A press release from Pinnacle Financial today uses plenty of hyperbole to tout the company's borrower education program, which is being packaged as a "tool" to help subprime borrowers avoid foreclosure. The headline of the press release: "National Mortgage Lender Responds to Distress Call." In the press release, the company touts its brand-new SOS program (that would stand for "Solutions Out of Subprime" - you just knew the marketers were working hard on that one), which consists of the following items:
  • A free consumer education booklet
  • A toll-free help line: 888-2-SOS-HELP (888-276-7435).
  • Free seminars about the options to avoid foreclosure.
I might be a cynic, but how is this news? Shouldn't lenders be committed to educating their borrowers BEFORE the loan process, during the loan process, and then retain that same commitment after the loan has closed? Perhaps Pinnacle should feel ashamed for NOT having this sort of program in place all along -- after all, Wells Fargo's been doing it for years. I realize there is a much-touted Freddie Mac study showing that the majority of delinquent borrowers don't contact their lender and don't understand what options they have when they get into trouble -- but Freddie, Fannie, OFHEO and many more financial institutions have been trying this same trick for years: here's booklet, here's a phone number, here's some seminars, and here's a press release about how great we are. (Go team!) Yet everyone still wonders why consumers don't seem to take action and find themselves in foreclosure. Providing passive educational materials to consumers and asking them to take the required action needed to access it isn't a commitment to serving the customer -- it is (or should be) the minimum bar for entry into the lending market. The real solution is to invest in actively reaching out to borrowers where they live, knocking on their doors and trying to speak with them about how they can avoid problems -- or, if they're already in difficulty, give them sound advice about how to best solve the problem. Companies like Titanium Solutions have been doing this for delinquent borrowers for years to great effect, but only when hired by lenders to contact troubled borrowers prior to foreclosure. Here's a thought: Maybe it's time to think about instituting neighborhood door-knocking campaigns as part of borrower education programs, before borrowers are in trouble? So instead of putting together a pamphlet and issuing a press release, lenders can become active participants in trying to prevent foreclosures before they take place. There are certainly practical hurdles to something like this -- cost being one -- but I have to think the potential benefits might even be able outweigh costs.