Editor’s Note: In the October 2013 issue of the Foreclosure News Report, we asked Brian A. Hudson, the Executive Director and CEO of the Pennsylvania Housing Finance Agency, to pen a “My Take” column and bring us up to speed on what the state is doing to foster affordable housing. Here’s a short excerpt from Hudson’s column.
The Pennsylvania Housing Finance Agency (PHFA) was created 40 years ago by the state legislature to expand affordable housing options for the state’s residents. It does so through a number of programs, including the following: funding the construction of multifamily rental units, providing affordable home mortgages, supporting housing counseling at no cost to prospective homeowners, and foreclosure prevention efforts. This article will focus on PHFA’s servicing of its home purchase mortgages to Pennsylvania residents and the pro-active steps taken by the agency to help keep borrowers in their homes when they are in danger of default or foreclosure.
PHFA has been servicing all of its mortgages in-house since 1999. The decision to bring loan servicing in-house was made for a number of reasons: to have greater control over the quality of service provided to our customers, to be able to respond in a timely manner to delinquencies, to provide a more hands-on approach in working with our customers, and to expedite loss mitigation on delinquent accounts. PHFA has 46 employees who service performing mortgage loans.
A conscious decision to help consumers
A foreclosure results in an average loss of between $8,000 and $16,000 to the agency. But the motivation to prevent foreclosure goes beyond the dollars. Given PHFA’s public service mission, the agency feels an obligation to help its borrowers stay in their homes. The goal is to help Pennsylvanians find, finance, and retain affordable, quality housing. The agency also realizes that foreclosed homes in neighborhoods can drive down home values, which provides another incentive to avoid foreclosure.
Even though its delinquency rates may be higher than the state average in some cases, the agency has been successful in its efforts to keep borrowers in their homes as reflected in its low foreclosure rates. This reflects the agency’s willingness to work with borrowers and to employ various loss mitigation efforts.
Strategies used by the agency to keep foreclosures low
Steps taken by PHFA to help borrowers are not complicated and, in fact, many are low-tech and simply involve increased, targeted communications to the customer. The cost to the agency primarily involves staff time, since considerable effort is needed to reach and interact with customers.
You can read the full article on Pennsylvania’s affordable housing by requesting a FREE issue of Foreclosure News Report by clicking here.