Hope Now Alliance
Encyclopedia
The Hope Now Alliance is a cooperative effort between the US
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 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
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....

, 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 President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....

 George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

 asked Housing and Urban Development Secretary
United States Secretary of Housing and Urban Development
The United States Secretary of Housing and Urban Development 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 succession. The post was created with the formation of the Department of Housing...

 Alphonso Jackson
Alphonso Jackson
Alphonso Jackson served as the 13th United States Secretary of Housing and Urban Development . He was nominated by President George W. Bush on January 28, 2004 and unanimously confirmed by the Senate on March 31, 2004. On March 31, 2008, Jackson announced his resignation, effective April 18,...

 and Treasury Secretary
United States Secretary of the Treasury
The Secretary of the Treasury of the United States is the head of the United States Department of the Treasury, which is concerned with financial and monetary matters, and, until 2003, also with some issues of national security and defense. This position in the Federal Government of the United...

 Henry Paulson
Henry Paulson
Henry Merritt "Hank" Paulson, Jr. is an American banker who served as the 74th United States Secretary of the Treasury. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs.-Early life and family:...

 to work with mortgage lenders, foreclosure counsellors, the Federal Housing Administration
Federal Housing Administration
The Federal Housing Administration is a United States government agency created as part of the National Housing Act of 1934. It insured loans made by banks and other private lenders for home building and home buying...

, Fannie Mae and Freddie Mac to launch a new "foreclosure avoidance initiative". 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
Mortgage-backed security
A mortgage-backed security is an asset-backed security that represents a claim on the cash flows from mortgage loans through a process known as securitization.-Securitization:...

. Additional organizations joined over the following months.

Strategy

The group promotes a national 24 hour toll-free telephone number
Toll-free telephone number
A toll-free, Freecall, Freephone, 800, 0800 or 1-800 number is a special telephone number which is free to the calling party, and instead the telephone carrier charges the called party the cost of the call...

 (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
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 works to negotiate mortgage terms for the homeowner...

. 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
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...

to undertake its own investigation into foreclosures.

Membership

A current list of Hope Now members is available here
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