But this time, things are different. First, this is a different type of crisis. In 2008, the crisis was created within the financial and housing markets themselves, through unscrupulous practices and pricing. The markets were bifurcated in such a way that collapse was practically built into them. Thus, in the first half of 2010, 1.65 million American homes went into foreclosure, according to ATTOM Data Solutions. In the first half of 2020, barely 165,000 loans were hit with foreclosure actions, and ATTOM is predicting a total of 200,000-500,000 total foreclosures from COVID-19. This time, we are dealing with a global pandemic that is first and foremost a public health crisis, as opposed to a crisis of inflated market values or negative home equity. Due to the far-reaching nature of the current crisis, the housing market is just one component of the economy experiencing a shock, and this is due largely to the surge in unemployment and uncertainty in longevity of the small business sector. 

This crisis is a jobs crisis, brought about by a public health crisis. Low-and moderate-income households have been particularly hard hit by job and income loss. A SpringFour survey of LMI households shows that more than a quarter of these households have been furloughed or had hours reduced due to the pandemic, causing 40% to delay nonessential purchases.

Thus, while the financial and housing markets did not create this crisis, they definitely could, and SpringFour believes, should, play a major role in helping to mitigate it. In addition to continuing to offer mortgage forbearance programs, banks and other lenders can help customers potentially stave off foreclosure by limiting or eliminating fees on a temporary basis, allowing payment deferrals, freezing interest rates, and instituting other hardship programs. History has shown us that doing so, is not only good for the customer but business as well. 

We know, for example, that housing and foreclosure prevention counseling programs work. A 2018 study by the Urban Institute of the National Foreclosure Mitigation Counseling (NFMC) program found that counseled homeowners were 67% more likely to remain current on their mortgage nine months after receiving a loan modification–and that counseled borrowers were more likely to get a modification in the first place.  Building off of this knowledge and the lessons of the 2008 crisis, banks and lending institutions are in a much better position to work with partner organizations to help stave off another foreclosure crisis.  And we know through our work that borrowers who receive SpringFour referrals are twice as likely to engage in foreclosure prevention programs than those who do not receive our referrals.

“BALANCE is preparing for a significant increase in foreclosure prevention and rental counseling once the moratoriums and forbearances conclude in January. It is important for those in need to have access to a knowledgeable and unbiased resource, such as a HUD certified housing counselor. We would also encourage those impacted by COVID-19, whether they are currently struggling or think they will be struggling with their mortgage or rent, to reach out to discuss their options now. There is no need to wait until the New Year. Time is of the essence, as we learned during the previous crisis. It is important for those impacted to maintain communication with their mortgage servicer or property owner.” 

 

-Linda Davis-Demas, Senior Director of Housing, BALANCE

Moreover, now more than ever, financial institutions should partner with experts in the field who know how to help families access the resources they need and deserve in order to get through a widespread crisis outside of their control. For example, with its financial institution partners, SpringFour has already provided well over  2 million referrals to struggling families in the year 2020. Almost half of these referrals are in the basic need categories of food assistance, financial assistance, employment services, and rental resources. Our survey of LMI households shows us that families feel they need a large safety net that they do not have access to currently, they do not know where to turn for help, and they would welcome assistance from their bank or lender to get them through this long-term crisis:

Key takeaways from SpringFour survey of LMI households, August 2020:

• Referrals to local HUD-certified counselors that can help people budget before foreclosure hits and also help them navigate their options;
• A tip sheet with information about mortgage relief options during the pandemic; and
• A wide range of financial health resources that can help families save money in other areas so that it is easier to stay on top of mortgage payments

Katy Jacob

VP of Research & Impact, SpringFour

SpringFour, the only social impact fintech that helps financial institutions give customers the support they need to regain financial control, today published the results of its COVID-19 financial health survey, which shares how the pandemic has impacted low- and moderate-income households. 

The insights reveal that the pandemic has impacted families’ ability to cover their monthly expenses and pay for basic resources, including food, prescriptions, and utilities. Households state that they need $4,000 in an emergency fund. Many families are unaware of financial resources that exist to help, but trust their banks to provide financial guidance and support. SpringFour commissioned Competiscan for this survey, which included a nationally representative sample of 105 individuals with household incomes of under $50,000 per year.

A complimentary copy of the report can be accessed here.

“The pandemic has made financial challenges even more acute for low- and moderate-income families. The government’s stimulus payments have not alleviated their financial pressures and many are unaware that local resources exist to help them cover basic needs,” said Rochelle Gorey, SpringFour Co-Founder and CEO. “The good news is that families feel confident in their banks’ ability to help, giving banks the opportunity to step up and meet their clientele’s challenges.”

Key takeaways include:

Unemployment has greatly impacted low- and moderate-income families: 26% have been furloughed, let go, or had their work hours reduced.

Households are facing challenges in making regular payments: 30% of families are unable to cover their monthly expenses completely and on time.

Families expressed concern about covering the following expenses:

70% are not confident that they can set aside money for emergencies.

55% are concerned about paying for basic necessities, like food, utilities, and health care.

40% are concerned about paying their credit card bills on time.

Households expressed a need for financial assistance to cover basic resources, including food (47%), heating/utility costs (47%), prescription savings (40%), health care savings (40%), and home repair (39%). 

Families do not know where to turn for financial assistance. 40% are unaware of local resources to reduce household expenses.

Households want to receive financial guidance and support from their financial institutions: 83% expressed interest in receiving support from their banks.

Families lack the necessary emergency funds. 47.6% stated that they need more than $4,000 in an emergency fund.

Families expect the pandemic to have long-term implications. 41% stated that once the country opens up, their financial situation will not change.  

“Research in the financial health field has long shown that families are one step away from a financial emergency and that they do not have sufficient funds to cover an unexpected expense. The survey results show that a crisis like COVID-19 uncovers the need for long-term, ongoing solutions,” said Katy Jacob, SpringFour Vice President of Research & Impact. “Families know they don’t have enough money saved and they need financial support and specific, targeted resources that help reduce household expenses and create opportunities to save for emergencies.” 

Learn More

For more information, download a copy of the report here.

Katy Jacob

VP of Research & Impact, SpringFour

Back to Basics: Providing Resources to Struggling Families

COVID-19 has led to unprecedented levels of unemployment and upsurges in payment delinquencies for households all over the country. May marked the largest one month increase in mortgage delinquencies in history. A third (33%) of Americans have lost income because of COVID-19. An estimated 5.4 million Americans have lost health insurance as a result of job loss during the COVID-19 pandemic. These trends reveal that the safety net in the US is precarious, and families are often one small shock away from financial insecurity or peril. 

SpringFour is in a unique position to help address these issues, as its mission and business model has always been to partner with financial institutions and others to provide specific, local resources to families who need financial assistance. To this end, in late July, SpringFour issued a report of findings related to trends in resource need following the COVID-19 pandemic.

In a matter of weeks following the onset of the pandemic, SpringFour added 3,000+ COVID- specific resources in: Food Assistance; Financial Assistance; COVID-related health resources. SpringFour finds that families are looking for referrals to cover basic needs in light of the pandemic. In Q2 2020, these three new categories accounted for nearly half of all referrals (44%). Employment Services was the third-highest category of need in May 2020. Families are also struggling to pay for basic services such as heating and utility bills – the fourth-highest referral category.

And demand for these resources is exploding. SpringFour has seen a fourfold increase in referrals in Q2 this year versus Q2 of 2019. SpringFour provided nearly 1 million referrals to families in need in Q2 2020 alone, compared to 1.1 million referrals in the year 2019 as a whole. In the first half of 2020, SpringFour has provided over 1.6 million referrals.

Impact of COVID-19 on Referral Demand by Quarter

Unfortunately, the COVID-19 pandemic and its impacts are likely to reverberate throughout the economy and our culture for years to come. But just because the world has changed doesn’t mean that we can’t work together to make people’s lives better. In fact, innovative partnerships are our best bet for lifting up families and businesses during COVID-19 and beyond.

“If something good is to come from this, it’s that companies now understand that most people are just a day away from a financial emergency, and that providing help and assistance is not only the right thing to do — it’s good for business.”

 

– CEO & Co-Founder of SpringFour, Rochelle Nawrocki Gorey

For more information on this report of SpringFour’s research and insights, contact Katy Jacob at katy@springfour.com.

Read the full COVID-19 Impact Report here.

VP of Research & Impact, SpringFour

The United States might very well be on the brink of an unprecedented eviction crisis, with as many as 23 million renters at risk of losing their homes, and Black and Latinx households being hit disproportionately. The CARES Act, which included a temporary eviction moratorium, stopped protecting renters from eviction on July 31. This moratorium covered more than a quarter of all renters in the country. More than 26% of households have already missed a rent or mortgage payment and have no idea if they will be able to pay their next housing payment on time. Given the fact that the next stimulus bill is currently stalled in Congress, there is no sign that the federal government will be able to stave off an eviction crisis that puts tens of millions of households at risk of homelessness. Eviction causes a cascading series of related social issues, from mental and physical health risks to difficulty enrolling in school to disenfranchisement. In addition to the social costs, the actual costs to the economy are staggering: For the worst-case scenario of 23 million evictions, experts have estimated a nationwide one-year cost of $128.7 billion. Being able to maintain adequate housing is a staple of financial security and financial health, so the effects of this crisis have the potential to be catastrophic.

SpringFour Recognizes the Need and is Working to Help

SpringFour and our Resource Integrity Team have been hard at work to figure out how we can use our expertise to help households in this dire situation. Since the onset of the COVID-19 pandemic, SpringFour has seen a sharp increase in usage of our Rental Resource Category. The Team has added more than 3,000 resources to address financial challenges since the pandemic began. The rental resource category is now consistently in the top five of all categories referred through SpringFour. In fact, we have seen a 48% increase in rental resource referrals in S4Pro since February 2020.  SpringFour has provided over 92,000 referrals to households needing assistance with rental resources since the onset of the pandemic.

Going even further, SpringFour’s data team developed a tenant tip sheet to help end users struggling to maintain adequate housing. This tip sheet, released on July 15th, was referred over 2,200 times in the first 3 weeks. It provides essential information on tenant rights and responsibilities under the CARES Act, provides links to local and state eviction moratoriums, and provides links to tenant advocacy organizations and rental resources available through SpringFour. Tip sheets like these go above and beyond SpringFour’s usual offerings and instead compile tips and resources that can help renters navigate their way through this crisis. Efforts to provide additional rental resources and create the tip sheet showcase the expertise of our incredible Resource Integrity Team, including Kate McCarthy, an experienced housing professional, and Jessica Williams, a talented systems management and operations guru.

For questions on the tenant tip sheet or if you have ideas for additional tip sheets, contact resources@springfour.com.

Rochelle Nawrocki Gorey

Co-Founder & CEO, SpringFour

Rochelle, can you tell me about SpringFour’s relationship with the Financial Health Network?

I attended my first EMERGE Forum in Los Angeles in 2015–and was introduced to the Financial Health Network and the concept of financial health. I realized this is precisely what SpringFour is doing and has always been about— helping people get back on track and live a financially healthy life.

Everything that we do and have done since 2005 is about financial health. I was excited to realize that there was a concept that encompassed what SpringFour does. I left feeling energized. That summer, we applied for an award from the Promontory Financial Group, and we learned that fall that we had won the 2015 Empowerment Award. This was a defining moment for SpringFour, and coincided with our rebranding as SpringFour from Mortgage Keeper. We knew what we had built went beyond mortgages and foreclosure assistance and our brand needed to encompass that. 

Being at the EMERGE Forum, I was able to meet with so many different people from banks, fintechs, and other organizations that were new to me, and several partnerships spurred from that. The event really is a who’s who of those you want to talk to in this field. After attending the conference for several years, SpringFour became a member of the Financial Health Network in 2019 because we understood that these were our people. Never have I attended a conference where everyone seemed to be on the same page, where everyone was truly focused on the same mission.

What made SpringFour decide to pursue being a Financial Health Network Leader?

SpringFour has been a leader in financial health for 15 years, as have our leadership team prior to working for SpringFour. When we started SpringFour, no one was talking about financial health. This was a natural fit for us. Several of our clients are in the program, and we saw an opportunity to further our work and strategic partnerships that have financial health at their core.

“SpringFour was selected as a 2020 Financial Health Leader as they will be using financial health measurement and transactional data such as bill payment rates and credit scores to evaluate customer’s financial health. This will help them adjust products and offerings to be more responsive to the financial health needs of their customers.”  -Rob Levy, VP of Research and Measurement for Financial Health Network

Now that SpringFour is a part of the Leaders program, what do you see as the primary benefit to SpringFour?

The camaraderie! Being a part of this group of esteemed leaders dedicated to financial health is very validating. We get different exposure to some Financial Health Network members that we work with more closely through this group, and we are looking forward to sharing best practices and collaborating on research.

What are the unique things that SpringFour brings to the table within the group?

Our track record, long history, scalability, and ability to work with multiple sectors that are focused on financial health. When we bring on a new client, we have the opportunity to quickly impact their customer base. All of a sudden, their portfolio has the opportunity to access financial health resources that can make a real difference.  We are unique because we are not focused on providing products direct to the consumer. Our focus is on bringing value to those financial health leaders who work with consumers, from banks to fintechs to nonprofits and employers. We are a neutral third party that has the mutual benefit of the end consumer and the company in mind. We want people to be able to save and get out of debt at the same time that we want companies to get repaid and maintain positive relationships with their customers. 

What is SpringFour’s goal as a Financial Health Network Leader?

We are a mission-based, woman-run fintech company that has managed to grow over the years without raising outside funds, and we are able to work with any company that wants to help its constituents manage their financial health. We know that when you can get to the root cause of financial issues, you can help people get back on track. We want this vision to become an integral part of what companies do, and in doing so we all win–the customer, the company, and the field as a whole. We have a unique opportunity to play a major role in that by interfacing with other companies that have the same overall vision of financial health. Though we are small, through this work, we see large scale impact on millions of people. Through the Leaders program, we can share impact with others who are doing this type of work.

SpringFour partners with several of the Leaders in the Financial Health Network’s program. Could you tell me a little bit about how SpringFour works with other Leaders?

We are proud that we were already in partnership with the following Financial Health Network Leaders: Balance; Elevate; GreenPath; MMI; OppLoans; and SalaryFinance. Some are new and others have been working with us for years. That says a lot. Again, it is unique how we are able to work with nonprofits as well as fintech, employer-based and financial institutions.  All of these organizations trust and rely on SpringFour to add value to their offerings and impact their bottom line. By providing access to vetted, curated fin health resources, SpringFour is helping these organizations further assist their customers. We enable them to provide tangible assistance that elevates a difficult conversation, by delivering actionable next steps and ensuring that the consumer at the end of the line sees their bank or lender as their partner. 

The Financial Health Network helps amplify our voice and mission as a company. We are proud to be in the Leaders Program.

Katy Jacob

VP of Research & Impact, SpringFour

Living up to their respective taglines, “we’re here to help,” and “your partner in financial wellness,” BMO Harris and SpringFour have forged a powerful partnership that helps individuals and families in times of financial hardship. SpringFour believes that when consumers can’t pay a bill or are living paycheck to paycheck, they need direction to local resources that can help. 

For more information about the BMO Harris and SpringFour partnership and its impacts, see the full case study HERE and read the story in the American Banker. Also, read the Forbes article that covers the partnership. 

The SpringFour business model provides exactly that: access to over 15,000 vetted local government and nonprofit resources in 25 categories, including over 2,500 resources specifically related to the COVID-19 pandemic in health, financial services and food security. Through its partnership with BMO Harris, SpringFour has been able to reach over 160,000 BMO Harris customers in need in 17 months. This has resulted in significant gains for the bank, both from the perspective of repayment rates and reputation lift and customer engagement. 

As families across the country grapple with challenges brought about by COVID-19, this partnership proves especially timely. Since the pandemic began, BMO Harris has seen SpringFour referrals spike by over 500%. 

“Deploying SpringFour’s platform has enabled BMO Harris to provide financial resources to our customers who are then able to find opportunities for financial relief and to subsequently catch up on their payments. This has improved repayment rates and has resulted in declining delinquent balances, ultimately saving the bank hundreds of thousands of dollars within the first year alone.” Ric Leitheiser Head of U.S. Collections BMO Harris Bank.

Katy Jacob

VP of Research & Impact, SpringFour