HOPE NOW, the private sector alliance of mortgage servicers, non-profit counselors, and investors, on Wednesday announced a new campaign targeting homeowners “at serious risk” of foreclosure. The campaign — called “Reach Out” — will pair at-risk borrowers with U.S. Department of Housing and Urban Development-certified counseling agencies to “determine options that will best serve their needs.” “Reach Out,” a targeted state-by-state initiative, will begin with a preliminary phase aimed specifically at Wisconsin homeowners who are 90 or more days delinquent. HOPE NOW, partnering with the Wisconsin Housing and Economic Development Authority and 11 HOPE NOW member servicers, is mailing outreach materials to homeowners urging them to take advantage of the local, “HUD-certified, free, legitimate” counseling firms. So far, the campaign has contacted at least 900 borrowers via these campaign mailers, the alliance said in a press statement. “HOPE NOW wants to make sure that homeowners are aware of the legitimate housing counseling services available to them in their community,” executive director Faith Schwartz said. “Qualified, professional assistance is available at no cost to the homeowner and we want to be sure everyone who needs it actually gets it.” HOPE NOW said it plans to expand “Reach Out” to other states with the highest percentages of 90-plus-day-delinquencies, including New Jersey, Texas, South Carolina and Florida. But will it stick? Past studies have shown that outreach programs on the part of servicers and lenders almost always result in some portion of borrowers that never return inquiries, cannot be reached at all, or even refuse help. As for those mortgages that are actually modified, studies show an alarming trend of near 50-percent-recidivism — or re-default rate. The Office of the Comptroller of the Currency and the Office of Thrift Supervision announced in their most recent joint quarterly mortgage performance report that 41 percent of loans modified in the second quarter had fallen at least 60 days behind payments after eight months. The specific reasons for re-default were not clear, the report said, but a separate trend in the data indicates the degree to which a mortgage is modified — or how much monthly payments are reduced — may have some bearing on affordability and, consequentially, a borrower’s ability to remain out of default. “Overall for 2008, about 42 percent of modified loans resulted in reduced payments, 27 percent in unchanged payments, and 32 percent in increased payments,” the agencies reported. “The proportion that reduced payments increased significantly in the fourth quarter, to more than 50 percent of all modifications.” Re-default rates among modifications that actually lowered monthly payments “were consistently lower,” according to the report. About 23 percent of modifications that eased payments by more than 10 percent re-defaulted six months later, compared with the 51 percent of unchanged modifications that re-defaulted after six months. Some 46 percent of modifications that led to an increased payment had re-defaulted six months later. Write to Diana Golobay at [email protected].

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