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.

NeighborWorks Salutes Eight Resident Leaders for Contributions to Their Communities

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Last night, NeighborWorks America recognized eight resident leaders who have made significant contributions in communities across the country. Each of these volunteers has made a difference in the lives of many through their activism, community building and service to their neighbors. NeighborWorks America thanks these individuals for their steadfast commitment to strengthening their neighborhoods.

The 2010 Winners of the Dorothy Richardson Resident Leadership Award are:

• Victor Aguilar, who organized youth graffiti offenders in his hometown of Oxnard, California, to clean up the neighborhood and paint murals
• Linda Allen Miller, who is a tireless advocate for her community, serving on a dozen local boards and committees to spur investment and development in Birmingham, Alabama.
• Jesse Clayton, who led a team of volunteers to reclaim a park that had turned into a drug hangout, and convert it to a skate park.
• Tammy Hoth, who refused to let the trailer park where she lives in Great Falls, Montana to be sold. She mobilized her neighbors to organize into a resident association, applied for grant funds to purchase the property, and today the former trailer park is about to be turned into Mountain Springs Villa, a beautiful subdivision, with Tammy as its president.
• Paul Lopez, who brought investment and business opportunities to the community where he grew up in Chicago, Illinois, including a multi-million dollar banking facility that also houses the first bilingual NeighborWorks HomeOwnership Center.
• Marron, McCleod, who has managed the Cornhill Community Garden for more than 20 years, bringing increased opportunities in education, innovation, restoration, feeding the hungry, green lifestyle and youth engagement to his community of Utica, NY.
• Emily MacRae, the quintessential consensus builder whose leadership on the board of directors of Twin Cities CDC in Fitchburg, MA helped forge partnerships among elected officials, business leaders and community residents.
• Dave Pottinger, who has devoted untold time and talent to revitalizing Goshen, IN, focusing not only on bricks and mortar, but on the people who live and work in his buildings.

This year’s honorees exemplify the commitment to community service and to helping others that is championed by NeighborWorks America and its national network. Congratulations to each of them for winning the 2010 Dorothy Richardson Resident Leadership Award!

NeighborWorks Reaches Out to Hispanic Homeowners Affected by Foreclosure and Loan Modification Scammers

The New England District of NeighborWorks America recently joined with MassHousing and the Rhode Island Loan Modification Scam Campaign to sponsor a live foreclosure and Loan Modification Scam Alert news program and hotline with WUNI Univision Television and WUTF Telefutura in Needham, Massachusetts. Univision News Anchor Sara Suarez posed some challenging questions to NeighborWorks America’s Fiona O’Connor, manager, Internal and Network Communications, about the proliferation of loan scam companies targeting Hispanic homeowners facing mortgage default or foreclosure.

The program aired live in three regional Univision television markets airing in four states – Southern New Hampshire; Boston and Springfield, Massachusetts; Hartford, Connecticut; and Providence, Rhode Island. Eight foreclosure counselors from four NeighborWorks organizations: NOAH, Lawrence Community Works, Oak Hill CDC and its affiliate NeighborWorks Homeownership Center of Worcester (MA) and NeighborWorks Blackstone River Valley answered nearly 70 calls in two hours from the six open lines at Univision Television. Hispanic families reported paying between $700 and $10,000 to loan scam companies for mortgage modifications which for some families led to foreclosure and eviction.

NeighborWorks America and partners launched the Loan Modification Scam Alert Campaign one year ago to empower homeowners to protect themselves against loan modification scams, find trusted help and report illegal activity to authorities. So far, over 59 million people have been exposed to the signs of a loan modification scam and over 6,000 courageous people have reported scams to authorities.

As the holiday season nears, the campaign has made a holiday e-card available to help homeowners protect one of their most precious treasures - their home. The card is available in English (http://www.loanscamalert.org/holiday-ecard.aspx) and Spanish (http://www.alertafraudedehipoteca.org/holiday-ecard.aspx).

Small Business Gets Boost from NeighborWorks Micro-Loan and Small Business Programs

Entrepreneurs and small businesses looking to start or incrementally expand their business should look to selected NeighborWorks local community development nonprofit organizations for a variety of financial and consulting assistance as these organizations plan to strategically support economic development by offering micro and small commercial business loans in 2011.

While not available throughout the NeighborWorks network, organizations from Long Island, NY to Austin, Texas and Lexington, KY and many others are honing their plans and tapping into new resources so that budding entrepreneurs and small businesses can create jobs in their communities.

"NeighborWorks organizations have housing at their core, but as a network we recognize that without a strong and diverse community economic base, sustainable housing solutions for families are extremely difficult,” said Eileen Fitzgerald, chief operating officer of NeighborWorks America.

One organization that is making a difference both in housing and business lending is Community Ventures Corp (CVC), a Lexington-based member of the NeighborWorks network for ten years. CVC recently received $605,000 in grants and loans from the U.S. Department of Agriculture out of a competitive process so that it could provide financial and technical assistance and training to rural micro-entrepreneurs.

In fact, CVC is the largest micro-enterprise business lender in the Small Business Administration system, making business loans as small as $500. Kevin Smith, president and CEO of CVC said, “Small businesses are having a tough time right now securing the capital they need to grow and create jobs. We’re excited by the opportunity to partner with small business and help these businesses and the communities they’re in become stronger.”

Another NeighborWorks organization that successfully mixes homeownership efforts with business development is BCL of Texas, an Austin-based nonprofit. BCL’s name literally means Business & Community Lenders and it has been helping small businesses grow for 20 years.

By offering a menu of free services to budding and existing business owners such as free business financial analysis, free business loan underwriting and no-cost loan structuring, BCL is a cost-conscious entrepreneur’s go-to resource. Also active in SBA lending, BCL has facilitated more than $200 million in SBA and other lending. Recently BCL was named administrator of the Balch Springs Micro Loan Fund, a $100,000 business development fund, and it also received a $605,000 grant from the USDA to provide financial and technical assistance to rural-based small businesses.

“Microloans make an important difference for a range of businesses,” said AR Ruiz, Director of Lending at BCL. “Small businesses traditionally account for the bulk of new jobs and we’re enthusiastic about doing our part and keeping our fingers on the pulse of the economy in our community.”

Back east, NeighborWorks network member Community Development Corporation of Long Island (CDCLI) sets a high, but accessible standard with its small business and microloan programs.

CDCLI also is a SBA lender and one of the more active in the region. Qualified borrowers can obtain loans as small as $1,000. Perhaps most interesting about the CDCLI effort is its childcare loan program, helping to finance daycare centers and qualifying in-home care facilities.

“The economics of today are clear – more households are two-wage earner families and to make that happen families need safe and affordable daycare,” said CDCLI President and CEO Marianne Garvin. “By helping to finance quality daycare, we simultaneously support small business and hard working families.”

For more information, contact Doug Robinson, 202-220-2360, drobinson@nw.org .