Freddie Mac, Roper Poll Survey Asks Why More Delinquent Borrowers Don't Call Lenders for Help
12 Dezember 2005 - 3:38PM
PR Newswire (US)
Nearly Two-Thirds of Delinquent Borrowers Say They Are Unaware of
Workout Options MCLEAN, Va., Dec. 12 /PRNewswire/ -- Freddie Mac
and Roper Public Affairs and Media, a division of GFK NOP -- a
leading international market research firm, today announced the
results of the nation's first ever survey to learn why more
late-paying borrowers risk losing their homes rather than reaching
out to their mortgage servicers. The borrowers never contact their
lender in over half of all foreclosure cases. The survey was
undertaken to help find out why. The Freddie Mac/Roper survey found
that 75 percent of the delinquent borrowers surveyed recall being
contacted by their servicers. But, a substantial percentage gave a
variety of reasons for neglecting to follow-up with their servicers
to discuss workout options. Mortgage servicers collect monthly
housing payments on behalf of Freddie Mac or other investors.
Specifically, 28 percent said there was no reason to talk to their
servicers or that their servicers could not help them, 17 percent
said they could take care of their payment problems without any
help, and 7 percent said they didn't call because they didn't have
enough money to make the payment. Other reasons for not calling
included embarrassment (6 percent), fear (5 percent), or not
knowing whom to call (5 percent). The lack of borrower follow-up
may help explain why more than six in ten (61 percent) of
late-paying borrowers said they were unaware of a variety of
workout options that could help them overcome short-term financial
difficulties. At the same time, 92 percent said they would have
talked to their servicers had they known these options were
available to them. The Freddie Mac/Roper survey found no
significant statistical difference in the responses given by white,
black, Latino, male or female borrowers indicating an almost
universal need for more borrower education about workout options
and foreclosure avoidance. Freddie Mac requires mortgage servicers
to explore several workout options with late-paying borrowers.
These options include forbearance, which temporarily delays or
reduces payments, and loan modifications, which can restructure the
payment terms for a fixed period. Many servicers typically describe
these options in their collection letters. However, it is up to
borrowers to follow-up with their servicers to learn more about
these options. "The results of the Freddie Mac/Roper survey are a
wake-up call to delinquent borrowers everywhere," said Ingrid
Beckles, Freddie Mac's Vice President of Default Asset Management.
"Its message is clear: when you get a phone call or letter from
your servicer, don't ignore it, act on it. Pick up the phone, call
your servicer and talk to them about the possibility of forbearance
or some other repayment alternative because it just may be your
best chance to avoid foreclosure." "Part of the problem is that the
data shows that there's a knowledge gap: People's interest in the
options available to them is quite high, but their awareness of
these options is quite low," said Elizabeth Armet, Vice President,
Senior Account Executive at Roper Public Affairs. While the
likelihood of a successful foreclosure avoidance depends upon each
individual borrower's financial situation, a 2004 Freddie Mac study
concluded that repayment plans could lower the probability of home
loss by 80 percent among all borrowers and by 68 percent among
low-to-moderate income borrowers. Working together, Freddie Mac and
its servicers have helped more than 100,000 troubled borrowers
avoid foreclosure and stay in their homes over the past two years.
(Borrowers can find a comprehensive description of workout options
at freddiemac.com) "These findings are consistent with what Wells
Fargo Home Mortgage has done and the great success we have had
during the past several years with our early intervention process,"
said Patrick Carey, senior vice president, WFHM Default and
Retention Operations. "We try to educate customers to contact us
early in times of financial crisis, and hope that they will learn
from studies like these that their lender can be their best
resource when financial strain threatens their homes," Carey said.
"The Freddie Mac/Roper survey underscores why we work so hard to
encourage borrowers experiencing financial difficulty to
proactively contact their lender and explore the options that could
help them avoid foreclosure," added Deb Oakley, Senior Vice
President at National City Mortgage. "At National City Mortgage, we
also work with credit counseling agencies to further help borrowers
learn how to take charge of their situation." Other notable
findings from the Freddie Mac/Roper survey: * Eighty percent of
delinquent borrower households included at least one employed
individual and only five percent said someone in their household
was unemployed. Seven percent of the respondents said they were
retired. * Among homeowners in good standing, 62 percent were
employed, 32 percent were retired, and only two percent were
unemployed. * Delinquent borrowers earned slightly less than
borrowers in good standing. The median annual income among
delinquent borrowers was $52,400 compared to $56,700 a year for
homeowners in good standing. * Forty seven percent of the
defaulters were first-time homeowners but 62 percent of the
homeowners in good standing had owned a home in the past. Freddie
Mac is a stockholder-owned corporation established by Congress in
support of homeownership and rental housing. Freddie Mac purchases
single- family and multifamily residential mortgages and
mortgage-related securities, which it finances primarily by issuing
mortgage passthrough securities and debt instruments in the capital
markets. Over the years, Freddie Mac has made home possible for one
in six homebuyers in America and more than two million renters
across America. For more information, visit:
http://www.freddiemac.com/. Methodology The findings presented are
the results of a telephone study conducted August 5th-18th, 2005 by
Roper Public Affairs and Media -- a part of GFK NOP - - among 2031
U.S. homeowners ages 18 and older. Respondents were considered to
be in default if they were more than one month late on their
mortgage payment. The margin of error for the total sample is +/- 3
percentage points at the 95% confidence level. The margin of error
for subgroups is higher. DATASOURCE: Freddie Mac CONTACT: Brad
German of Freddie Mac, +1-703-903-2437 Web site:
http://www.freddiemac.com/
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