Report: Foreclosure Counseling Nearly Doubles Chances of Mortgage Modification, Reduces Likelihood of Re-default by at least 67 Percent
Consumers Obtaining Mortgage Modification through NFMC Program Save More than $2000 Annually
WASHINGTON, Dec. 19, 2011 /PRNewswire-USNewswire/ -- A report issued today by NeighborWorks America prepared by the Urban Institute on the consumer benefits of the National Foreclosure Mitigation Counseling (NFMC) Program shows that homeowners who received NFMC counseling were nearly twice as likely to obtain a mortgage modification and at least 67 percent more likely to remain current on their mortgage nine months after receiving one, saving servicers considerable time and expense. The data compares the results against homeowners who obtained a mortgage modification without the assistance of an NFMC foreclosure prevention counselor. The report also showed that homeowners received, on average, a mortgage modification that lowered their payment by $176 more per month, than homeowners who didn't work with an NFMC counselor – a savings of close to $2,100 a year.
"The NFMC program works incredibly well for homeowners and communities," said Eileen Fitzgerald, NeighborWorks America CEO. "Importantly, the NFMC program is an investment that also has benefits for mortgage servicers. By significantly reducing the chance that a homeowner re-defaults after a mortgage modification, servicers are saved added expense. This tells us that increased servicer investment in partnerships with nonprofit counselors is a win for everyone."
The improved long-term sustainability – reduced re-default rate -- of the borrower is led largely by the financial counseling that is a part of foreclosure prevention, not by the lower mortgage payment obtained. The Urban Institute's NFMC analysis noted that, "the great bulk of the sustainability benefit resulted from other impacts of counseling, such as helping borrowers to improve their financial management skills, assisting them in managing relationships with servicers/investors, and providing other types of support."
"In short, the personalized work nonprofit housing counselors do to help homeowners improve their overall financial situation had the greatest effect on a homeowner not falling behind again on their mortgages in the future," said Fitzgerald.
The latest Urban Institute analysis of the NFMC program can be found at www.nw.org/nfmc.
About NeighborWorks® America
NeighborWorks® America creates opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated more than $19.5 billion in reinvestment in these communities. NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.
SOURCE NeighborWorks America