Many unaware of mortgage help: Freddie Mac

Survey says more than half of delinquent mortgage borrowers still unaware of ways to avoid foreclosure.

January 31 2008: 1:01 PM EST

NEW YORK (CNNMoney.com) -- More than half of borrowers who have missed mortgage payment deadlines are still in the dark about ways to avoid foreclosure, but that percentage is falling, said a survey released Thursday.

Research from government mortgage buyer Freddie Mac and marketing research firm Roper Public Affairs and Media said that 57% of late-paying borrowers are unaware of foreclosure alternatives offered by their lenders.

That percentage was down from the 61% reported in the first Freddie Mac/Roper survey in 2005.

"Efforts to get borrowers to call lenders and counselors are starting to work," said Ingrid Beckles, Freddie Mac's VP of Servicing and Asset Management.

But, she added, "Too many at-risk borrowers are still unaware their servicers routinely provide alternatives."

Both the percentage of delinquent borrowers who contacted their lenders and the percentage who said their lenders had contacted them have increased since 2005, Freddie Mac said. But while 59% said their communication was helpful, nearly a fourth said the contact was "intimidating" or "confusing."

Beckles pointed out that delinquent borrowers should proactively call their servicers, firms that collect payments for firms such as Freddie Mac (FRE, Fortune 500), to learn what they can do to avoid foreclosure.

The survey also found increased awareness of foreclosure avoidance strategies such as repayment plans, adjustable to fixed rate mortgage conversions, and lump sum payments.

Borrowers are less likely to turn to lenders and financial institutions for foreclosure information, and increasingly go to friends, family, and the Internet, said the report.

More than half of those surveyed still talk to their bank or mortgage lender first, a statistic unchanged since 2005, but a large percentage said those institutions are a pain to deal with.