Real estate website Zillow yesterday released results from its Mortgage Marketplace Survey, which found that one-third of homebuyers do not fully understand the basic terms of a mortgage, like down payments, lender rules, and mortgage rates. According to the survey, around 25 percent of homebuyers incorrectly believe that they are required to close their loan with the lender that pre-approved them.  In reality, prospective homebuyers should shop around for a loan that fits their unique financial needs rather than always go with the first bank that pre-approved them.

The survey also reported that one in five – or roughly 14 million homeowners –believe that underwater borrowers are unable to refinance their home loans. This is simply not true – to date, a significant portion of the 2.3 million homeowners who refinanced their mortgages via the Home Affordable Refinance Program (HARP) were underwater. Information about HARP, which has been extended through December 2015, is available by speaking with an HPF counselor at 888-995-HOPE (4673).

In addition to the evidence provided in the Zillow survey, last week’s HPF blog post discussed a recent academic study published by the Yale Law Journal, which found that, when presented with mortgage documents, homebuyers’ eyes focus more closely on language that is easy to comprehend rather than on the more complicated information. This leaves homebuyers’ susceptible to agree to terms they don’t understand, which could potentially harm them in the long run.

As with any other important financial decision, HPF urges homeowners to do their homework before taking out a mortgage. Taking the time to fully understand the terms of your mortgage and what the details of your loan entail is one of the first steps to take on the path to sustainable homeownership.

This study is the latest of several that validate the effectiveness of foreclosure prevention and pre-purchase housing counseling (see here and here). With so much positive, independently analyzed and verified data highlighting the benefits of housing counseling, it makes the case that every homeowner should have access to a nonprofit counselor, whether they are in distress or just getting their feet wet in the home buying process. In fact, this most recent study even found that repeat homebuyers who complete pre-purchase counseling are able to avoid delinquency more than those who do not participate in a counseling program – proving that even the experienced can use an ally when considering various mortgage options.

The NeighborWorks release also touched on a report from the Bipartisan Policy Center’s Housing Commission, which said that “housing counseling can improve prospective borrowers’ access to affordable, prudent mortgage loans, especially for families that otherwise might not qualify or who may experience other barriers to mainstream lending.” The report itself mentions data from NeighborWorks’ National Foreclosure Mitigation Counseling program (NFMC), noting “counselors can also be an ally in the event of an unexpected financial change and can start the conversation with a lender about ways to help struggling homeowners.”

These studies do more than reiterate that housing counseling works; they also send the message that homeownership can still be a very viable option for those who are mentally and financially prepared. Many people who witnessed the housing market collapse are nervous about pursuing homeownership, fearing that they too might end up facing foreclosure or trapped in an underwater mortgage. These fears, while very real, can cause even the most prepared consumer to ignore the many advantages of homeownership, which includes building equity in your home, tax savings, and, on a more personal level, creating a home for your family and becoming a contributing member of a stable neighborhood or community. It’s important that prospective homeowners do a lot of research and take everything into consideration – the good and the bad – so that they can make a truly informed decision.

HPF currently offers free foreclosure prevention counseling to struggling homeowners and is working with several lenders and organizations on pre-purchase counseling programs that help homeowners before they sign on the dotted line. For more information, call 888-995-HOPE (4673) to speak with a housing counselor today.

These statistics are contrary to the many indications that the housing market is in recovery: CoreLogic reported that housing prices are up; RealtyTrac says foreclosures are down; and the US Census Bureau announced that homes are once again being built. These improvements, all reported by extremely credible sources, are very good news for homeowners, especially those who are underwater on their mortgages or whose home values have depreciated because of an abundance of distressed properties in their neighborhoods.

The devil, however, may lie in the details. RealtyTrac’s data reports that, while down on a national average, foreclosure activity has increased in 57% of the nation’s metropolitan areas.  In Tampa, Miami, Baltimore, Chicago, and New York, the housing crisis is far from over. Additionally, CoreLogic’s foreclosure report noted that the 56,000 foreclosures completed in December, while down year-over-year, was still nearly triple the pre-crisis foreclosure level.

And here’s another sobering statistic: as previously reported, there’s been a dramatic increase in calls from homeowners who are current on their mortgages but are in danger of default. HPF counselors continue to remain busy helping homeowners build the budgets and find the solutions that will help them avoid foreclosure.

If you or someone you know is having trouble making mortgage payments, counselors are available to assess your financial situation. Call 888-995-HOPE (4673) to find out more.

Regardless of who we are talking to, however, one of our core messages remains the same and that is, simply, that housing counseling produces results; after undergoing counseling, more homeowners are able to save their homes, avoid foreclosure, understand their finances, and regain financial stability.

In the last year or two, there has been a great deal of compelling research from HUD, Harvard University, The Urban Institute, and other reputable sources that easily make that case. HPF probably has a filing cabinet’s worth of data, stats, and research at this point that indicates the myriad ways in which housing counseling is a good use of time, effort, and resources for homeowners, their lenders, housing sector investors, the government, local communities, and the economy.

That said, this story by Lew Sichelman, a syndicated columnist who has been covering housing and real estate for decades, does a superb job of hitting some of the highlights. If you’re wondering whether housing counseling can help you with your mortgage challenges, I strongly encourage you to read Mr. Sichelman’s article and then to call our HUD-approved counselors at 888-995-HOPE (4673).  Housing counseling can help.  There’s no reason to try to tackle your financial crisis alone.  Let our counselors work with you to find the best possible solution for you and your situation.

As always, we’d love to hear your thoughts here, on our Facebook page or via Twitter.

In his piece, reporter Christopher Matthews argues that recent housing sector improvements, such as the rise in home prices and decline in foreclosure activity, will not result in a meaningful recovery unless unemployment drops or wages increase. His insights match what we hear every day first hand from the people who call our Homeowner’s HOPE Hotline at 888-995-HOPE. Rare indeed is the struggling homeowner who is behind on his or her mortgage, but current with all the other average household debts, such as car loans, utility bills, student loans, and the like. Unemployment, underemployment, unexpected medical bills…. any of these life challenges could significantly change someone’s ability to stay afloat – and can do so practically overnight. Accordingly, homeowners who are current with their payments today but are living off their savings or are making ends meet paycheck-to-paycheck could easily join the millions now facing foreclosure if their funds dry up.

Our view on what’s ahead?  First, that the threat of foreclosure will remain a harsh reality for millions of American homeowners. While the crisis may be abating nationally, it is far from over. While we expect to receive calls to our HPF HOPE Hotline from thousands of homeowners every week, we know that many more will not reach out for foreclosure prevention guidance, either to HPF housing counselors or their bank. These hard-to-reach homeowners often struggle alone to remedy their challenges out of a sense of hopelessness, fear, indecision, lack of trust, embarrassment or some combination of all these and other emotional and attitudinal triggers. HPF will continue to work aggressively in the year ahead to try to connect with these homeowners and help them see that foreclosure is not the only option.

Also, as previously reported, we’ve seen a dramatic increase in calls from homeowners who are current on their mortgages but are in danger of default; we expect that trend to continue in 2013.  More and more homeowners are calling to speak to our housing counselors before they get behind on their payments. Our counselors have helped untold numbers of homeowners hold onto their homes by taking a broader view of their financial picture and making meaningful changes in their spending habits to follow more realistic budgets.  We expect that this already- underserved need among concerned homeowners for such reliable, holistic one-on-one financial counseling that’s available at their convenience to grow in 2013.

FYI:  Those interested in learning more about what may be ahead for housing may be interested in a recap of a five-part series of 2013 housing predictions in the Wall Street Journal; it notes that the housing market remains fragile due to the number of underwater borrowers, but also predicts that the “shadow” inventory will continue to shrink and that credit-lending standards will remain tight in 2013.

Wishing you all a happy, healthy, and financially stable 2013.

The data, which was released in this December Congressional Report, also featured statistics underscoring the efficacy of foreclosure prevention counseling, including that homeowners who completed NFMC counseling were twice as likely to receive a loan modification.

Another statistic featured in the report is the default rates among homeowners who received loan modifications – those who were counseled were 67 percent more likely to remain current on their mortgages in the nine months after receiving a modification. Additionally, those who qualified for the Home Affordable Modification Program (HAMP) and completed counseling experienced a high level of success, lowering the overall loan modification re-default rate by 83 percent. The Urban Institute independently verified all findings.

The positive statistics referenced in this report match data that NeighborWorks released in June of 2012 (see press release on that report here). That the counseling results remained consistent over the course of the year underscores the value of third party, independent housing counseling like that offered through the NFMC program.