Last month I posted a blog about the complexities in the housing market and detrimental side effects of foreclosures for communities and individual wealth preservation. Soon thereafter the Bipartisan Policy Center’s Housing Committee issued a report entitled Housing America’s Future: New Directions for National Policy that contained recommendations for a new housing finance system and for reforming housing assistance programs to better meet the needs of America’s most vulnerable households. While much of the media attention focused on the report’s suggestion to eliminate Freddie Mac and Fannie Mae, the report strongly emphasized the importance of housing counseling in keeping families in their homes.
Today, NeighborWorks America released research showing that homebuyers who receive pre-purchase housing counseling and education are nearly one-third less likely to fall behind on their mortgage, than consumers who don’t. This research uses data from NeighborWorks’ network own housing counseling services to show that these programs do work — that there is indeed a significant return to investment in pre-purchase counseling and education, in terms of avoiding the costs related to delinquency and foreclosure, and its associated impacts on families and their communities. The Joint Economic Committee of the U.S. Congress estimates that total losses due to foreclosure borne by local governments, service providers and households can exceed $50,000 per foreclosure.
Housing counseling programs have many benefits especially for underserved and underbanked populations. Individuals and families that otherwise might not qualify for “traditional” loans or who experience barriers to mainstream banking gain access through education to affordable, prudent mortgage loans, and gain tools to borrow successfully. Homeownership counseling has long been a strategy of community development corporations — many part of NeighborWorks’ network — to anchor capital locally, achieve economic stability, and revitalize communities.