Study: Counseling Dramatically Reduces Foreclosures
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- Peter King | November 23, 2009
Financially stressed homeowners who receive foreclosure counseling are far less likely to lose their homes and obtain better terms on loan modifications than homeowners who do not receive counseling, according to a new report.
Homeowners who took part in foreclosure counseling were sixty percent less likely to lose their homes to foreclosure than other at-risk homeowners who did not seek counseling, according to the report from NeighborWorks America, which administers the National Foreclosure Counseling Mitigation (NFCM) Program.
The study also found that, for homeowners who obtained mortgage loan modifications, those that took part in foreclosure counseling obtained far better terms that those who did not. Homeowners who took part in foreclosure counseling lowered their monthly mortgage payments an average of $454 more than homeowners without counseling, an average savings of $5,448.
“The findings announced today demonstrate the real impact foreclosure counseling can have for families facing foreclosure,” said Ken Wade, CEO of NeighborWorks America. “Thanks to the hard work of nonprofit, HUD-approved housing counseling agencies around the country, and the expertise of their certified counselors, families are less likely to lose their homes to foreclosure and receive substantially better mortgage modifications, significantly reducing the likelihood of falling behind again on their mortgage.”
The study assesses the effectiveness of the NFCM Program during its first year of operation, Jan. 1 – Dec. 31, 2008. The program was created by Congress to increase the availability of housing counseling for families at risk of foreclosure.
More than 750,000 families have received assistance through the NFCM Program to date, although the current study only covers data through the end of 2008. The program was funded by an initial $180 million from Congress, which has since provided an additional $230 million in funding.
More information on the National Foreclosure Mitigation Counseling Program is available at www.nw.org/nfmc.
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