“Preventable foreclosure” is an industry phrase meaning what exactly? I’ll tell you. Preventable foreclosure is a lender and servicer phrase meaning, “Not you!”. Put another way, “We looked at your income, debts, neighborhood values, and determined your foreclosure is NOT preventable. So you will not be offered a loan modification or any assistance keeping your home”.

Preventable Foreclosure & Hope Now

Hope Now recently announced…like it always does…a pie-in-the-sky number of “households help” or some other stats we are supposed to believe which shows they are preventing foreclosures. This time they are promoting the story that the Hope Now program and its work with mortgage lenders and servicers, together “completed a record-high 239,000 foreclosure prevention workouts in December 2008.”

Hope Now’s director had this to say,

According to Faith Schwartz, HOPE NOW’s executive director, the December results show that the industry is continuing to focus on the pace of help for homeowners. “HOPE NOW members know they have to keep doing more to keep up with the growing needs of homeowners at risk of losing their homes,” she said. “The December results demonstrate that HOPE NOW members are moving aggressively to do what’s needed to avoid preventable foreclosures.”

Ha! You’ve got to be kidding…

I want to break this down….specifically the statement, “The December results demonstrate that HOPE NOW members are moving aggressively to do what’s needed to avoid preventable foreclosures.” (emphasis added)

Even Ms Faith Schwartz could make this statement without parsing her words. She’ll make a good politician someday or possibly a economist for the NAR, with nuianced oratory skills like these.

What Is a Preventable Foreclosure?

I have my idea and I’m sure you have yours, but the more important question is what does Hope Now and it’s volunteer cadre of the largest lenders and servicers consider a “preventable foreclosure”?

Is it a foreclosure that can be prevented only if the lender does lose a dime of the interest originally promised?

I also have issues with the phrase “foreclosure prevention workouts“.

What is a foreclosure workout anyway? Well for many in the past is simply a prepayment plan to get “caught up” on missed payments.

It certainly is NOT a mortgage modification or a permanent changing of the rate, term, or balance of the original mortgage into a permanently more affordable option for the borrower.

Beware of press reports about how many “workouts” the industry has done…most allow you to believe a massive effort is under way to help foreclosure victims when exactly the opposite is true.

But you knew that, right?

Good Luck!

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