does not actually include getting a loan modification or repayment plans by the services however this type of counseling makes up sixty nine percent of all counseling levels and level three counseling  years most americans can benefit from housing counseling kind of financial literacy that builds a financial foundation so that families can succeed as homeowners counselors at the front lines of our nation's housing crisis  counseling within her by establishing an office of housing counseling that expands the availability of hud approved housing counseling services offered grants to states and local agencies and launches a national outreach campaign that requires had to consider appropriate ways such as through technology to streamline and improve the housing counseling grant process review approval and award process the goal is to lighten the paperwork burden on agencies especially smaller agencies so that they can devote more time and resources to the homeowners so that regard i'm interested in learning about how a neighbor works good partner with such an office at hud and implement similar streamlining efforts to meet the current unprecedented demand we need our counselors to have the resources and technology available to devote time to counseling homeowners versus unnecessarily filling out forms at the same time the counselors  agencies should be able to easily implementor hands parents the measures to ensure that housing counselors are affectively utilizing time and resources to provide counseling to our constituents in conclusion i look forward to working with my colleagues on the foreclosures and if we're going to have this kind of a problem we've got to make sure that the effort by the united states federal government to fix the problem provide remedy and i do understand  representatives from services giving different responses and different solutions are concerned about the documentation that is being lost also concerned about refinancing that is not affordable to the borrowers foreclosure mitigation counseling program given the limited time i will be brief in my oral remarks allowing for ample opportunity for committee members ask specific questions but my written testimony include an extensive program overview and information in response to a series of questions that we did receive from the committee so in my oral remarks i'll provide a brief background neighbor works america touch on some of our broader efforts to address the current foreclosure crisis and then focus the remainder of my statement on discussing the national foreclosure mitigation counseling development and related agencies appropriations subcommittee a board of directors is made up of representatives of the federal financial regulatory agencies the federal reserve board the federal deposit insurance corporation the comptroller of the currency the office of thrift supervision in the national credit union administration along with the primary mission of our organization is to extend affordable housing opportunities both rental and home ownership and to strengthen distressed urban suburban and rural communities across america much of our work is carried out through the neighbor works network which is two hundred thirty five affiliated community based organizations serving more than forty five hundred urban suburban and rural communities in all fifty states puerto rico and the district of columbia with the growing foreclosure crisis america expanded its efforts on behalf of the n neighborhoods and in response to that throughout our history we've had an opportunity to support community based practitioners as they work to improve their community and because of our work and pres those communities we were an early leader in calling out the growing problem of foreclosures we started the neighbor works center for foreclosure solutions more than five years ago the national we've been a national leader in training and certifying foreclosure counselors we've convened groups to establish the national industry standards for housing and foreclosure counseling we've supported local and statewide foreclosure coalitions that have been hard hit  by the foreclosure crisis and we sponsored a public education our reach campaign to reach troubled borrowers some are briefly our results to date and the new national foreclosure mitigation counseling funding to date a total of four hundred ten million dollars has been appropriated and of that amount we distributed require that we restrict the first appropriation required that we distribute that funding our minimum of that funding fifty million dollars within sixty days of award and the naval works was able to award one hundred thirty million dollars in the first sixty days this included designing the program from scratch identifying and doing all the work to get a program up and running because congress is funding to enable works provided funding and training as well we were able to provide training to six hundred counseling organizations throughout the country we funded the counselors who have assisted more than one hundred ten thousand families facing foreclosure today the majority of the people counseled have been minorities fifty three percent c grantees also are doing well and serving areas that were targeted by subprime and predatory lenders thirty seven percent of the clients are in zip codes where the majority of clients so minorities forty two and f m c grantees said that they stance substantial portion of the funding went to areas of greatest need i see i'm running down on the time here so let me just say we've had overall great success with the program we've your program was designed to ensure that we could get the maximum number of borrowers with the funding that was provided so what we did was set up a program that reimbursed the counseling organizations based on their number of consumers and the level of service that they provided to those homeowners we also wanted to ensure that we could serve the maximum number  on the front what they would propose in most cases level one of the number of level one counseling units delivered are larger than what was originally structured there were eligible apple prescribed in the legislation so those included approved housing counseling intermediaries and i think there were about twenty one or so in total in the country every state housing finance agency was eligible and been able works organizations who are part of that two hundred thirty five organizations in our network the national intermediaries in the state housing finance agency many of them have sub recipients who actually carry out the counseling activities and so they were responsible for setting up the program assembling a number of sub and then passing the funding on to those organizations to actually carry out the program so would there be an administrative fee then for them as well what is that it is five to seven percent so that we limited the be administrative costs to the state housing finance agency and the intermediary to anywhere from five to seven percent in each of them propose in their application what percentage they would request in order to carry out the program and that's essentially to deal with the reporting requirements they responsible for the program administration costs that they have and the follow up and the documentation that they have to do to ensure that the kind of picking up from your comments that people reimbursement is on a per homeowner reimbursement level and it's reconciled to ensure that basically at the end of the draw for you will not exceed the total your award so you're always in a forward funded position one of the things the groups were concerned about would be an opportunity to have funding up front in order to get started measure for you and a transparency measure i appreciate that i noticed in the of the hundred million that was funded through the at and the thirty million of that was for legal not allowed to be used by any civil litigation it could be used to assist homeowners who had any other variety of issues that might need legal consultation the funding goes around in the as an example so you could consult a legal organization or to help you understand whether there might be a cause of action that could be brought on behalf of that for that homeowner how much of that  it then expended we've awarded twenty five roughly twenty five million of it five million returned to the treasury because it was lack of demand for that in the second round of applications so we did not fully award the total thirty million and so the roughly twenty five million was awarded could go to like a legal aid or something of that nature while the organizations were eligible applicants so they had to be the counseling organizations actually receive the funding they could in partnership with a legal aid organization pay the legal aid attorneys to do the work they get hire attorneys themselves we allowed either arrangement ok last question on the service i think that's a real sore spot in terms i know and in my office trying to help people reach their service or is very difficult and frustrating and then a lot of  clearly one of the things that will be helpful we assume would be the new program that's been rolled out up until this point there had not been a widespread program that most services subscribe to there are a lot of initiatives that one service or one lender might have not broadly available you also have the complication of services who typically service service for a variety of investors all of whom had different roles and that created confusion additional time and energy for both services for what they could do with a customer who might be in a loan that was owned by fannie or freddie versus something that was on a private private label security and those caused complications as well so we think the new program will go a long ways toward helping address that we also assume that the incentive payments that are being paid to services through tarp program give them an additional incentive to get consumers either refinanced or modified so we think that will be a great help and presumably that additional funding will also help them address the capacity challenges because i mean at some point at the end of the day it just seemed like they didn't have enough people to deal with the demand as it scaled up tha are the individuals in the media who provide telephone counseling compensated at the same rate as those who do perform face to face that's a good question i mean really we organize the reimbursement based on the level of service you provide irrespective  or or in person the level of service you provide the homeowner do you have any data to that would suggest that either of the services either   we don't get performance data from the services so we have hired urban institute to use a third party service that all the services report into that has long performance data and we will be doing matches with the homeowners assisted through this program to be able to track the performance of those homeowners over time so we will be in a position to answer that question more definitively we have a pulmonary report where they've done some preliminary matches that we think we'll be able to release by the end of this month that will give us some initial data but i would say the early matches have suggested about in total about seventy six percent of the homeowners who have been helped in this consumers can go look up the local organization that's closest to them we also refer consumers to the homeownership preservation homeowners hotline and and so we we provide the opportunity to right now we have grants that were made to be eligible applicants they are a large allowed to use a portion of those grant funds for our we have through our remember where the other one was offhand in order to reach far so we were trying to variety of variety of means i would say we have not done anything any extensive way paid advertising that that's very expensive and so we've not we've not spent any money on paid advertising other than maybe a few times when we might have been participating and folks bought an ad in a local community based newspaper or something like that  house thank you for appearing with the way and i'll try to be as brief as possible but i do want to know if i am getting some sort of mixed signal because on one hand we got indications of services wanting to modify not refinance not give a payment plan but wanting to modify and on the other hand i have information here today indicating that there is some degree of difficulty associated with getting modification so which is correct early on when this program first began there were only a handful of modification programs out there that were substantially reducing the payment of home loan i think that's a fact so early on in the program history the vast majority of modifications offered to homeowners were basically repayment plans and they were probably not sustainable although all our data will will probably help validate that over time as new programs were introduced  more service were providing more substantial modifications and i would say it really wasn't until the indy mac program that got initiated by the f was in a sense with a whole portfolio approach that created a modification opportunity that was driven by the borrowers ability to pay and i think that's the standard that was set with the indy mac program that was built on based on the new administration's program are you receiving some resistance no resistance give me some indication as to what the circumstance of the interface with the services is still a big problem so even with the new program you know we had a feedback session again with some counseling organizations last week a number of them indicated that even though many of the service have signed up for the administration it ministrations program when they contacted the servicer to get their bar or engage they were told that we've signed up we're not ready yet our systems are up and running yet so i think there are still challenges with the services no question about it it's still a problem have you received any intelligence indicating that servicers may have been amenable  maybe i should say more amenable to modification when there was the possibility of the bankruptcy option and now that that possibility has been removed there is less less compliance or less of a desire to modify what i'm getting at is very simply this did bankruptcy have an impact the possibility of bankruptcy had an impact on the behavior of what program is willing to reimburse quite if those are the rules that they're working by saying that they don't apply the rules and they don't ask for what the rules say they can cost fifteen hundred dollars they would have to document that we would have to say that that was inappropriate and all of the counselors in the program do that are just certain ones who have to four hundred fifty dollars and an additional twenty percent for programatic support as all counseling agencies and state housing finance agencies and national intermediaries model i'm talking now about asian americans and pacific islanders specifically as well as others but can you address the question of the person in terms of how you are able to communicate with communities that have rich cultures but require i think some linguistic talents of able to them what we ask all organizations to clarify  the population groups they were going to serve what language capacities they had to serve that client base and we took that into account in both the awards that were made and  do you know i've actually captured demographic information on who the agencies have served have you made awards to organizations that are identifiably asian american or pacific islander in terms of the community that they were performing outreach to we have done a few awards neighbor works organizations who fit that category  as i recall none of the state housing finance agency or hud intermediaries would qualify as asian american pacific island organization and some reason why they wouldn't intermediaries who would qualify as organizations based in that community but there is no there are no hud housing counseling intermediary that meet that qualify because my time is up let me just ask if you would in writing give you one of the problems we have and i've been dealing with this in the financial services committee we try to get small minority businesses involved and one of the problems  we always run into is the payment schedule you know you have a sub contractor who is doing work for a major and if they are forty five days  late paying the the sub contractor it could almost put him or her out of business and i guess the same question i'm asking you about those who are involved the program are trying to provide this service and this is happening you know we do understand that there are a couple of state housing finance agency that have chosen to do this on a strictly cost reimbursement basis but in the last sixteen months we've counseled four hundred eighty six thousand homeowners on an average seven thousand calls to discuss how and where we do our work where our funding comes from what results we produce what challenges as a hotline work when you dial the number you talk to a call center worker who questions about thirty percent of the people who call simply have questions and then they dispatch the call to counselors now we give all homeowners a management international green pass by design and the consumer credit counseling services of atlanta san francisco and dallas are counselors are the trusted allies of homeowners as a reference i provide  information an article in the washington post that describes a day in the life of a hotline counselor and what transpires during a counseling session counselors basically listen to the story of the homeowner they say you're behind in your mortgage what happens and then they listen for as long as it takes to that story within the story are the nuggets of the solution after that they review in great detail the income and expenses and during that time the light bulbs begin going off in the mind of the homeowner about the choices that they have on how they earn their money how they spend their money and how they might dedicate more resources to their mortgage we are a trusted third party that takes fresh eyes and an independent look at their options and helps them determine the best  we are also our bridge to the service where do we do our work all over america in america there are forty three thousand zip codes and last year we counseled people in twenty two thousand seven hundred seventy seven of them that's part of the beauty of the hotline everybody with access to a telephone can access this service and they can do it at their convenience any time of the day or night where does our funding come from our adopted budget this year is sixty two million dollars million comes from an f m c neighbor work forty six million from mortgage servicers who are reimbursed by investors a million from hide and seven hundred twenty thousand from fannie mae the funding we received from industry is significant because it's flexible the more we counsel the more they pay but more importantly it's helpful to homeowners because in the counseling process we capture data from them which we transfer instantaneously to the servicer to give them the jumpstart that they need to resolve the problem is the funding the work that we do produce results every day i ask myself that question and the answer is yes and here's how we know a member of our network of atlanta studied twenty one thousand people who receive counseling in two thousand and seven after one year they looked at data from the reports and they saw that in fact seventy one percent of the people counseled were still in their homes and had avoided foreclosure copies of that research or on our website so when we evaluate the effectiveness of the hotline we asked the following did homeowners reach out for help about seven thousand a day do they go through counseling about two thousand a day did their information get to servicers yes one hundred percent of the time did they avoid foreclosure about seventy percent of the time there are a couple challenges that i'd like to highlight for your attention today and the first is that scams are proliferating every day the first thing i do in the morning is google foreclosure prevention and every day there is a new promises results for just a couple thousand dollars and i know you're aware of that and doing what you can the second challenge is there is so much talent and commitment in the housing counseling industry much of it represented at this table and yet the resources don't match the demand our desire at the homeowners help hotline is to give every consumer who calls the choice between face to face counseling and telephone counseling and to make sure that there are adequate resources the homeowners in america count on the counseling industry and we are counting on you thank you provide services to nearly eight hundred fifty communities across this country as the largest housing counseling intermediary and one of the largest recipients of funding under the national foreclosure mitigation counseling program the n f t c is very proud of its ability to provide housing related counseling as well as a broad range of financial counseling and education services last year alone and the member agency provided services to over three million consumers the n s e c commands congress for recognizing the value of counseling and stemming the tide of foreclosures and for providing funding to make counseling available to those  give you two examples a couple in sumter south carolina who are both tragically diagnosed with cancer seven months ago because of their medical expenses they were three months to link on their mortgage and home equity loan we helped them to get loans modified and significantly reduced resulting in a saving of three hundred seventy five dollars per month a single parent thousand oaks california went through a divorce and then came we helped her structure a household budget modified or mortgage on her savings with six hundred dollars per month through the n f l program congress has made it possible for thousands of american families to only home but to begin the process of rebuilding their financial lives however there is a lot more still to be done and i would really like to focus on for specific areas first of all the mortgage crisis reflects a national failure to promote housing counseling as a consequence a significant number of homeowners they could not afford with mortgages they did not understand the remedy is repurchased counseling for first time homebuyers first of all and also for those that are considering sub prime or nontraditional mortgages the creation of the office of housing counseling with as passed by the house last week represents a major step forward if we are to sustain housing related counseling there must be long term funding for the n f l program and other counseling initiatives federal grant to help finance the expansion of housing counseling but without additional dedicated federal funding nonprofit agency will not be able to provide these services third it is imperative that consumers have access to counseling intermediary which in turn utilize the services of only ten counseling given the size and scope of the problem to limit the resources being used to address it when there were many faith based organization or another community based consumers should have access to all available resources and that has not happened today we are focused on fixing financial problems looking forward we have to do more to prevent and to prevent financial problems with broad based financial education and literacy programs the end of recent financial literacy survey found that forty one percent of americans eight mortgage holders admit that their mortgage is different terms than what they thought they had when they took out the loan so finally i'd like to say thank you for this opportunity we believe there has to be a chairman women water and members of the committee and i just want to also thank congressman green for your leadership with the congressional caucus is having tough so i thank you i am lisa half a gallon on the executive director of the national serving community based organizations unfortunately for asian americans and pacific islanders historically the system of housing counseling basically and then like the n f l i'm sorry the neighbor works affiliates in many many organizations a gap in terms of the existing system for serving our communities in the linguistically culturally competent manner now we have been working over the past several years with neighbor works with with homeownership preservation foundation et cetera to build that capacity but it  has been a challenge i think that what unintentionally and happened with the fusion of resources with the n f l the program is actually widen the capacity gap it was i think it made sense for go over a little bit about what we are doing to try to partner again we are currently working with national council and several of our member organizations have been able to get contracts and they just recently did a study for example doing their own data on research looking at the foreclosure listings and doing a name count and they came out with a study that basically said that over fifty percent of the foreclosures particular time period that certain zip codes were with south asian families and i think that was a conservative estimate we have been those kinds of stories from our organizations particularly those that are serving the filipino community in california the korean community in southern california the southeast asian community in central valley and in minnesota and south asian community particularly in the in the jackson heights area a recent federal reserve report that came out that  validated that where they looked at our population data and overlay that with a map of where asian americans and pacific islanders were living and so there was a lot of correlation unfortunately home mortgage disclosure act data does not just aggregate  show that need there have been some positive positive steps forward we have been working with bank of america and freddie macin particular to fund some of the work that we have been doing that hasn't fit within the scripted eligible activities and grant requirements that is currently existing with never worked america f m c program and so those flexible dollars have been really helpful for us to build the capacity of our organizations we've got a neighbor work has given us scholarships to their training to train more counselors that are bilingual and bicultural but that kind of capacity building takes time and so what we've been trying to do for example is to create models where community based organizations that have a lot of expertise and a lot of capacity to have the language capabilities that have the trust with the communities they can play a role in this particular crisis they really want to play a role there because great champions of the housing counseling program and that is clear to us we thank you for your support with you know communities are watching a generation of well slip through their fingers and nonprofit housing counseling agencies are really on the front lines of this battle yet support for their work has not kept up with demand congress must strengthen the counseling infrastructure and doing so will ensure that services are widely available to combat foreclosure and in the future help homeowners avoid common lending trap in my testimony today i'm going to talk a little bit about and sealers approach to housing counseling and then i'm also going to talk about some of the challenges to implementing the s m c program as you've heard from all of my colleagues already and feel ours one of a couple dozen housing counseling intermediaries not many people talk about the role of intermediaries but that's important as well intermediaries provide quality control training partnerships develop technology do a lot of work to advance housing counseling field in general and then feel are is the only network that focuses specifically on the latino community over the last decade and still are has used one on one counseling to help thousands of families secure their first home my colleague stated this is the most effective way to reach our communities there are several studies that show that this is a proven methodology especially for communities of color when the foreclosure crisis hit we applied the same approach to foreclosure prevention counseling in the last twelve months we counseled over seven hundred fifty thousand delinquent homeowners i'm sorry seven hundred seven thousand five hundred i added a couple of  depth counseling because we need to help homeowners understand their options find the best possible resolution and get connected to other resources we don't focus on counseling or provide referrals instead we keep our clients in house and we work with them all the way to the solution the demand for foreclosure prevention is on the rise but we're concerned that demand is out and without a robust system in place families are going to get lost with a foreclosure  intermediaries we sat with them worked on the industry standards that we testified about earlier that mr wade testified about earlier and we've often worked together on public policy issues but it's important for us to bring up the challenges in implementing this program because it's having a crippling effect on the nonprofits out there trying to meet the needs of their community the challenges have already been covered and there's more detail in my testimony so instead of the five that we've outlined in full testimony i want to focus on two and that is that the reporting requirements have been extremely we already had a reporting system in place that had been working for decades but when this program came in place we  had over forty additional data fields that we had the technology did not keep up with that so we all work from one of two or three technology platforms every time they make a change and we have to wait for the technology to be updated which means we're all busy doing work the technology is not capturing the data that creates a lag and homeowners fall through the cracks we don't get reimbursed as an example in our first quarter of reporting and seal  incentivizes level one counseling over the more in depth counseling we talk a little bit about this because it's very important you get paid one hundred what is one hundred hundred one hundred fifty dollars for that level one it takes about twenty minutes to an hour where you can spend all day over and over doing intake and referral and earn as many a hundred fifty dollars you have twenty minutes in a day but up to fifteen hours over the course of three to that that initial intake and referral to get the quick buck rather than take the time to do the most effective counseling which is the one on one and which takes a lot longer and only pays out a little bit more money so that's why we think we see these really high numbers in level one because the incentive is not there you don't get all the way out of that six months when you've been putting time in incurring staff expenses and so you see that resolution that is a having to your point they are having tremendous results in expediting the resolution with every single person that calls what happens is when a telephone counselor or somebody calls in and they listen to the story on the phone they can get on their computer screen what the lone facts are how delinquent are they who is their service are but the most important thing they get is what are the investor work rules so when they propose a solution to the servicer that's already been vetted through the investor work rules that's one of the biggest impediment slows things down this technology has been piloted for the last sixteen months in atlanta with wells fargo we believe that industry should migrate to that and migrate quickly we thank you for straitly expedite has been working on these issues for some time now and a lot of what she does is done without any degree of compensation other than the just knowing that you've done a good deed and  suspicion is that that applies to all of you let me ask if you would please could you kindly give us some examples of why we might need to be sensitive to culture sixteen months we've served four hundred eighty six thousand people with the homeowners help hotline counseling the federal grant that we are our annual budget is sixty two million dollars fifteen million of that is from also program dollars available in round one we distributed most of the program dollars out to agencies so that they could actually build capacity and basically address the needs of their communities ok thank you  government sponsored hotline was initially it was very focused through one intermediary those agencies were providing level one services only and we've created this artificial notion of what is level one level two rather than starting with the homeowner and i think what you're hearing here whether it's by phone or whatever getting at the root cause and fundamentally working towards a solution so i would even though the to really help implement loan modifications and then you should be responsible for i would say it really depends on the client and what the situation is congresswoman i  modification taken care of thank you very much i'd like to follow up on what the chair is bringing to our attention because it seems to me that we are encouraging as has been said the intake process which is twenty minutes and then we find some having to go through this twenty week process which will net a lot less on realty trac to help you come up with these numbers how do you do that credit bureaus so this is a study done by our affiliate consumer credit counseling services of atlanta on twenty one thousand two hundred thirty four people that they