach to distressed homeowners while acting as a mediator between borrowers and lenders. We specialize in borrower outreach, coaching, training and monitoring the individual borrower results. We focus on presenting realistic, viable solutions to delinquent borrowers with the aim of keeping them in their homes under workable loan modifications. Polaris coaches work in tandem with for-profit investors, asset fund managers and servicers.
Often, Polaris is the first responder on the scene of the delinquent borrower. Polaris will become the primary contact and because we are not debt servicers, nor do we seek payment, our ability to communicate with the reluctant borrower is enhanced. Instead, we offer education and advocacy to the borrower regarding their options putting Polaris in the role of mediator between a borrower seeking a modification and a lender willing to provide one.
Polaris will work with lenders, government agencies, financial advisors and other professionals in the field in an effort to approach the borrower’s situation as wholly as possible and find all possible alternatives.
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What Note Investors are Saying:
As non-profit credit and housing counselors, we can communicate with borrowers in ways that you as the lender and your servicer cannot. As certified credit counselors performing services for a nonprofit counseling group, Polaris and its counselors are exempt from licensing requirements under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the “SAFE Act” or “Act”), related state SAFE Acts and the Consumer Finance Protection Act as it relates to negotiating loan modifications, even where Polaris’ fees are paid for by a for-profit investor
Unlike loan servicers, our ability to communicate plainly with delinquent borrowers and their lenders cuts through the red tape of loss mitigation providing quicker, more efficient, and substantially more successful loss mitigation solutions for everyone. Unlike servicers, Polaris approaches the delinquent borrower as a friend and counselor and not as a debt collector. This gives us the ability to establish trust in the process and trust between the borrower and lender.
300 homeowners and happy investors will agree, the solution to the U.S. mortgage crisis must involve a whole-person approach to healing one family at a time. Polaris is socially responsible, financially effective and politically correct.
The New Era of Loss Mitigation
To put it bluntly, the housing market crash which began in 2007 turned everyone upside down - borrowers, lenders, investors, servicers - everyone. Lenders struggled with managing a surge in delinquencies in a declining market. Servicers struggled with a surge in active loss mitigation work, a decline in resources to address the problem, and new regulatory agency and stifling regulations enacted in response to the crisis. But at the center, homeowners faced the prospect of losing their homes under a system they had little control over and which they believed to be at best, extremely unfair; at worst, criminal. And no one has gone to jail for it.
In response, the Federal government proposed a number of loan modification programs designed to prevent foreclosure. Many lenders adopted similar proprietary loan modification programs to assist their troubled borrowers. All agreed that modifying loans and getting borrowers to re-perform was the best way to staunch the bleeding of housing crisis and was in everyone’s best interest.
However, eight years after the housing market crash and amid positive housing reports for 2015, millions of American homeowners are still in trouble and are in danger of losing their homes. According to RealtyTrac’s U.S. Home Equity & Underwater Report for the fourth quarter of 2014, over 7 million homeowners (13 percent) still have combined loan amounts exceeding their property’s worth by at least 25 percent. Nearly 4.5 million borrowers (8.3 percent) are delinquent or in foreclosure.
Last year, only 489,000 borrowers received loan modifications to keep them in their homes. This is a decrease of nearly 36% from 2013. With a surge of home equity lines of credit scheduled to reset in the coming year, even more delinquencies are likely.
For the non-performing note investor in a buy-and-modify investment strategy, there is often disconnect between the overly-regulated servicer that seeks to collect from the borrower, and the borrower who has lost hope and faith in the system. Too often, real and meaningful loan modification offers are ignored as a result of a servicer’s ineffective loss mitigation program and the borrower’s fear and mistrust. The solution at the institutional level, at least according to Hope Now (www.hopenow.com), an alliance between counselors, mortgage companies, investors, and other mortgage market participants, is mediation. HUD approved housing counselors and nonprofit consumer groups can be an important bridge to connect borrowers with their loan servicers and help them to understand one another.
But how can a borrower and servicer begin the dialogue if they are not even speaking to each other? Nothing puts more fear into the hearts of many homeowners than a notice in the mail from their mortgage servicer filled with language they don't understand. Upon receipt, most are paralyzed by fear not knowing which way to turn.
If that message of reconciliation is instead delivered by the nonprofit counselor directly, the borrower’s fear is mitigated and we can all move towards effective solutions that keep borrowers in their homes and the investor’s mortgage being paid.
By partnering with groups like ours, mortgage lenders and servicers can improve their outreach to struggling homeowners as well as prospective new homebuyers. We understand them and you, and can serve as an olive branch to mold long term relationships.