NeighborWorks America Receives $425,000 Grant from CITI Foundation

NeighborWorks America has received a $425,000 grant from Citi Foundation to enhance the professional capabilities of housing counselors. The grant will be used by the NeighborWorks Center for Homeownership Education and Counseling (NCHEC).

“Citi Foundation’s generous grant strengthens our ability to help nonprofit housing counselors to build the knowledge and skills they need to assist families who are struggling to maintain homeownership during this national housing crisis,” said Ken Wade, CEO of NeighborWorks America.

NCHEC provides homeownership counselors with access to quality tools, materials, best practices and uniform standards designed to help low- to moderate-income clients make informed homeownership decisions. Homeownership counselors play a critical role in helping homeowners develop budgets, accumulate savings and protect their housing investment.

With support from the Citi Foundation, NCHEC will provide training and certification to more than 400 housing counseling practitioners who will reach as many as 40,000 low-to moderate-income individuals with pre- and post-purchase homeownership education and foreclosure intervention counseling.

“As people struggle in this uncertain economy, Citi and Citi Foundation believe that it is essential that financial education and asset building programs deliver results and make a difference in peoples’ lives,” said Daria Sheehan, senior program officer, Citi Foundation. “We are proud to partner with NeighborWorks to provide the training to help practitioners assist low-income individuals in achieving their financial goals.”

NeighborWorks Report Cites Job Loss or Reduced Income As Top Reason Homeowners Are Facing Foreclosure

NeighborWorks® America, the administrator of the National Foreclosure Mitigation Counseling (NFMC) Program, announced that more than half (54 percent) of homeowners who received foreclosure counseling through the NFMC Program reported the primary reason they were facing foreclosure was reduced or loss of income. This finding was reported in NeighborWorks’ fourth Congressional report, which reported on NFMC Program activity through August 18, 2009.

Over the course of the NFMC program, which began January 1, 2008, the percentage of homeowners who cited reduced or loss of income as the top reason they were facing foreclosure has steadily increased. In the June 2009 Congressional report, 49 percent of NFMC counseled-homeowners reported reduction or loss of income as the primary reason; 45 percent cited this reason in the February 2009 report; as did 41 percent in the October 2008 report. This parallels the nation’s unemployment rate, which until the November 2009 employment report, had steadily increased since October 2008.

“For the last year this nation has witnessed the highest unemployment rate and the largest number of job losses in over a generation,” said Ken Wade, CEO of NeighborWorks America. “Our report proves what many already believed to be true — no longer are mortgage payment increases, or even health issues or divorce, cited as the top reason homeowners are facing foreclosure. With the unemployment rate steadily increasing over the last year, it’s no surprise that reduced or loss of income is now the primary reason countless homeowners are facing foreclosure.”

The report also found that 56 percent of all NFMC clients held a fixed-rate mortgage. Forty-three percent (43%) of clients held a fixed rate mortgage with an interest rate below 8 percent.

To date more than 750,000 families have received foreclosure counseling as a result of NFMC Program funding. Late last month NeighborWorks reported that NFMC Program clients in foreclosure were 60 percent more likely to get out of foreclosure than homeowners who did not receive foreclosure counseling.

Speaking at NeighborWorks Symposium, Federal Reserve Governor Calls for Holistic Approach to Community Stabilization

With the downturn in housing affecting communities in a variety of ways, there is no one-size-fits-all strategy to fix deteriorating neighborhoods, said Federal Reserve Governor Elizabeth A Duke at the NeighborWorks Symposium on Community Stabilization held December 9 in Maryland.

“Because of these variations, a stabilization strategy that is effective in an industrial city facing high unemployment is unlikely to suit a suburban community where employment has remained relatively stable,” said Governor Duke.

Her observations were made first hand, as she toured the country to see how the economic crisis was impacting communities, how NeighborWorks was responding, and how the Reserve Banks were assisting communities under stress and the organizations that serve them. Governor Duke is a member of the NeighborWorks America Board of Directors and represents the Federal Reserve in a partnership with NeighborWorks America to reduce the impact of foreclosures in low- and moderate-income communities.

Governor Duke shared many lessons learned along the way; the first among them being that the effects of foreclosure on a community largely depends on the strength of the area’s underlying economy.

In some economically weaker communities, like Detroit, Cleveland and Indianapolis, the increased rates of foreclosures and the related economic downturn have hastened a cycle of vacancy and decreasing property values, said Governor Duke.

Communities with strong underlying economies have not been immune to the destabilizing effects of high foreclosure rates either. In the more vibrant communities of California, Florida, Arizona and Nevada, for example, there were very high rates of new home construction and speculative investments that resulted in unsustainable price escalation, Governor Duke said.

With so many influences exacerbating the foreclosure crisis across the country, Governor Duke said a holistic approach to community stabilization is key.

“After visiting with community organizations and seeing their work first-hand, it is clear to me that the most effective community stabilization approaches look beyond homes and mortgages,” said Governor Duke. “Successful community stabilization requires a broader vision of community, one that factors in the many elements that make a neighborhood a desirable place to live.”

She cited several examples of what this more holistic approach looks like across the country. Though tailored to meet the needs of the particular community, there is one thing all successful approaches have in common: organizational capacity.

The Governor highlighted efforts by NHS of Chicago, a NeighborWorks America member, as one of the “finest examples” organizational capacity. In the mid-1990s, NHS of Chicago identified predatory lending as a threat to the neighborhoods it served. In collaboration with the City of Chicago, the Federal Reserve Bank of Chicago, and many others, NHS formed the first Home Ownership Preservation Initiative (HOPI). This initiative became the model for foreclosure prevention and has been replicated across the country. Because of this experience, NHS was well-prepared to assist Chicagoans in the recent housing market downturn.

Governor Duke cautioned that many communities are facing the issues of vacancy, abandonment, and decay for the first time, and these communities need help to grow the human and financial capital required to address neighborhood decline. Organizational capacity needs time to be developed she said.

“As your attendance at this Training Institute demonstrates, there is a strong appetite among community organizations for information, training, and leadership development. And I am encouraged by your dedication,” said Governor Duke.

Read speech

About 25 Percent of HAMP Homeowners in Default Again

Data from the Treasury Department indicate that more than 25 percent of homeowners who have received assistance from the Home Affordable Modification Program (HAMP) are behind on their new mortgage payments. DSnews.com picked up the statistic from Assistant Treasury Secretary Herbert Allison’s testimony before a congressional oversight panel, in which he stated that just “73 percent of borrowers are current in their trial plan payments.”

NeighborWorks America believes that one way to reduce the default rate is for homeowners to receive the lowest sustainable mortgage payment possible when they rework their mortgages. Foreclosure counseling also greatly increases the chances that homeowners will be successful in their efforts to keep their homes.

In a report released in November, NeighborWorks America found that homeowners who received loan modifications through the National Foreclosure Mitigation Counseling (NFMC) Program lowered their mortgage payments significantly more than homeowners who received loan modifications without NFMC Program counseling.

NFMC Program clients, with the help of their counselors, secured loan modifications that lowered their monthly mortgage payments $454 more than the clients who received modifications without foreclosure counseling, which results in an average annual savings of $5,448. The same report found that NFMC clients are 60 percent more likely to avoid foreclosure than homeowners who don’t seek counseling.

Read “Quarter of HAMP Mods in Default Again” at DSnews.com

Learn more about the NFMC report in the NeighborWorks newsroom.

Two Newly Chartered NeighborWorks Organizations Celebrate their Affiliation in the Northeast District

Asian Americans for Equality (AAFE) in New York City and St. Joseph’s Carpenter Society in Camden, New Jersey, each recently held events to mark their affiliation with NeighborWorks America. Both highly accomplished organizations, they represent the first new affiliations in the Northeast district since 2002 and significantly expand NeighborWorks’ reach into underserved communities.

NeighborWorks America COO Eileen Fitzgerald noted that “St. Joseph’s represents the kind of excellence in community stabilization, revitalization and development that characterized the NeighborWorks network across the country.”

“St. Joseph’s Carpenter Society has helped thousands of New Jersey residents purchase and maintain their homes and they will be a tremendous asset to the NeighborWorks America network in our state,” said U.S. Senator Robert Menendez. “Their proven track record of educating potential home buyers will complement NeighborWorks’ efforts in improving the quality of life of working families. I congratulate St. Joseph’s for their revitalization projects which have improved the lives of so many children and families, andhope this partnership will serve to expand their efforts in promoting safety, financial stability and homeownership opportunities in Camden neighborhoods.”

Joined by District Director Deborah Boatright and several other prominent local elected officials, Congresswoman Nydia M. Velázquez offered her congratulations to AAFE. “By joining forces with NeighborWorks, AAFE will have additional funding and support for their efforts to create equal opportunities for all New Yorkers. I am committed to working with AAFE to address the shortage of affordable housing, increase financial literacy and improve lending practices. With unemployment rising above 10 percent and families struggling to make ends meet, this help is needed in New York City now more than ever.”

Read more in the NeighborWorks Newsroom.