Treasury Secretary Henry Paulson announced a new initiative under which major mortgage servicers, mortgage counselors, government officials and non-profit groups will coordinate their efforts to help struggling borrowers restructure their mortgage payments and stay in their homes.
The initiative, called HOPE NOW, is aimed at coordinating and improving outreach to struggling borrowers, developing best practices for mortgage counselors across the country, and ensuring that groups able to help homeowners work out new loan arrangements with lenders have adequate resources to carry out this mission.
Paulson said the initiative is the result of President George W. Bush's August request for a new effort to help people avoid foreclosure at a time when interest rates on many adjustable rate mortgages have been reset at much higher levels, and delinquency rates have soared.
"A unified strategy and better integration will mean homeowners get better help with their mortgages, servicers get better responses when they reach out to people, and our communities will see fewer foreclosures," Paulson said. At the same time, Paulson warned that he is "not announcing we have solved this problem. What we're announcing is a necessary step toward a very important objective."
Paulson said 11 of the largest mortgage servicers, representing 60% of the mortgages in the US, have joined the initiative. However, he said more participants are needed in order to ensure a broader range of homeowners is covered.
"We need greater participation if we are going to get all those that need help as quickly as possible,' he said. 'Others have good reason to join in this alliance, because minimizing foreclosures benefits lenders and investors as well as homeowners."
Paulson said rising interest rates and stagnant or falling home prices are creating "real challenges" for US homeowners. He said that even before the initiative was announced, mortgage servicers were beginning to increase outreach to borrowers, and state and local governments were setting up programs to help borrowers.