Homebuyer Education Critical, Especially in Rural Communities

This blog is reposted from CFED's website. Erica Bradley works with the NeighborWorks America Rural Initiative.

For years, community development professionals were advocates for financial education. Not many lenders, and certainly not customers, took financial education seriously, until the housing bubble burst in 2008. In rural markets, homebuyers typically do not have the same access to services, like homebuyer education. For many rural organizations, expanding their services to include online financial education courses has allowed them to reach more customers.

Tammy Hyman, homeownership program administrator at PathStone, always knew how important homeownership counseling is. PathStone, she said, had offered it since the late ‘90’s. “If they would have done (homeownership counseling) back then, we wouldn’t be having these issues now,” she said of the lenders.

PathStone, which is headquartered in Rochester, serves New York, Vermont, Pennsylvania, New Jersey, Virginia, Ohio, Indiana and parts of Puerto Rico. Many of the markets they serve are rural, and homeownership counseling is offered in Indiana, New York and Pennsylvania.

Hyman said clients have the option of taking an in-person training, which consists of an eight-hour course, or they can take an online course from eHome America. eHome America is a certified provider of online homebuyer education.

For the in-person class, the requirement is an eight- to ten-hour day. Hyman said she tries to include guest speakers, such as real estate agents or lenders. The course is held every other month or sometimes quarterly, depending on the demand for it. Hyman estimates there are 8-18 students in each class.
If the client chooses to take the online course, Hyman said, a staff person schedules a one-on-one call to discuss the course material and answer any questions the client has. Hyman said the benefit to the eHome course is it allows people to take the course at a convenient time for them.
Like PathStone, Neighborhood Housing Services (NHS) of Richland County also offers an in-person homebuyer education course as well as the eHome course. NHS of Richland County covers several counties in Southwest Wisconsin, including an area where homebuyer education was not offered.

Linda Smith, NHS of Richland County homeownership center coordinator, said they offer in-person courses, and they attempted to offer distance learning classes. The distance courses were broadcast from the main Richland Center site to remote sites, typically high school classrooms, in neighboring counties. Smith said because broadcasting the course was too staff-intensive, and there were technology problems, the remote course was cancelled. They are now using eHome America for their customers who cannot attend the course in Richland Center, which has gotten a great response. “eHome, because we are rural, is a good fit. It fits the needs for many of our households, especially the younger households who cannot attend classes at night or on the weekends,” she said.

Like PathStone, NHS requires customers who have taken the eHome course to have a phone conference with a staff person.

Gary Throckmorton, eHome senior executive vice president, said eHome’s model is a network of local agencies. “We want the customer to be connected to a local agency. Follow-up is key,” he said. eHome has had steady growth, he said, and approximately 250 agencies are registered with over 36,000 clients served since 2009. Throckmorton expects growth to continue, especially since online education has become more accepted. eHome is currently offered in English and Spanish, but Throckmorton said adding additional languages would be considered if there was a demand.

eHome America was started in May 2009 by Community Ventures Corporation (CVC), a Kentucky-based non-profit. It is endorsed by NeighborWorks America.

Powerful Benefits Linked to Pre-Purchase Housing Counseling

This is reposted from the Bipartisan Beat blog on the Bipartisan Policy Commission (BPC) website.

Counseling can help families decide whether they are prepared for the obligations of homeownership

By Christopher S. Bond

The BPC Housing Commission believes that counseling and education must be a central part of a more responsible approach to homeownership, particularly for first-time buyers.

I first learned about the benefits of housing counseling from NeighborWorks America, one of our country’s leading community development organizations. In 2007, then-Senator Dodd and I sponsored legislation supporting NeighborWorks’ efforts to help forestall foreclosure for struggling families.

When homeowners experience an unexpected setback – the loss of a job, a medical emergency, or some other crisis – housing counselors can help them find solutions before they fall behind on their mortgage payments. But the benefits of counseling are often felt even before the home purchase takes place, as counseling can help families decide whether they are prepared for the financial and other obligations of homeownership. In meetings with counselors, civic officials, and families, I heard time and time again that pre-purchase counseling’s most important contribution may be helping prospective buyers understand when it is not the right time for them to buy a home.

The latest proof that pre-purchase counseling can offer powerful benefits comes from a recent NeighborWorks study examining 75,000 mortgages originated over a two-year period from October 2007 to September 2009. The study concludes that mortgage borrowers who participated in NeighborWorks’ pre-purchase counseling program were nearly one-third less likely to be 90 days or more delinquent on payments in the first two years after closing than those borrowers who did not receive counseling. This percentage reduction in mortgage delinquencies was the same for both first-time and repeat buyers.

Pre-purchase counseling provided by the NeighborWorks network of organizations consists of a minimum of eight hours of group education and individual counseling sessions. These sessions examine the potential homebuyer's personal and financial situation; details about house selection, the financing process, and the closing; and post-purchase concerns like home maintenance.

Also, the NeighborWorks study responds to one of the main challenges in evaluating the effectiveness of pre-purchase counseling: selection bias. The concern is that people who enter counseling may have certain “unobserved” characteristics related to how they manage credit that can affect mortgage performance, either positively or negatively. To mitigate the impact of selection bias, the study utilized data about borrowers’ credit practices and behaviors from the credit-rating agency Experian and employed a procedure called “propensity scoring” to create a comparison group with the same observable characteristics as the counseling clients.

The NeighborWorks study makes a significant contribution to the public’s understanding of the potential effectiveness of pre-purchase counseling. It’s good to see that the study is receiving some national attention, and it is a must-read for housing practitioners and policy makers.

Former Governor and Senator Christopher S. "Kit" Bond serves as a co-chair of BPC's Housing Commission.

Foreclosure Filings Down but Help Still Needed

By Douglas Robinson, media relations manager, NeighborWorks America

Housing counselors at NeighborWorks
affiliate Wyoming Housing Network helped
this couple save their home from foreclosure

RealtyTrac recently reported that new foreclosure filings in January 2013 dropped to the lowest level since April 2007, and that's a big deal and a good sign that many homeowners' financial positions are stabilizing. But the news from RealtyTrac also showed that more than 150,000 new foreclosure related notices were filed in January. These notices are on top of the nearly 1.5 million households who received a foreclosure notice in 2012.

These families need to be directed to the right kind of help and that's where trained housing counselors come in. According to data from the National Foreclosure Mitigation Counseling (NFMC) program, homeowners who receive help from a counseling agency that is a part of the NFMC program are more likely to obtain a mortgage modification, and get a better new mortgage rate if their loan is modified.

This week, the NeighborWorks Training Institute will convene in Atlanta and dozens of nonprofit professionals will take courses in foreclosure mediation, while dozens more will attend courses toward certification in homebuyer education. Homebuyer education prior to making the home purchase helps ensure that homebuyers know the full financial responsibilities of homeownership. NeighborWorks America believes that if more homeowners had the opportunity to work with a homeownership counselor prior to the housing crisis, the crisis would be much less severe.

More information about the National Foreclosure Mitigation Counseling program can be found at: www.nw.or/nfmc. The full report to Congress on the NFMC program is available on the NeighborWorks America website. 

Information about NeighborWorks homeownership programs can be found at: www.nw.org/homeownership

Equity Express: Uniting Financial Management and Environmental Responsibility

By Karuna Mehta,
NeighborWorks America,
Green Strategies program fellow

Just in time for Energy Awareness month, we are sharing a blog about our new Equity Express class. The initiative responds to two major crises of our time – economic and ecological – by increasing the wealth of asset-poor households through consumer choices that are both financially smart and promote sustainable living.

As a young professional with a limited budget, saving money is always at the back of my mind.  While I’ve tried to abide by the same “save, save, and save some more” mentality as my parents, in today’s world it’s easier said than done. Many of NeighborWorks homeownership and financial fitness counselors encounter similar experiences counseling low- and middle-income clients who are hoping to buy homes or simply get out of debt. For most of us, it doesn’t seem possible to save money by committing to living a more sustainable, healthy lifestyle. 

However, hope is not lost on being both "green" and financially savvy. This summer, homeownership and financial fitness counselors from all over Ohio came together to learn how living a healthy, sustainable lifestyle can also help you save some green. The two-day train-the-trainer workshop, hosted in partnership with the Center of Neighborhood Technology, is called “Equity Express” and describes opportunities to save money in nearly every facet of our lives while improving our health and lessening our environmental impact. The workshop introduces counselors to an alternative way of teaching financial education and provides them with resources and materials so they can incorporate sustainable ideas and green living into their own curricula.

Creative Commons image

Equity Express emphasizes the importance of monitoring six areas: budgeting, energy, transportation, food, communications and “green lifestyle,” which focuses on how much “stuff” we consume and buy and how we dispose of it. The materials taught in each workshop are tailored to analyze the trends and events that are occurring in that region—for example, counselors from Cleveland received “Cleveland-specific” information while those from Cincinnati learned about the health and environmental impact in their own metro area.

While some topics, like those revolving around consumption and budgeting, were already common in a number of the counselor’s own curricula, participants also learned about managing energy costs through reducing wasted energy. They began assessing where transportation alternatives such as walking and biking fit into their lives, and reassessed how their affinities for certain kinds of food would impact their health and bank accounts in the long run.

Using resources provided by Equity Express, many of the counselors discovered large potential savings for themselves. Class participants were shocked when they took a look at their own utility bills and calculated the nutritious values (or lack thereof) of their favorite foods. Some even called their children and spouses during break to share the information they'd just learned.

Class participants with their certificates of completion

The workshop also gave as an opportunity to take a look around the office of Neighborhood Development Services (NDS) in Ravenna, Ohio, where the workshop was held. The executive director and his staff have committed to greening their organization, including taking out unnecessary lighting, enforcing recycling and limiting the amount of waste they produce.  NDS board members and staff have iPads to limit the amount of paper they use and their commitment to environmental conservation is inspirational. Not only is the staff creating sustainable housing, but they are “walking the talk” when it comes to their own daily lives, creating a more durable, healthy and inspired workplace for themselves.
 
At the Equity Express workshop, counselors realized the first step in teaching about a low-cost, sustainable life was living by these principles ourselves. We set goals for kicking our addictions to things like fast food and cheap clothes and electronics. Some people vowed to cook a little more often and eat a little less meat, others re-examined the differences between wanting and needing a new smart phone or television. Still others discussed carpooling with their co-workers and pledged to think twice before buying new stuff.

Budgeting and managing expenses is crucial for those who seek financial counseling or help with homeownership, and resource efficiency is also critical to "going green." Sustainable living improves long term and short term health, creates a more durable living environment and helps people save money in the long run, making it an incredible tool for promoting money management as well as equity. Financial workshops such as Equity Express incorporate the importance of sustainable and socially responsible living empower clients and inspire local and global action through simple changes in one's daily routine.

$3 Million from Wells Fargo Housing Foundation Will Bolster NeighborWorks Housing Education and Counseling

A $3 million grant from the Wells Fargo Housing Foundation will support a range of NeighborWorks America training initiatives. It will strengthen the ability of nonprofit community development professionals to help thousands of consumers better understand homeownership and how to avoid foreclosure.

Wells Fargo’s grant to NeighborWorks America supports training and scholarships for homeownership educators and housing counselors delivered through NeighborWorks Training Institutes; local place-based training opportunities around the U.S., and increasingly through NeighborWorks led e-learning courses. The grant period runs from October 1, 2011 through March 31, 2013.

“This grant from Wells Fargo is important to our ability to provide the latest information and training to housing counselors and other community development professionals,” said Eileen Fitzgerald, CEO of NeighborWorks America. “Importantly, this grant from Wells Fargo underlines its commitment to narrowing the gap for access to quality homeownership education, training and counseling.”

“Financial challenges are building for housing counseling services at a time when consumer demand for their help is growing,” said Kimberly Jackson, executive director of the Wells Fargo Housing Foundation. “Wells Fargo believes homeownership education and counseling training and scholarships provided by NeighborWorks are critical to helping Americans as they face financial struggles that extend beyond their home payments and the country continues to work through the impacts of a challenging economy.”

Using various delivery methods to reach housing counseling practitioners, NeighborWorks America awards more than 12,000 training certificates each year in homeownership and community lending, and the demand for skilled professionals in homeownership education and counseling is not expected to decline.

Thank you to Wells Fargo for strengthening our training reach! Learn more here.

NeighborWorks America Receives $1 Million Grant from the Rockefeller Foundation for Nonprofit Housing Counseling and Foreclosure Prevention

NeighborWorks America today announced that it received $1 million from The Rockefeller Foundation in support of infrastructure development and upgraded technical support for nonprofit housing counseling organizations. The grant will help to strengthen and supplement nonprofit housing counseling capacity and increase their efficiency and ability to help homeowners avoid foreclosure.

Specifically, the grant will help NeighborWorks America provide data management and technical support to nonprofit organizations using CounselorMax™ to manage homeowner client data and to deliver and track that information to the servicers through the HOPE LoanPort, a web-based tool developed by the HOPE NOW Alliance that streamlines loan modification applications on behalf of borrowers at-risk of foreclosure, allowing housing counselors to efficiently transmit completed applications to mortgage servicers. In addition, the grant will also support community-based outreach events for homeowners at risk of foreclosure.

“Homeowners and housing counselors need better technology to work through the complicated details and document requirements for a long-term, successful mortgage modification,” said Ken Wade, CEO of NeighborWorks America. “The support from The Rockefeller Foundation will improve the work of nonprofit organizations that have been slowed by a paper-based system and inefficient mortgage modification delivery process. As a result of these investments, counselors will be able to serve homeowners at risk of foreclosure more efficiently and effectively.”