The mortgage meltdown has sullied the reputations of more than a few lenders, so banking companies are going on the offensive to preserve theirs.
Trade groups such as the Wisconsin Bankers Association have launched publicity campaigns to advise consumers on how to spot and avoid lenders that encourage borrowers to take out risky loans, such as adjustable-rate mortgages with teaser rates that skyrocket if homeowners do not refinance multiple times.
A growing number of homeowners with such loans have not been able to refinance to get better rates, because their homes' values have fallen in the softening housing market. As such, in the first half the number of foreclosure filings on U.S. residential properties rose 55% from a year earlier, to 925,986, according to RealtyTrac Inc.
Many of these loans have been made by unregulated lenders, but many consumers do not make the distinction between such lenders and bankers, according to Eric Skrum, the communications director for the Wisconsin trade group.
"A lot of banks are being lumped into being part of the problem, when in reality they aren't," he said. "We're correcting that misunderstanding and showing that in many instances, the banking industry is the solution."
This month the Wisconsin Bankers Association, along with the Wisconsin Realtors Association, the Wisconsin Mortgage Bankers Association, the Wisconsin Mortgage Brokers Association, and the Wisconsin Land Title Association, jointly published a brochure, "Tips on Being a Smart Mortgage Consumer," that was distributed to each of the groups' members to pass on to their customers.
On its own, the Wisconsin Bankers Association also sought news coverage for the brochure, offering interviews to newspapers and television and radio stations, Mr. Skrum said.
"Our main message was that anyone purchasing a home really needs to understand what they're getting into, and they really need to shop around for an appropriate lender," he said.
Though the group periodically publishes consumer tips on a variety of issues, including mortgages, the news coverage this time has been much higher as a result of the mortgage credit crisis, Mr. Skrum said. The Milwaukee Journal-Sentinel and a radio network that provides spots for stations around the state interviewed him about the latest brochure, as well as one his group published in June with advice on how homeowners could prevent foreclosures.
The California Bankers Association also is conducting a publicity campaign. Anissa Routon, a spokeswoman for the group, said it is revising the consumer tips page on its Web site to include advice on how consumers can choose the most appropriate loans for them.
The California group also is considering whether to record a public service announcement to be distributed to radio stations across the state, advising homeowners who are late on their payments to call their lenders to work out their problems.
"And if their lender isn't willing to talk to them," the message may also say that "they need to look at options that are out there in the marketplace, such as community banks," Ms. Routon said.
James Ballentine, the director of housing and economic development for the American Bankers Association, said now is a good time for the banking industry to publish mortgage advice, because the news media — and the public — are far more interested in the message than ever before.
When the ABA published tips in June on how to pick the right mortgage and prevent foreclosures, Mr. Ballentine gave a record 14 interviews in one day to radio stations across the country, reaching over a million listeners.
"The number of questions and the level of intensity" of the questions by the interviewers "were much higher than in previous years, largely due to the number of people who have been affected by this issue," he said.
Now is the best time for banks to encourage borrowers "to seek the advice of at least three sources, particularly a regulated bank, when shopping for a mortgage," Mr. Ballentine said.
Kris-Ann McKenzie, director of marketing for Taylor Bean & Whitaker Mortgage Corp., an Ocala, Fla., wholesaler that services loans originated by the Independent Community Bankers of America's member banks, said the timing may be perfect for the group to launch its own nationwide blitz touting its members' trustworthiness.
She is lobbying ICBA members to band together to launch a TV, radio, and newspaper campaign to let consumers know that they would not have to worry about getting an inappropriate loan if they did business with the group's members. Taylor Bean would help in some way with the campaign, she said.
Some trade groups, like the Ohio Bankers League and the Massachusetts Bankers Association, have asked members to participate in task forces to resolve the credit crisis in their states. Michael Van Buskirk, the president of the Ohio group, said that Gov. Ted Strickland asked him to participate in a state task force, because the group has the expertise to help develop financial literacy programs for homeowners, such as workshops for those currently facing foreclosures.
The trade group also is helping to draft legislation to regulate mortgage lenders, Mr. Van Buskirk said.
In Massachusetts, many of the trade group's member banks, at the request of the Massachusetts Housing Finance Agency, are offering the agency's newly developed workout mortgage to eligible homeowners facing foreclosures on what the agency deems predatory loans.
The agency is offering the refinancing product through community banks (as well as credit unions) rather than mortgage lenders, many of which are based outside of Massachusetts, "because they are the ones with the roots in the community, and the agency feels they can do a better job of insuring their customers are in the appropriate product to sustain homeownership," said Jon Skarin, the trade group's director of regulatory and legislative policy.
