WASHINGTON: Over the coming weeks and months, the Treasury Department, other federal officials, financial service associations, and consumer advocacy groups are expected to bolster outreach to the public and policymakers as the housing mortgage crisis deepens and increasingly threatens the US economy.
Among other efforts, the Treasury will continue touting a recently announced plan to
temporarily freeze introductory rates on some sub-prime mortgages. The department also plans to emphasize the importance for struggling homeowners to reach out to mortgage lenders or servicers as soon as possible - all in the hope of forestalling excessive foreclosures.
Promoting the plan himself this past week was Treasury Secretary Henry Paulson, who led town hall-style meetings in Ohio, California, and other states hard-hit by the mortgage meltdown. The meetings were facilitated through the Hope Now Alliance (HNA), a group that includes a huge range of mortgage lenders, financial trade associations, and other groups.
Treasury communications director Jennifer Zuccarelli said US Treasurer Anna Escobedo Cabral will continue touring the US to promote the plan as well as the HNA's hotline and other resources. Outreach will target community groups, local banking officials, and national and local media, including those within the Hispanic community, which has been particularly affected by sub-prime mortgage problems.
"We found that when [people] just get a letter from their mortgage servicer in the mail, they [won't] respond," she explained. "They think, 'These people want to take my house from me.' When you work with local community leaders, the message is so much more effective."
Qorvis Communications is providing counsel to several entities affected by the crisis. Agency MD Stan Collender said that the broader communications challenge going forward for the government and financial services companies impacted by the problem will be winning support for rescue plans.
Support tends to wane among those not directly affected by adjustable rate mortgages, he said, adding that those people may resent financially irresponsible people receiving "bailouts."
"This is the biggest communications problem: How do you get those folks to understand they will be affected somehow if all these loans go bad?" Collender said. "Property values will plummet; there will be more homes on the market because of foreclosures.
"In addition," he added, "if the financial community is suffering, it will hurt the rest of us in other ways. That's not been part of the communications efforts and it's also a reason why the [biggest] initiatives announced so far... don't really require legislation. If they [did], it's not clear they would pass right now."
To date, financial trade groups have communicated extensively with policy-makers, their members, one another, and the media in support of smaller-scale or partial solutions to the mortgage problem. This includes legislation recently passed by Congress and expected to be signed into law by President Bush that would waive taxes on "forgiven debt."
However, the National Association of Realtors and other groups have argued the waiver will serve as a disincentive to homeowners who refinance, foreclose, or otherwise negotiate new terms with mortgage lenders.
Robert Pflieger, senior staff VP of public affairs for the more than 235,000-member National Association of Home Builders, said his group, through its nation-al office as well its 850 chapters, has reached out to the media, consumers, and policy-makers in support of reforms such as the Federation Housing Administration's single-family mortgage insurance programs.
More generally, he added, they have sought to ensure the media doesn't exaggerate the impact of the mortgage crisis to the extent that prospective buyers are dissuaded from entering the market or have unrealistic expectations about the value of property.
"We try to spend a great deal of time putting the information into context," Pflieger said. "We're not trying to sugarcoat the information. That would undercut our credibility. But we do have a keen interest in ensuring that reporters as a whole understand there is a regional aspect to the data and that you can't look at it in increments. You must take the longer view."