Could This Man’s Home Been Saved by a Foreclosure Counselor?

NeighborWorks America has always encouraged homeowners facing foreclosure to reach out to a HUD-approved housing counseling agency to get help with a loan modification, because for some, going it alone can be too daunting. NPR recently featured the story of Laverl Nicholson, a homeowner who lost his Montana home to foreclosure despite a year and a half negotiating with his bank. NeighborWorks America recently published a report that showed this homeowner’s odds of keeping his home would have been much stronger had he sought professional assistance sooner.

"We encourage borrowers in distress to get in touch with a HUD-approved counseling agency as soon as possible in the process," Marietta Rodriguez, NeighborWorks America's national director for homeownership and lending, told NPR.

Rodriguez’s advice is grounded in solid research. A recent independent study by the Urban Institute, of the National Foreclosure Mitigation Counseling Program, a special congressionally funded program administered by NeighborWorks America, shows the tremendous difference working with housing counselor can make.

According to the Urban Institute report, homeowners who worked with HUD-approved housing counseling agencies that got NFMC funding were 70 percent more likely to resolve an existing foreclosure than non-NFMC clients. They also reduced their monthly payments by $267 more monthly than they would have without NFMC counseling and were better able to sustain their new payments than those going it alone.

NeighborWorks is now working with the homeowner featured in the NPR story to determine if he has a viable wrongful foreclosure claim, but the lesson here is that foreclosure counseling works and it should be sought sooner rather than later.

A Dozen Organizations Fighting to Reverse Effects of Foreclosures Featured in New NeighborWorks Report

By Sarah Greenberg
Senior Manager, Community Stabilization
NeighborWorks America

I’m pleased to share with you a new report that features how 12 NeighborWorks organizations are stabilizing communities impacted by the foreclosure crisis.

These organizations work in very different markets — urban, suburban and rural — but they all demonstrate the “Five Cs of Community Stabilization,” a paradigm developed by the National Community Stabilization Trust to help define and identify effective local community stabilization efforts. The Five Cs are outlined below.*

The release of this report is timely, with the prospect of another wave of foreclosures looming and a brief pause between rounds of the Neighborhood Stabilization Program, as localities prepare their plans for Round 3.

We learned a lot in the process of creating this new publication. In community development, we’re always on the lookout for innovation, but the truth is that true innovation is rare. Innovation in community development primarily happens at the margins, as a result of adapting tried and true strategies to new markets and new situations, and unfortunately, often in response to a crisis.

The report confirms what we have been seeing since the beginning of the foreclosure crisis, which is that the most effective response to rebuild and revitalize communities is the comprehensive approach that high-quality nonprofits like the organizations in the NeighborWorks Network have been implementing for decades.

Further, we found that those communities that were able to make the best and most efficient use of their Neighborhood Stabilization Program funding are the ones that invested into an existing structure of community revitalization and housing rehabilitation programs, often led by nonprofit community development corporations in partnership with their municipal housing department.

I’d love to hear what you learn from this new publication, Implementing the Neighborhood Stabilization Program (NSP): Community Stabilization in the NeighborWorks Network.

Feel free to share your thoughts using the comment button below.

* The 5 Cs of Community Stabilization:

1. Comprehensive – Community stabilization efforts should result from a plan that addresses all destabilizing forces in the community.
2. Concentration – Community stabilization efforts should be targeted for maximum impact.
3. Collaboration – Community stabilization efforts should include a broad array of partners with a strong focus on resident engagement.
4. Capacity – Community stabilization efforts should be undertaken by organizations with demonstrated capacity in the planned activities.
5. Capital – Community stabilization efforts should be adequately capitalized and explore creative methods to take advantage of new sources of capital.

NeighborWorks America Identified as a Top Nonprofit in Washington, DC

NeighborWorks America is one of the largest nonprofits in the Washington, DC region, according to the Washington Post. International development, relief and advocay groups help make up the "Post 200: Nonprofits" list, compiled based on GuideStar USA's analysis of the amount of money these groups spend on programs.

Over the past 10 years, NeighborWorks America has distributed more than $18.1 billion to assist more than 230 community development organizations in all 50 states, the District and Puerto Rico, and it ramped up its efforts during the recent economic and housing crises. Last year NeighborWorks announced it would distribute $119 million in 2010, focusing on identifying and educating consumers about loan modification programs, counseling homeowners at risk of foreclosure and studying the impact of the housing crisis on minorities.

NeighborWorks America is in good company in the nonprofit category, sharing the spotlight with groups such as the American Red Cross, AARP and National Geographic. See NeighborWorks' entry on the list and find out which other groups made the cut.

Homeowners Counseled Through NFMC Almost Twice as Likely to Avoid Foreclosure

Today NeighborWorks America, the Congressionally appointed administrator of the National Foreclosure Mitigation Counseling (NFMC) Program, announced that, based on a new report that analyzed the NFMC program through December 2009, the odds of curing a foreclosure, and potentially avoiding losing a home, is 1.7 times larger for a homeowner who works with an NFMC counselor than for a homeowner who doesn’t receive such counseling.

Homeowners who obtain a mortgage modification through the NFMC program counseling save an average of $555 per month through lower payments, compared to savings of just $288 per month for homeowners who don’t work with an NFMC program counselor.

The re-default rate for homeowners counseled through the NFMC program was better than that for homeowners who didn’t receive NFMC program counseling. The NFMC report estimates that, for a group of typical NFMC clients, 64 percent of counseled homeowners who received a default-curing mortgage modification remained out of serious delinquency or foreclosure after eight months. In contrast, only 51 percent of these loan modifications would have avoided becoming seriously delinquent or entering foreclosure without NFMC program counseling services.

These results are part of the latest program analysis produced by the Urban Institute for NeighborWorks America. The report covers NFMC program years 2008 and 2009.

“The NFMC program results clearly demonstrate the value of counseling,” said NeighborWorks America CEO Ken Wade. “The findings announced today illustrate the real household and economic benefit foreclosure counseling can have for families facing foreclosure.”

As a result of NFMC program funding, families who sought and received foreclosure counseling were provided much needed information, assistance and guidance to address their risk of foreclosure, which helped them find a solution to foreclosure. These foreclosure solutions sustain family and neighborhood stability and generally help the national housing market.

The report also found that the likelihood of curing a foreclosure was better when an NFMC program counselor was involved, even if the homeowner had been in foreclosure for many months. According to the report, for a group of typical NFMC program clients whose loans enter foreclosure, an estimated 55 percent of these foreclosures would cure within 12 months of when the foreclosure started with the help of an NFMC program counselor, compared to only 38 percent otherwise.

The NFMC program was created by Congress to address the nationwide foreclosurecrisis by dramatically increasing the availability of housing counseling for families at risk of foreclosure. Congress has appropriated $475 million to the NFMC program. Upwards of 1,700 counseling agencies operate under the program.

The report is available at: http://tinyurl.com/nfmcdecember. For additional information about the National Foreclosure Mitigation Counseling Program, visit www.nw.org/nfmc. Media inquiries should be directed to Douglas Robinson, 202-220-2360.

Homeowners who would like to receive foreclosure counseling from an NFMC program -funded counseling agency in their community can visit www.findaforeclosurecounselor.org.

NeighborWorks Symposium Delved Into the ‘Mind of the Homebuyer’ – How Consumers Decide and Act

How do potential buyers determine if homeownership is the right financial decision for them? What influences their decisions to seek help with homeownership education and counseling, budgeting, credit management and foreclosure intervention assistance? What factors shape decisions on type of loan, home size and neighborhood?

Housing counselors and other nonprofit staff grappled with these questions at a NeighborWorks symposium, held December 8, in Washington, D.C., one of the main events at a week-long training institute that drew more than 1,700 affordable housing practitioners.

One of the lessons of the subprime mortgage meltdown was that advice from family and friends wasn’t always well informed and at times pointed to a business person who wasn’t trustworthy, according to symposium speaker Vada Hill, a principal at Kelton Research and former chief marketing officer at Fannie Mae. Word of mouth about “trusted advisors” didn’t typically connect the buyer to a credible source of information and people were taken advantage of.

And yet, Hill pointed out that family and friends’ connections should be a critical component of marketing strategies, particularly in Hispanic and African-American communities. “If you don’t reach them [first-time homebuyers] the bad guys will,” he said. He suggested specifically tapping into church and other community networks in conveying information about home purchase or foreclosure help, so that these friends and family have the right information to pass along.

Further, he said that in African-American and Hispanic communities it is important to reach the woman of the house when trying to influence major financial decisions such as home purchase. She is most likely to be managing the monthly expenditures, he said, advising to make sure to keep the male head of household in the loop.

Sendhil Mullainathan, professor of economics at Harvard, underscored the importance of considering “where the consumer’s mind is” when making decisions. Emotional factors weigh in as much as rational ones and those factors need to be considered in any marketing outreach, he said. On the list of Foreign Policy magazine’s top 100 thinkers in the world this year, Mullainathan and his longtime collaborator Richard Thaler, the University of Chicago economist, “have argued for more sensible policies toward struggling borrowers and defaulters: reshaping the mortgage code to avoid opaque language, restructuring existing mortgages, and staying in touch with panicked borrowers,” reports the magazine in this month’s issue.

Sandra Braunstein, director of the consumer division of the Federal Reserve System, also stressed using simple language when communicating to consumers about mortgages and other loans. For example, instead of using the term “finance charge” stating “fees and interest.” Braunstein explained some of the new regulations designed to protect consumers, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act. She said clear disclosures are no substitute for the kind of hands-on assistance consumers need when making major financial decisions, such as the kind offered by many NeighborWorks organizations.

Jane Katz, from the New York Federal Reserve, said that a challenge for nonprofit educators is getting across the message that planning for the future is important. “The future doesn’t always take care of itself,” she said.

Kathy Crosby, senior vice president at the Ad Council, and David Almacy, a senior VP at Edeleman, both emphasized the importance of using surveys and social media to better understand and relate to the selected consumer audiences. “We went to foreclosure counselors to better understand the situations of people in financial trouble,” she said of the Ad Council’s campaign to help people facing foreclosure. Digital media such as online videos are a great tool for messages to public about personal decisions, said Almacy.

Some of the service provider panelists, such as Lewis Dancy from the Self Help Credit Union and Bridgette Russell from New Haven Neighborhood Housing Services, provided a neighborhood outreach view, offering tips for marketing materials and effective outreach campaigns.

Resources from the symposium will be available at www.nw.org/homeownershipsymposium.