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Taxpayer Funded Foreclosure Solution Falling Short
September 2009

Since January 2008 the United States Congress allocated over $5 billion to help Americans avoid foreclosure. The National Foreclosure Mitigation Counseling Program (NFMC) provides free assistance to homeowners by funding non-profit HUD-approved housing counseling agencies.
The program is falling short of its intended goals. Only a small portion of those in need are getting help. As a result hundreds of thousands of homeowners on the brink of foreclosure are left to fend for themselves. According to the Congressional Report published on March 31, 2009 only 33% of the appropriated funds have been utilized, and only 360,000 homeowners have sought foreclosure counseling. Only 6% have had favorable counseling results.

Not only is the program under-performing, but also efforts to address major flaws have been continually ignored. The response has been indifference and “bureaucratic lethargy.” As a result taxpayers who are entitled to government assistance are being disenfranchised.
The NFMC concept is sound; however, the program is under-performing. As a result a vast number of homeowners are not getting the help they need. There are two primary flaws:

a. The current outreach efforts are inadequate.

b. The current counseling capacity is insufficient.

Failures to address these flaws appear to be the byproduct of the non-profit culture. HUD and government backed intermediary organizations seem to be over-worked. As a result, they are too busy maintaining the status quo. Any hope for true reform will rely on public outcry or high-level government intervention. In the meantime hundreds of thousands of American homeowners remain in crisis.



INADEQUATE OUTREACH
Traditional non-profit outreach efforts are not sufficient for a crisis of this magnitude. The current system relies solely on Public Service Announcements (PSAs) and limited community advertising to promote the free counseling program. These methods are useful, but alone will never constitute optimal outreach.
Truly effective outreach must integrate current methods with a pro-active strategy based on direct marketing methodologies. To maximize outreach NFMC must implement parallel and concurrent contact efforts including PSAs, community based advertising, direct mail, email broadcast, inbound/outbound call center services and Internet portals/webforms.

To-date the program has helped many people, but the majority of homeowners remain uninformed. Without additional outreach efforts these people will slip through the cracks and inevitably end up in foreclosure. Because NFMC refuses to address the outreach problem, these homeowners are being disenfranchised. These people, on the brink of foreclosure, are unwitting victims of a poorly planned system with an insufficient strategy and inadequate resources.

California Marketing, a direct marketing company in San Diego, has proof of the current outreach inadequacy. In January 2009 California Marketing purchased a list of 100,000 homeowners whose mortgage payments were 60-90 days late. After a test campaign including email and outbound telemarketing over a three-month period over 1,000 homeowners were contacted. Less than 9% of the respondents had called a HUD-approved agency or had knowledge of the free counseling program. 41% of the respondents had already contacted their lender directly. An amazing 50% of the respondents were confused, felt helpless and had no idea how to begin the foreclosure mitigation process.
California Marketing’s test campaign revealed a significant gap between NFMC’s outreach efforts and the population of homeowners in need of foreclosure mitigation counseling. NFMC’s current outreach strategy is simply inadequate.


INSUFFICIENT COUNSELING CAPACITY
After discovering the severe “information gap” California Marketing was eager to join the effort to help homeowners in crisis. They knew they could provide the missing outreach link to optimize NFMC’s objectives to help Americans on the brink foreclosure.
With a list of over 200 homeowners (a result of the test campaign) seeking FREE foreclosure counseling in hand, California Marketing started contacting HUD-approved counseling agencies. The objective was twofold – first find an agency that was willing to help the 200 homeowners, second find agencies with excess capacity to handle future counseling clients from a roll-out of California Marketing’s outreach program. The results were shocking. California Marketing could not find a single agency with any excess counseling capacity. While each agency acknowledged the “information gap” and the need for improved outreach, no one had the ability to handle increased counseling client volume. California Marketing was complimented and praised for creating such an effective outreach methodology; however, they were turned away by every HUD-approved counseling agency.


SUMMARY AND CONCLUSION
The current NFMC program is not getting the job done. Given its current limitations NFMC cannot and will not meet the congressional mandate to help all Americans on the brink of foreclosure. If left unchecked the inadequacy of the current system will have far reaching implications on our nations housing market and economy.
A high level politician, a concerned government body or the American public must intervene to facilitate program reform, namely improved outreach and expanded counseling capacity. We cannot sit idly by and witness the disenfranchisement of hundreds of thousands of American homeowners.
A call to action is necessary. Please forward this information to any concerned citizen; congressional representative or media source who may be willing to help. Please contact John Mabie, President of California Marketing, for more details and added insight to the current crisis. Mr. Mabie can be reached at 858-279-5585 x101