Housing Counseling Works

by Lou Tisler  February/26/2016

I was recently in D.C. to attend two very focused meetings – the first held at the AFL-CIO Headquarters, it was the Americans for Financial Reform Housing and Foreclosure Taskforce. We discussed the successes and barriers of our work for the past year and then identified goals and strategies for specific areas of need – racial and class inequalities in homeownership rates, the drag of underwater homeowners throughout the U.S., especially the Midwest, the Mortgage Debt Relief Act, and the dire need for improvement and inclusions. After that, it was on to the White House to join leaders of the National Housing Resource Center to discuss the importance of housing counseling with banking regulators and the government sponsored agencies of Fannie Mae and Freddie Mac, as well as Federal Housing Finance Agency.

Some takeaways:

•Create incentives to increase access to credit and homeownership sustainability by participating in housing counseling.

•Raise public awareness of the benefits of housing counseling.

•Adopt “HUD-approved housing counseling agencies” as the standard for housing counseling in all federal programs.

•Include borrower(s)’s preferred language data fields in the uniform mortgage application redesign.

•Retain housing counseling data fields in final redesign of the uniform mortgage application.

•Replace the Home Affordable Modification Program (HAMP) with a framework that will sustain homeownership and take advantage of the benefits of foreclosure prevention counseling.

 

Here’s the deal, the research is in, and housing counseling does work. Check out these recent examples of research showing the effectiveness of both pre-purchase and mortgage delinquency counseling:

PRE-PURCHASE COUNSELING IMPACTS ON MORTGAGE PERFORMANCE: EMPIRICAL ANALYSIS OF NEIGHBORWORKS AMERICA’S EXPERIENCE (2013)

LEARNING TO COPE: VOLUNTARY FINANCIAL EDUCATION AND LOAN PERFORMANCE DURING A HOUSING CRISIS. (2010)

NATIONAL FORECLOSURE MITIGATION COUNSELING PROGRAM EVALUATION: CONGRESSIONAL UPDATE (DECEMBER 8,2014)

The most recent report to Congress on the NFMC Program, this report provides a definitive analysis of NFMC counseling done through July 31, 2014:

•NFMC Program clients were nearly three times as likely to receive a loan modification cure than non-counseled homeowners;

•NFMC Program-counseled clients were 70% more likely than non-counseled homeowners to remain current after receiving a modification;

•NFMC-counseled homeowners who received a modification, on average, a reduction in their payment of nearly $5,000 more per year than non-counseled homeowners, a savings of more than $60 per month.

THE EFFECTIVENESS OF PRE-PURCHASE HOMEOWNERSHIP COUNSELING AND FINANCIAL MANAGEMENT SKILLS (APRIL 2014)

I am thankful to Michael Stegman, Senior Policy Advisor for Housing at the White House, who convened the meeting, and I look forward to what will come from our discussions.