You're Invited . . . To Pay Your Mortgage

By Renae Merle
Washington Post Staff Writer
Saturday, February 16, 2008

Mortgage lenders hunting for delinquent homeowners who have dodged their phone calls and letters are employing aggressive new methods to track them down, potentially making every knock on the door or fancy envelope seem like part of the pursuit. Even wedding invitations are suspect.

The idea, they say, isn't to twist arms. Instead, it's to avoid foreclosures, which have cost the mortgage industry billions of dollars in the past year.

Ocwen Financial is negotiating a deal with HomeFree-USA, a nonprofit group, to go door to door in the Washington area to strike deals with elusive borrowers. Fannie Mae is offering foreclosure lawyers up to $600 to help find solutions for these homeowners. Wells Fargo is disguising its letters in different colored envelopes, including some resembling wedding invitations.

Although some lenders initially resisted paying for assistance, the industry has begun backing community groups that help them find these borrowers. The math is simple: The typical foreclosure costs more than $50,000. It is usually cheaper and less time-consuming to lower the borrower's interest rate, put them on a repayment plan or sell the home at a loss. To stem the foreclosures, the mortgage industry says, lenders need to reach people they call "no-contact borrowers," those who have eluded or rebuffed them.

There are lots of them. From September 2005 to August 2007, 53 percent of the loans backed by Freddie Mac that went into foreclosure involved borrowers who could not be reached.

Many of these homeowners do not expect, or trust, offers of help from their lenders, say community groups that have become active in this work. Some borrowers tried reaching out before an interest rate increase pushed the monthly payments out of their reach, only to be told to call back after they fell behind.

"They feel that the lender has put them into this bind, so they are not returning phone calls," said Marcia J. Griffin, president of HomeFree-USA, a local group that works with home buyers and homeowners.

Jennifer Lewin, 39, a receptionist, stretched to pay $310,000 for a three-bedroom house in Prince George's County in 2005. She was unprepared last year when her monthly payments doubled, to $2,100 a month. Lewin said she scraped the money together for two months and called her lender almost daily. She hoped to have the rate lowered, she said, but never seemed to reach the right person.

"It was just so much. I mean, I couldn't do it," said Lewin, who asked that The Post identify her by her maiden name.

Lewin fell behind on her payments. She couldn't catch up, she said, so she dodged the persistent calls and letters from the lender. "There was no way out," Lewin said. The house eventually went into foreclosure.

Many borrowers have been pursued before by aggressive debt collectors who encouraged them to use their retirement accounts, borrow from family members or raid their child's college fund to catch up on their bills, said Michael Shea, executive director of Acorn Housing, a counseling agency. "They badger you until [you] don't want to talk to the servicer again," he said. "By then, [you] don't even want to answer the phone."

Even though lenders said they were reaching out, it remains difficult to work out deals, said Mosi Harrington, executive director of Housing Initiative Partnership in Prince George's County. "We have cases that we have tried for two months to get paperwork to the right department," she said. "They put you on hold for half an hour, and the phone clicks off."

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