Homeowner Pre-Buy Counseling Helps Reduce Mortgage Delinquencies

Homeowner Pre-Buy Counseling Helps Reduce Mortgage DelinquenciesHome buyers who get pre-purchase housing counseling are nearly one-third less likely to fall behind 90 days or more on their mortgages within two years of origination, compared to consumers who don’t receive such education.
That is the finding released Thursday by NeighborWorks, the national, non-profit organization that provides homeownership counseling to 4,500 communities.
The research findings are important to the mortgage industry because a high number of seriously delinquent home-loan borrowers end up in foreclosure.
With national and local partners, NeighborWorks provides grants, support, training and technical assistance to its national network.
The research was done by Neil Mayer and Associates and the credit-reporting bureau Experian, and is based on about 75,000 mortgage loans originated in 2007, 2008 and 2009, when residential mortgage underwriting standards began to tighten.
The study determined to what extent pre-purchase services provided by the NeighborWorks network affect first-mortgage loan performance.
The research shows a significant return on investment in the NeighborWorks network pre-purchase counseling, in terms of avoiding the costs related to delinquency and foreclosure, and its associated impact on families, their communities, and servicers.
“NeighborWorks America has long known that pre-purchase housing counseling and education, provided by certified professionals in our network helps create homeowners who are less likely to become seriously delinquent on their mortgages,” said NeighborWorks America CEO Eileen Fitzgerald. “Using data from the NeighborWorks network and its customers who received this important advice and guidance … we now know the empirical value that NeighborWorks housing counseling and education provide.”
On average, 14 percent of mortgage loans that seriously delinquent end up in foreclosure, according to data from National Association of Realtors.
Estimates vary, but total losses due to foreclosure borne by local governments, servicers and households can exceed $50,000 per foreclosure, according to a report from the Joint Economic Committee of the U.S. Congress.

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