Pre-purchase and foreclosure prevention counseling deemed as a positive for individuals and families
FARMINGTON HILLS, Mich., May 22, 2012 /PRNewswire-USNewswire/ -- The U.S. Department of Housing and Urban Development (HUD) recently released two reports on the impact of HUD-approved housing counseling for first-time homebuyers and those struggling to prevent foreclosure. In both studies, HUD found that the counseling was significantly beneficial for consumers.
"GreenPath Debt Solutions is one of the housing counseling agencies that participated in HUD's studies," said Setina Briggs-Kelly, GreenPath's housing manager. "We're very pleased with the results. But they're not surprising, because we see first-hand the benefits that our clients receive when they speak with one of our counselors." Briggs-Kelly went on to say that the results further validate the value of free housing counseling and the need for lenders and government to financially support the work.
That point was echoed by Raphael Bostic, HUD's Assistant Secretary for Policy Development and Research. "These two studies underscore the need to continue supporting housing counseling programs across this country, especially during this period when families need these services the most," said Bostic. "The evidence is clear, with a little investment on the front end, we can go a long way toward improving the chances families will buy a home they can afford and sustain their homes in the long run."
HUD found that 35 percent of participants became homeowners within 18 months of pre-purchase counseling. Only one of those buyers subsequently fell behind in their mortgage payments.
Key findings of the study include:
- 35 percent of study participants had become homeowners 18 months after seeking pre-purchase counseling.
- Most purchasers had a FICO score of 620 or higher (71 percent).
- Only one of the purchasers had fallen at least 30 days behind on mortgage payments 12-18 months after receiving pre-purchase counseling services.
- Most were motivated to seek counseling to obtain down payment or closing cost assistance (58 percent).
- Study participants were racially and ethnically diverse (52 percent African American, 32 percent White, 16 percent of another race or multi-racial, and 19 percent Hispanic), were more likely to be young (51 percent were under age 35), female (72 percent), and have dependents under the age of 18 living with them (57 percent).
The "Pre-Purchase Counseling Outcome Study" enrolled 573 individuals seeking pre-purchase counseling services in fall 2009 from 15 HUD-funded counseling agencies across the country. HUD concluded that the findings suggest that pre-purchase counseling helps clients make good decisions regarding homeownership, and might help to make homeownership more sustainable.
Foreclosure prevention counseling
HUD's foreclosure counseling study reveals that, with a counselor's help, nearly 70 percent of those counseled obtained a mortgage remedy. And 56 percent cured their defaults and became current on their mortgages. Positive outcomes were much more common among homeowners in the study who sought counseling before becoming delinquent or in the early stages of delinquency (1-3 months).
The report's findings include:
- About three-quarters of the homeowners who had fallen behind on their payments did so because of a loss of income, and very few had any savings to draw upon.
- Most study participants attempted to contact their servicer when they first fell behind, but were unsuccessful in negotiating with their lenders on their own.
- With a counselor's help, 69 percent of counselees obtained a mortgage remedy, and 56 percent were able to become current on their mortgages.
- Nearly 70 percent of clients who sought counseling before becoming delinquent were in their home and current on their mortgage payments at the 18-month follow-up period. Only 30 percent of clients who were six or more months behind at the time they entered counseling were in their home and current at follow-up.
HUD's "Foreclosure Counseling Outcome Study" involved conducting baseline interviews with 824 foreclosure counseling clients, tracking the housing counseling services they received, and analyzing homebuyer outcomes through an analysis of credit report data. A follow-up telephone survey was conducted approximately 18 months after the foreclosure counseling services were delivered.
"The study emphasizes how important it is for homeowners to reach out for help before it's too late, while they're still current or only a month or two delinquent," said GreenPath's Briggs-Kelly.
GreenPath provides pre-purchase counseling for people interested in purchasing a home, foreclosure prevention counseling for individuals seeking help with resolving or preventing mortgage delinquency, and reverse mortgage counseling for seniors considering a reverse mortgage. For more information, log-on to www.greenpath.org or call GreenPath at (888) 860-4167.
GreenPath Debt Solutions is a network counseling partner of The Homeownership Preservation Foundation (HPF), an independent national nonprofit that has received more than six million phone calls from distressed homeowners seeking to avoid foreclosure.
About GreenPath Debt Solutions
GreenPath Debt Solutions is a nationwide, non-profit financial organization that assists consumers with credit card debt, housing debt and bankruptcy concerns. Their customized services and attainable solutions have been helping people achieve their financial goals since 1961. Headquartered in Farmington Hills, Michigan, GreenPath operates more than 60 branch offices in Michigan, New York, New Hampshire, Colorado, Florida, Texas, Vermont, Illinois, Indiana, Wisconsin, Arizona and Wyoming. GreenPath also delivers licensed services throughout the United States over the Internet and telephone. GreenPath is a member of the National Foundation for Credit Counseling (NFCC) and is accredited by the Council on Accreditation (COA). For more information, visit www.greenpath.org.
SOURCE GreenPath Debt Solutions