Alarms Sound on Dangerous Loans

By Dina ElBoghdady
Washington Post Staff Writer
Saturday, June 30, 2007

There's a marketing blitz underway aimed at the homeowner in denial -- the one missing mortgage payments, dodging calls from the lender and hoping for the best.

This month, several groups have launched initiatives to educate the public about mortgages. The campaigns range from the traditional to the quirky. Most are heavily funded by the mortgage industry. All focus on stemming a recent surge in foreclosures that threatens to destabilize entire communities, if not the U.S. economy.

"People are alarmed by what they're seeing in the paper, on the street and in their neighborhoods," said Colleen Hernandez, president of the Homeownership Preservation Foundation, which counsels people on foreclosure prevention. "There are a number of nonprofits and other groups that see a need in the community that's compatible with their mission, and they feel a need to respond."

Among them is the D.C. nonprofit organization NeighborWorks America, which teamed up with the Ad Council to produce public service announcements that will be distributed to 30,000 media outlets nationwide. The three-year campaign, announced this week, encourages financially strapped borrowers to contact their lenders or federally approved housing counselors at the first sign of trouble. The slogan for the $5 million campaign: "Nothing is worse than doing nothing."

The advertisements feature the Homeownership Preservation Foundation hotline (888-995-HOPE). The hotline operates round-the-clock, seven days a week, manned by about 100 counselors in various parts of the country. Callers are not charged for the counseling sessions, which would usually cost about $100. The foundation picks up the tab using grants from lenders and from District-based Fannie Mae, one of the nation's largest investors in mortgages.

Meanwhile, Fannie Mae's largest rival, Freddie Mac of McLean, has paid for production of a Spanish-language soap opera that encourages financial literacy. The 13-episode telenovela, called "Nuestro Barrio" ("Our Neighborhood"), was created by the nonprofit Community Reinvestment Association of North Carolina. The series started running earlier this month in about a dozen markets on a Spanish-language network called V-me. Nationally, it airs on the Dish Network.

"The soap opera weaves homeownership and financial literacy into the traditional plot line of romance, jealousy and greed," said Patti Boerger, a Freddie Mac spokeswoman. For instance, one character manages to work out a payment plan with his lender after he gets a foreclosure notice. "It's what's called edutainment," Boerger said.

Some mortgage lenders are sponsoring broadcasts of "Nuestro Barrio" in several cities. Bank of America, Bank of Texas Mortgage Group, Chase Home Finance, Harris Bank, Bank of Albuquerque and Countrywide Home Loans will use DVDs of the series for community outreach.

Countrywide and the National Association of Realtors also contributed money to print a 24-page booklet in English and Spanish with tales of Latinos buying homes and avoiding foreclosure.

Last week, former housing secretary Henry G. Cisneros and U.S. Rep. Joe Baca (D-Calif.) joined the Congressional Hispanic Caucus Institute at the Capitol to unveil the booklet, which will be distributed nationwide by housing and advocacy groups such as the National Council of La Raza.

For lenders, supporting such initiatives makes financial sense.

Servicing a healthy loan costs lenders about $50 a year, while managing a delinquent or a foreclosed loan costs about $1,000 or $2,000, respectively, according to an analysis by Banc of America Securities.

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