HUD: Counseling prepares families for homeownership, stay in homes
The U.S. Dept. of
Housing and Urban Development (HUD) has released two reports on the impact
HUD-approved housing counseling has for those families who purchase their first
homes and those struggling to prevent foreclosure. In both studies, HUD
found housing counseling significantly improved the likelihood homeowners
remained in their homes.
Both the pre-purchase counseling and foreclosure counseling studies enrolled
clients in the fall of 2009 and early 2010. HUD found that 35 percent of
participants became homeowners within 18 months of pre-purchase counseling, and
only one of those buyers subsequently fell behind in their mortgage payments.
The foreclosure counseling study reveals that with a counselor’s help, nearly
70 percent of those counseled obtained a mortgage remedy to retain their home,
and 56 percent cured their defaults and became current on their mortgages.
Key findings of the “Pre-Purchase Counseling Outcome Study” include:
- Thirty-five percent of the study participants
had become homeowners 18 months after seeking pre-purchase counseling.
- Most purchasers had a FICO score of 620
or higher (71 percent), and were reported as having completed counseling
by their housing counselor (72 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
identify homebuyer assistance programs (58 percent) or to obtain down
payment or closing cost assistance or to qualify for a specific loan
program (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
Key findings of the “Foreclosure Counseling Outcome Study” include:
- 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, whereas 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.