In Brief:
In the wake of the foreclosure crisis, it's no surprise that there have been many "foreclosure rescue" schemes- some illegal and some legitamate- that have victimized homeowners in foreclosure, such as what that we've covered here and here. This has been especially true in states such as Illinois, Florida, and New Jersey, where the mortgage crisis was and is still at its worst. While the government has made an extensive effort to reign in illegal schemes, the government has never made a legitimate effort to change its own foreclosure recovery program for the better. Although Hope Now Alliance has assisted hundreds of thousands of homeowners, the question will always be "what if". What if it was more efficient? What if it offered homeowners better solutions? What if it wasn't bankrolled by the large banks? No one will ever know.
Hope Now Alliance was created by President Bush in October 2007 in immediate response to the (then) rapidly-brewing foreclosure crisis. It was intended to be a alliance between banks and other investors, loan counselors, and the federal government that would help alleviate the foreclosure problems of American homeowners. Homeowners would be able to call the 24-hour Homeowner's HOPE hotline and receive foreclosure counseling over the phone. Unfortunately, at that time, no one knew just how terrible the foreclosure crisis and the subsequent "Great Recession" would be, and everyone underestimated how apathetic the big banks would be to homeowners' foreclosure issues.
Within a year after its official launch, HopeNow was roundly criticized because it wasn't helping out enough homeowners, and it also wasn't doing enough for the homeowners it did help. HopeNow began hosting large events where thousands of homeowners would have the chance to work directly with lenders, but these events didn't even put a dent in the foreclosure crisis. Ultimately, the problem did not lie with Hopenow's HOPE hotline, HopeNow's events, HopeNow's Staff or its supporters on Capitol Hill, but the very composition of the program itself. Creating an alliance with the big banks dulled the overall effectiveness of HopeNow, because that made HopeNow about the banks' interests, not the people's.
One of the most recurrent criticisms of Hope Now is that they gave most homeowners repayment plans instead of loan modifications. This is like putting a band-aid on a deep wound- a repayment plan fixes the homeowners' problem for a short time, but a better, stronger solution such as loan modification was what was really necessary to "stitch up" the issue. Unfortunately, it goes against the banks' interests to give loan modifications, as modifications have the potential of representing a financial loss to the banks (in their minds, anyway).
Another criticism is that Hope Now's counselors would usually recommend that homeowners speak with their banks directly to receive help for their foreclosure troubles. The majority of homeowners who did call their banks experienced extreme difficulty in getting any kind of help. Many homeowners even lost their homes while attempting to get foreclosure help from the banks. A recent lawsuit has revealed that banks would often push for these foreclosures on purpose, because once again, it goes against a banks' financial interests to offer loan modifications.
At the end of it all, Hope Now is still around and is very active nationwide; they were even in the news recently for creating a special assistance program for soldiers. Tens of thousands of homeowners are still receiving foreclosure notices every month, and banks are still creating difficulty in getting loan modifications, even for homeowners who are deep within the foreclosure process. Hope Now has other ways of helping homeowners, but real solutions still present major conflict of interest problems for the banks that Hope Now represents.
On the other hand, some states such as California and Nevada have passed laws that institute a "Homeowner Bill of Rights", which give homeowners more negotiating power with their banks. There are also a select few foreclosure defense law firms (here's how to pick one) nationwide which specialize in defending financially troubled homeowners against foreclosure and getting them a fair loan modification. This is the most highly-recommended strategy for most homeowners in foreclosure trouble, because unlike Hope Now, it combines experience with a willingness to serve the best interests of homeowners.