continued “Supporting pre-purchase housing counseling by certified staff affiliated with NeighborWorks organizations like ours, is a win-win for the homebuyer, the mortgage industry, and the communities in which these families live” said Hipps.
The NeighborWorks America research shows how a small investment up-front, that finances the availability of pre-purchase housing counseling and education can help homeowners avoid financial losses by potentially avoiding serious delinquency. Such delinquencies have a good chance of extending into foreclosure. Housing counseling can help prevent disruption of family life and help keep communities stable that might otherwise be hurt by home foreclosure.
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. These losses include bank administrative costs, lost property taxes, unpaid utility bills, property upkeep and lost water and sewer payments.
According to the Mortgage Bankers Association National Delinquency Survey for the fourth quarter of 2012, the percentage of residential mortgage loans 90 days or more past due across the country was 6.78 percent, and 3.74 percent of homeowners nationwide were in foreclosure. By providing NeighborWorks pre-purchase housing counseling and education to more consumers, it’s likely that tens of thousands of the more than 1.5 million homeowners who received a default notice in 2012 may have been able to avoid entering foreclosure.
Interestingly, the NeighborWorks America research shows that even repeat homebuyers benefit from receiving NeighborWorks pre-purchase housing counseling and education. According to the report, repeat homebuyers who received the services also are about one-third less likely to fall 90 days or more behind in their mortgages than repeat homebuyers who didn’t receive NeighborWorks pre-purchase housing counseling and education.
“More analysis of the data is required to determine the factors for the repeat homebuyer results,” said NeighborWorks America CEO Eileen Fitzgerald. “But one thing is clear from the data: housing counseling is effective, even if you’ve been a homeowner before.”