mortgage loans to work out loan delinquencies and avoid foreclosures whenever reasonably possible. The leading servicers subscribed to the “Dodd Principles,” developed by Senator Christopher Dodd in May 2007.¹¹ All of the servicers were implementing strategies to notify borrowers in advance of the ARM reset date. All were increasing staff to deal with the increased loss mitigation demand. Most were enhancing efforts to communicate with delinquent borrowers, including contracting with third party non-profit agencies for that purpose.

While there was considerable agreement among servicers at the senior management level that efforts to prevent foreclosures needed to be expanded, the State Working Group expressed concern that the corporate pronouncements were not being adequately implemented at the ground level. The experience of the State Working Group as well as anecdotal reports from consumers and housing counselors, indicated that it remained difficult to contact loss mitigation staff; that foreclosures were proceeding even when borrowers had reasonable options to preserve homeownership; that temporary and unrealistic short-term repayment plans were still the most common loss mitigation method; and that loan modifications were rarely offered. In short, a considerable disconnect existed between words and actions, particularly as to the availability of loan modifications.

To move past anecdotes, the State Working Group recognized the need for consistent data to verify the performance of the servicers’ foreclosure avoidance programs. The State Working Group developed a “call report” format for monthly data reporting purposes. The call report form was circulated to a number of federal banking regulators and servicers for comment and revision. The final call report was intended to improve data reporting, ensure that data was uniform, and to reduce the burden on servicers facing multiple requests for data from a variety of sources, including state and local government agencies. This report is the first public discussion of this data collection effort.

11 The Dodd Principles can be found at: http://dodd.senate.gov/multimedia/2007/050207_Principles.pdf.

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