EconSouth (Third Quarter 2008)
Q & A
"We Know These Are Difficult Times"
An Interview With Barb Godin of Regions Bank
As pressures in the housing market mount, increasing numbers of homeowners are facing the threat of foreclosure. Some banks have instituted programs to assist customers who find themselves in this situation. Barb Godin, executive vice president and consumer credit executive for Regions Bank in Birmingham, Ala., discussed steps her bank is taking in this area.
EconSouth: What kind of consumer hardship problems has Regions Bank been encountering?
Barb Godin: Generally, the first mortgages we originated were sold to Freddie [Mac] and Fannie [Mae]. So we've been dealing mostly with home equity loans. A lot of these are second mortgage loans in Florida, cases where the customer is less invested in staying as opposed to primary residences. Along with the problems in Florida, there have been problems in the inner cities, and we've also seen an increase [in foreclosures] along the coast in Alabama.
ES: What are some steps you've taken to address the foreclosure problem?
Godin: We want to identify problems before they get out of hand. We will call people who are close to their limit on home equity lines of credit. If we notice a repayment pattern change or a credit score decline, we'll give them a call. Most people are glad to hear from us. They know we're not fair weather bankers. For those who need more help, we'll put them through a customer assistance plan. We're open to rewriting the loan and extending the repayment period. If we need to, we'll go from 10 to 20 years or 15 to 30 years—whatever works to keep people in their homes.
Depending on the problem, we can suspend foreclosure actions or do what's called a short sale. Basically, that's an agreement to accept a lesser amount than is owed to release a lien against the property so that it can be sold. Also, we have a program for certain borrowers to avoid foreclosure known as Keys for Cash. We will pay them to vacate their home. We make an offer, and we give them a check if they leave the house in good working order.
We know these are difficult times. We recognize foreclosure is a very emotional process. But as long as they're willing to talk, we'll listen. It's not just an ability to pay that we're looking for but also a willingness.
ES: What are some of the things that Regions Bank has done to mitigate your customers' foreclosure problems?
Godin: One of the most important steps we've taken is our enhanced Web site. We have launched portals called Home Equity Payment Hardship and Mortgage Payment Hardship. These provide a way for customers who have payment hardship to reach out and start a conversation with us on their options. I would describe it as a kinder, gentler approach.
ES: How do these programs work?
Godin: To begin with, there's an 800 number to call us toll-free. There's also a link to a financial assistance form that borrowers can send in to explain their financial hardship. So they have a choice to send in the form or call.
ES: What other information do you provide on the Web?
Godin: We've found that it helps to explain some of the jargon that comes with the mortgage process, and that information is on our Web site. We try to answer questions such as, What is a repayment? What's modification? We explain the meanings of these kinds of terms in both English and Spanish. Also, there's a free DVD available with some examples of customers we've helped.
ES: What kind of reaction have you gotten?
Godin:We've received a good response and a lot of nice feedback. People have said, "Thanks for doing this." With a telephone call, people are afraid they will be judged for their problems—or worse. But if they go to the Web they're not threatened. They start to recognize that there might be a payment plan that could work for them. The Web helps to do away with the fear of being rejected.
ES: What have been the results of this effort?
Godin: We started this customer assistance program in October 2007. Since that time through our Web site we've helped 1,070 customers and worked with loans amounting to $270 million. These loans have involved some form of modification or forbearance.
ES: What are the origins of this program?
Godin: This project is an extension of best practices we learned after Hurricane Katrina when many of our customers experienced a different kind of hardship. We dedicated a group to customer assistance, and we've expanded staff to cope with foreclosures. The difference with the subprime meltdown is that we're not dealing with a natural disaster like a hurricane. It's a manmade disaster.
This interview was conducted by William Smith, a staff writer for EconSouth.