WASHINGTON, D.C., JUNE 23, 2011–The Homeownership Preservation Foundation (HPF), an independent national nonprofit dedicated to helping distressed homeowners navigate financial challenges and avoid mortgage foreclosure since 2004, today reported that independent data presented this week at a regulatory briefing verified the efficacy of mortgage counseling for financially challenged homeowners who receive it.
“Alarmingly, the continued availability of these much-needed services is in jeopardy due to recent federal government budget cuts that removed $88 million for housing counseling programs. We must restore this critical funding to ensure that financially distressed homeowners who desperately need reliable, accurate financial guidance can get it.”
The four research studies separately conducted by the Joint Center for Housing Studies of Harvard University, The Urban Institute, Federal Reserve Board of Governors, and the National Council on Aging were presented at a briefing session held June 21st by the Coalition of HUD Housing Counseling Intermediaries. Colleen Hernandez, president and CEO of The Homeownership Preservation Foundation, which offers mortgage counseling via the Homeowner’s HOPE™ Hotline at 888-995-HOPE™, moderated the panel during which the four organizations reported their findings.
Among the data presented that makes a compelling case for continued support of mortgage counseling opportunities:
- Housing counseling consistently increases the likelihood that the homeowner will be granted a loan modification (200 percent higher probability) 1
- Counseled borrowers received more favorable terms on their loan modifications compared to uncounseled borrowers (on average, $110 lower monthly payment and five basis points lower interest rate) 1
- Counseling raises the probability of a homeowner receiving a loan modification that “cures” (restores the loan to good standing) a serious delinquency or foreclosure (over a 12 month period, 55 percent of loans cured among people who received counseling vs. 38 percent of loans cured among those who did not receive counseling) 2
- Homeowners who received counseling prior to being granted a loan modification curing a serious delinquency or foreclosure were more likely to remain current on their loan after the modification compared to those who did not receive counseling (64% vs. 51% of loans were still current eight months post-modification for counseled and uncounseled homeowners, respectively) 2
- Increasing affordability problems suggest greater need for counseling as the number of renters and current homeowners paying more than 50 percent of their income on housing continues to grow 3
- HECM counseling is a critical consumer protection service for senior citizens who, facing financial insecurity due to stock market volatility, low returns on investments, and rising longevity may consider reverse mortgages to address budget shortfalls. HUD budget cuts have shifted the cost of mandatory pre-loan HECM counseling to senior citizens at a time they may not be able to afford it (35 percent carry a mortgage in 2009 versus 24 percent in 1999, and more than 40 percent of seniors currently live more than 200 percent below poverty level) 4
“As nearly three-quarters of those who call our national Homeowner’s HOPE Hotline and receive foreclosure prevention assistance from our counselors report back that they are still in their homes a year later, the findings presented by these four well-respected organizations corroborate what everyone at HPF knows firsthand – that mortgage counseling works,” said Ms. Hernandez.
Housing counselors employed by HUD-approved agencies are trained to help financially distressed homeowners examine their financial health, create responsible budgets that will alleviate debt, and, where possible, identify options that will enable the homeowner to prevent foreclosure and bring their mortgage back to good standing. Many, including those affiliated with The Homeownership Preservation Foundation, also provide critical information to help homeowners avoid being victimized by mortgage scams, all at no cost to the consumer.
“The research presented at this briefing provides unbiased support of the favorable impact that housing counseling has had during this economic crisis,” said Ms. Hernandez. “Alarmingly, the continued availability of these much-needed services is in jeopardy due to recent federal government budget cuts that removed $88 million for housing counseling programs. We must restore this critical funding to ensure that financially distressed homeowners who desperately need reliable, accurate financial guidance can get it.”
About the Homeownership Preservation Foundation
The Homeownership Preservation Foundation (HPF) is an independent national nonprofit dedicated to helping distressed homeowners navigate financial challenges and avoid mortgage foreclosure. HPF guides consumers onto the path of sustainable homeownership and develops innovative solutions to preserve and expand homeownership. Through its Homeowner’s HOPE™ Hotline, 888-995-HOPE™, HPF provides comprehensive financial education and confidential foreclosure prevention counseling for FREE, 24 hours a day, 7 days a week, 365 days a year, in over 170 languages. Since 2007, HPF has served more than four million distressed homeowners, an average of 5,500 each weekday, who depend upon HPF as a trusted, neutral source of information and assistance. For more information about the Homeownership Preservation Foundation or the Homeowner’s HOPE™ Hotline, please visitwww.995hope.org.
1 Maximilian Schmeiser, Federal Reserve Board of Governors
2 Peter Tatian, The Urban Institute; Ken Temkin, Temkin Associates; Neil Mayer, Neil Mayer and Associates; Charles Calhoun, Calhoun Consulting LLC
3 Chris Herbert, Joint Center for Housing Studies of Harvard University
4 Barbara Stucki, National Council on Aging