There's been a lot of frustration among homeowners over delays in getting the administration's Making Home Affordable foreclosure prevention program up and running. But that's not the biggest issue preventing at-risk homeowners from getting mortgage assistance - many aren't even seeking help in the first place.

According to some studies, as many as 50 percent of the people who fall behind on their mortgages never contact their lender, said Nick Demeester, a bankruptcy counseling and education supervisor with the consumer counseling agency Greenpath.

"I think a lot of that's psychological," said Demeester, who's based at Greenpath's main office in Farmington Hills, Mich. "Sometimes, they don't know they have an option, they don't know who to contact, they've had bad experiences in the past with their mortgage lender or other bill collectors and they think that's what it's going to be like again."

More loan modifications being approved

Demeester and other credit counselors say the pace of loan modifications approved under Making Home Affordable is picking up as lenders and servicers get the kinks worked out of the program. But they say one of their biggest frustrations remains homeowners who face foreclosure without seeking a loan modification in the first place.

"The challenge is getting people to call for help," said Kathy Virgallito, community and business development director with the Columbus, Ohio office of Consumer Credit Counseling Service. She said for some homeowners, part of the problem may be that they've never been in a position where they had to rely on a social safety net before.

"They've never seen themselves as people who need to reach out for help," she said.

Many try to ride it out

Virgallito said that many homeowners in financial trouble think they'll manage to get by somehow, and draw down their savings, 401k plans and other reserves. By the time they do finally seek help, they've depleted a lot of the resources that could have given them more options in dealing with their mortgage problems.

"We find a lot of people aren't fully aware of what their situation is - they haven't been opening the mail, they haven't been returning calls to their server," she said. She said the important thing is for homeowners in financial difficulty to make that first call to their lender or servicer to get the process rolling.

Government program is only one option

People also need to know there are other options besides getting a loan modification through the Making Home Affordable Program. Lenders also have their own guidelines for loan modifications outside the government program, which may be faster to obtain, particularly when dealing with smaller lenders, or have more flexible guidelines.

"A lot of the servers, particularly those that are served by the banks, will come to community meetings and do workouts on the spot," said Virgallito, referring to mortgage assistance workshops that credit counseling agencies and lenders frequently conduct around the country.

Demeester said that even a homeowner doesn't qualify for a loan modification, a credit counseling agency can often help them find options short of foreclosure, such as a short sale, that will do less damage to the homeowner's credit rating.

For homeowners who may be at risk for foreclosure, the first step is to contact their lender or mortgage servicer to explain the situation and inquire about their options, including the Making Home Affordable program. For homeowners who wish assistance in seeking a loan modification, the U.S. Department of Housing and Urban Development maintains a list of approved credit counseling agencies that offer assistance for little or no charge.

Published on December 2, 2010