What's Old is New Again: HOPE NOW Touts Loss Mit Guidelines
If anything, HOPE NOW -- the industry coalition of lenders, servicers, investors and counselors -- faces the sort of challenges that tend to come whenever a large group of people with conflicting interests get together and work on finding some sort of non-binding, unforced middle ground. In particular: arriving at a groundbreaking accord is pretty much not an option from the outset, and pushing individual members to make real changes becomes difficult. On Tuesday, the group released a set of mortgage servicing guidelines that it touted to the press as the first set of uniform, even if unbinding, procedures for loss mitigation; the guidelines included what the group claimed were "the lending industry's first-ever published guidance for dealing with second mortgages and short sales." "These new guidelines will greatly expedite the process of preventing foreclosures," said Faith Schwartz, executive director of HOPE NOW. "The industry is committed to helping distressed borrowers stay in their homes whenever possible and these guidelines will help in that effort." All hyperbole aside, HOPE NOW faces a tough challenge: convince an increasingly untrusting public that, in the face of historic and yet-growing foreclosure activity, those invested in the mortgage banking value chain are doing all they can to help troubled borrowers keep their homes. Truth be told, the HOPE NOW servicing guidelines don't exactly chart new territory in loss mitigation at all, sources that spoke with Housing Wire said. A review of the formal guidelines by HW show that, in fact, the outlined procedures tend to merely provide a taxonomy of the loss mitigation process already in place at most sizeable servicing options -- for example, outlining when to use a forebearance or repayment plan, as is done in the guideline document, isn't exactly the stuff of servicing legend. Wells Fargo & Co. (WFC) executives even essentially admitted as much in a separate statement on Tuesday, that ran with the headline "New HOPE NOW Mortgage Servicer Guidelines Mirror Wells Fargo Long-Standing Real Estate Lending and Servicing Practices." In other words: we're already doing this, and have been for some time. Which means that the HOPE NOW pronouncement is likely more a chance for the industry to remind legislators and the public at large that loss mitigation departments at key servicers are already doing all they can to help those borrowers that want to and can stay in their homes. "It’s critical to remember that nobody benefits when a homeowner faces foreclosure," said Jonathan L. Kempner, president and CEO of the Mortgage Bankers Association. While the group touted its guidelines on second lien subordination as ground-breaking -- and received some breathless press coverage from non-trade financial press in this area, as a result -- more than a few industry participants told HW on Wednesday morning that the guidelines don't say anything that market participants didn't already know. "Essentially, [HOPE NOW is] saying that second lien holders should resubordinate if it fits within the terms of the pooling and servicing agreement, and whenever the loan modification doesn't hurt the equity position," said one source, a bank servicing manager that asked not to be identified. "I'm not exactly sure what's new there." That's not to say, however, that HOPE NOW's efforts to crystallize a basic set of servicing guidelines that everyone can agree upon is for naught. If anything, the industry needs to be able to explain the range of its loss mitigation efforts clearly and succinctly -- and the servicer guidelines do just that, even if they're being touted as more than they might really be. Treasury Under Secretary for Domestic Finance Robert K. Steel alluded to that very premise in remarks Tuesday on the HOPE NOW guidelines. "There is no one silver bullet to address every housing challenge, but if we continue pursuing a series of measures and initiatives, we can have a maximum impact," he said. Which means that the truth behind the HOPE NOW guidelines is less blaring than the headlines used to sell them -- but it should also be clear at this point that the "maximum impact" that Steel refers to is clearly as much about the battle for the public's minds and hearts, as it is about the very real battle for people's homes. For more information, visit http://www.hopenow.com. Disclosure: The author held no positions in WFC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.