The Hope Now Alliance is a cooperative effort between the US government, counselors, investors, and lenders to help homeowners who may not be able to pay their mortgages. Created in 2007 in response to the

subprime mortgage crisis The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the Financial crisis of 2007–2008, 2007–2008 global financial crisis. It was triggered by a large decline ...

, the alliance claims to have helped over 1 million homeowners avoid foreclosure through January 2008. Critics of the alliance contend that the assistance provided does not go far enough, and that not enough homeowners are being helped.

Creation

On August 31, 2007

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George W. Bush George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...

asked

Housing and Urban Development Secretary The United States secretary of housing and urban development (or HUD secretary) is the head of the United States Department of Housing and Urban Development, a member of the president's Cabinet, and thirteenth in the presidential line of succ ...

Alphonso Jackson Alphonso R. Jackson (born September 9, 1945) served as the 13th United States Secretary of Housing and Urban Development (HUD). He was nominated by President George W. Bush on August 28, 2004 and confirmed by the Senate on August 31, 2004. J ...

and

Treasury Secretary The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...

Henry Paulson Henry Merritt Paulson Jr. (born March 28, 1946) is an American banker and financier who served as the 74th United States Secretary of the Treasury from 2006 to 2009. Prior to his role in the Department of the Treasury, Paulson was the Chairman a ...

to work with mortgage lenders, foreclosure counsellors, the

Federal Housing Administration The Federal Housing Administration (FHA), also known as the Office of Housing within the Department of Housing and Urban Development (HUD), is a United States government agency founded by President Franklin Delano Roosevelt, created in part ...

Fannie Mae The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the N ...

and

Freddie Mac The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons Corner, Virginia. These discussions led to the creation of the Hope Now alliance, which was announced by Secretary Paulson on October 10, 2007. At its inception the Alliance was composed of lenders representing 60% of all outstanding mortgages in the United States, counseling services, trade organizations and a group representing investors in mortgage backed securities. Additional organizations joined over the following months.

Strategy

The group promotes a national 24-hour

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(known as the Homeowner's HOPE Hotline), through which the Homeownership Preservation Foundation (a member) offers free counseling to homeowners concerned about foreclosure. It also encourages homeowners in difficulty to contact their lender directly, and provides on its website a list of contact for member organizations. Beginning in October 2007 mortgage lenders & servicing companies within the group reached out to homeowners with past due accounts via mail, giving information to them of the group and the assistance available. Over 200,000 letters were sent in the first batch, with additional mailings occurring in November, January & February 2008. In total one million letters have been sent.

Relief options

Hope Now describes the assistance that it provides to homeowners as loan workouts, a form of

loss mitigation Loss mitigation is used to describe a third party helping a homeowner, a division within a bank that mitigates the loss of the bank, or a firm that handles the process of negotiation between a homeowner and the homeowner's lender. Loss mitigation ...

. These workouts can either result in establishing a modified repayment plan with the homeowner to bring them up to date, or a loan modification where the terms of the mortgage are modified in order to make the loan serviceable for the homeowner.

Results

Since first being mentioned in December 2007, the Homeowner's HOPE Hotline received more than 140,000 calls in 2007 (including over 45,000 in the first three days), and an average of 3,200 calls per day in January 2008 There are claims that the group has not been effective at addressing the increasing problem of foreclosures in the United States, with recent figures indicating that the rate of foreclosures rising faster than the increase in homeowners helped. It has also been noted that the majority of assistance provided by the group has been to establish repayment plans, rather than actually modifying the terms of the mortgage. Concerns about the limitations of data collected by groups such as Hope Now led the

Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all nation ...

to undertake its own investigation into foreclosures.

Membership

A current list of Hope Now members is availabl
here

References