The Chasm Between Words and Deeds reports provide snapshots of whether mortgage loan servicing companies are living up to their public commitments to help borrowers avoid foreclosure. These reports reflect the experiences of nonprofit home loan counseling agencies and legal service offices in California that are on the front lines of the foreclosure crisis, working hard to keep families in their homes. The previous reports focused on counselors' experiences in the months of August and December of 2007, and May of 2008. The first three surveys found that loan servicers were not modifying loans to any significant degree, were not conducting early outreach to borrowers facing rising mortgage payments, and that their most likely response to borrowers in distress was foreclosure. This fourth report, The Widening Chasm Between Words and Deeds, focuses on loan counselors' experiences in September 2008, a time when government officials, industry associations, and individual companies were continuing to represent publicly that great strides were being made to help borrowers in distress. Sadly, after much public discourse surrounding the need for a $700 billion federal financial bailout and its underlying cause -- the foreclosure crisis -- this new survey demonstrates that while the situation for borrowers has improved somewhat, loan servicers continue to fail to meaningfully address the crisis, as follows:
- Servicers are not modifying home loans at scale;
- Servicers are not conducting sufficient outreach to borrowers facing rising payments;
- Servicers continue to turn to foreclosure as their most common response to borrowers in distress; and
- Federal, state and industry initiatives that rely on voluntary industry compliance are not working.
The California Reinvestment Coalition hopes these reports will inform the public dialogue around foreclosure prevention and loss mitigation, and will promote sound policies and business practices that will help preserve homeownership and wealth in California communities.