Lenders help their customers curb foreclosures
As borrowers falling behind on their mortgage payments increase in number, they are getting help form an unlikely source — the mortgage industry.
Banks are increasingly testing new strategies to help curb mortgage delinquencies.
To prevent potential problems, National City Corp. — headquartered in Cleveland, Ohio — is working with churches, social workers and the United Way to help troubled borrowers avoid foreclosure. Bank of America Corp. is allowing some borrowers with adjustable rate mortgages (ARMs) to refinance into a different loan at no cost, and CitiMortgage is contacting delinquent borrowers within days after a missed payment.
But one Midwestern lender has a novel idea.
NovaStar Financial Inc., a Kansas City-based subprime mortgage lender, helps its customers find jobs. NovaStar’s Launch-Point program has helped more than 1,036 NovaStar borrowers find work without charging them a penny, according to the Columbus Dispatch. Launch-Point helps job-hunting mortgage customers prepare resumes, practice for job interviews, find job openings and evaluate how the real job interviews went.
In all, NovaStar has spent $3 million helping customers find jobs. The $3 million investment has prevented $15 million in likely foreclosure losses. Each foreclosure costs about a third of the value of the loan.
NovaStar also is working on a test program with Option One Mortgage, owned by H&R Block Inc., to see whether Launch-Point could offer its services to other mortgage companies for a fee.
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