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.

Flexing Green Muscles Earth Day and Every Day

NDS is a Neighborworks
America green designee

By Stacy Brown, Neighborhood Development Services Inc, director of asset management

Being a responsible steward of our environmental resources means looking at the variety of ways in which our homeownership and rental home work can reduce environmental harms and build the self-sufficiency of our people and buildings. Benefits of “going green” include lower utility costs for residents to a unique marketing asset for us as we compete for tenants and homebuyers.

Last December, NeighborWorks America named Neighborhood Development Services Inc (NDS), based in Ravenna, Ohio, as a NeighborWorks Green Organization designee. We are proud to be a part of this program and we hope what we learn can inspire others nationwide. Our green work spans weatherization and home repair to ecologically responsible design and materials for new buildings.  We are also branching into alternative energy as a way to raise revenue while helping the community and the environment.

For existing homes, we’ve found that weatherization protections pay off for all involved.  At our Lakeview 2 Apartments complex, we reduced energy 20 percent by installing Energy Star appliances, attic insulation, air sealing, heat pumps and high efficiency lighting and window fixtures. We also used faucet aerators, dual flush toilets, water efficient washers and landscaping to decrease water usage. The work has benefited not only NDS, but also Lakeview residents who now have lower utility costs.

NDS has also committed to incorporating environmental improvements and green maintenance. This means purchasing green materials and supplies when possible, installing rain barrels at all of its properties and creating recycling systems for all residents. Additionally, the maintenance staff is trained on purchasing, methodology and overall green maintenance.

Finally, we are working to take environmental sustainability beyond simply housing improvements. NDS is pursuing the opening and operation of a public compressed natural gas re-fueling site. This site responds to rising demand for cleaner fuel sources for their vehicles. It will dramatically cut greenhouse gas emissions and allow local residents and businesses to take advantage of major fuel cost savings. Revenue earned from the site will provide NDS with a new source of funds to support its other mission-driven programs, which will benefit the communities in which we operate. While this project is still in its preliminary stages, NDS has met with local stakeholders to discuss the project and continues to seek funding to perform a formal feasibility study for this project.  Additionally, we are working toward gathering fuel commitments from local companies. These commitments are key to securing funding and partnerships related to this unique, triple bottom line project.

Together, all of us can find ways to use environmental resources more sustainably. We know our efforts are but one example and we look forward to learning about and implementing many new ideas in the years ahead.  To learn more, visit http://www.ndsohio.org.

Beginning a Career in Service

This blog post is in honor of the forthcoming National Volunteer Week (April 21 - 27, 2013).

By Brittany Hutson, NeighborWorks
America Public Relations fellow

Today’s generation of college graduates and young professionals aspire to have a meaningful career that allows for connecting and giving back to communities in authentic and meaningful ways. There are a number of programs that allow for new professionals and career changers to explore what a career in service is all about. One of those programs is AmeriCorps VISTA, a national service program that fights poverty by placing members in yearly positions with nonprofit organizations to work on tasks such as fighting illiteracy, improving health services, strengthen community groups, and much more. The following testimonials are from four VISTA members who describe their experiences of working in local communities through a NeighborWorks affiliate:

Stories have been edited for length

Angela supporting NKCDC and the Sustainable 19125 initiative

Angela Taurino (AmeriCorps VISTA Member 2011-2012 at New Kensington Community Development Corporation in Philadelphia, PA): Upon graduating from Arcadia University, I decided to change my career goal of becoming a teacher. Unfortunately, I didn’t know what that career would be. I decided to use VISTA as a way to pursue other interests.  New Kensington Community Development Corporation (NKCDC) offered a green community builder position that, while unrelated to my professional or educational background, coordinated with my interests.  [At NKCDC] I learned how to organize projects, manage volunteers, and create plans.  I coordinated with a team of professionals who were as dedicated to improving the community as I was.  My work with NKCDC has helped me refocus my career interests and goals.  Without building and maintaining partnerships with city entities, civic groups, and other non-profits, I wouldn’t know the many community building organizations available and the work that’s involved.  While the job market has been tough, I’m better able to choose organizations that are truly exciting and match my interests and skill sets.

The building behind is a foreclosed/condemned property in Silver Spring.
MHP launched Green Club as a way to engage youth and younger
generations to care for their community.

Jose Gonzalez (AmeriCorps VISTA Member 2011-2012 at Montgomery Housing Partners in Silver Spring, MD): In the fall of 2011, I decided that I had to serve and share with others my talents, capacities and leadership skills. My decision was influenced by the realization that neighborhoods in Silver Spring, MD were struggling from the housing crisis and economic turmoil. I chose to serve as an AmeriCorps VISTA member with Montgomery Housing Partnership’s Glenville Road Interdepartmental Team (GRIT Team). The Glenville Rd. community was plagued by unemployment, chronic vagrancy, foreclosures, property vandalism, drugs, littering and trashed streets and alleys. To address these issues, I worked with the GRIT Team to develop a core group of leaders who would develop initiatives to protect the community. Serving as an AmeriCorps VISTA member was a unique experience and opportunity because it reminded me how important and rewarding it is to form a community where individuals can connect and participate in addressing the major challenges they are facing.

Homeport community garden

Josiah Littrell (AmeriCorps VISTA Member 2012-2013 at Homeport in Columbus, OH): In the summer of 2012, I signed up to spend ten weeks as an AmeriCorps*VISTA Summer Associate to help grow and administer a community garden. I created guides on recycling, composting, and getting involved in the garden. I wrote bylaws. I watered plants. I weeded plants. I set up a blog, Facebook page, and Twitter account. Each night, I wondered if any of my efforts would make a difference. As the summer progressed, slowly but surely, people started volunteering to help water and maintain the garden. Others started sharing ideas for parties in the garden and events we could have. With that, I realized that success was all the little things that happened along the way –it was the weeds that we pulled, the phone calls we made, and the pictures we posted. Success was working incrementally, sometimes painstakingly so, in order to be ready for that key moment when the right people were in the right place at the right time.

Alexandria at work, organized with Post-ITs

Alexandria Ingley (AmeriCorps VISTA Member 2011-2012 at Homeport in Columbus, OH): Upon graduation from college, I knew two things:  I wanted to stay in Columbus and I wanted to work within the nonprofit field. I discovered an AmeriCorps VISTA position available with Homeport. During my term, I refined my professional skills through community engagement, community event planning and grant writing. Beyond my professional development, I have learned with and from those who stand in the face of struggle, always resilient in their support of the neighborhoods they call home and the vision of a community that will return to its once beautiful and thriving rhythm. Society has often measured success by wealth or a higher social position. For communities working to stabilize, however, success may look like months with less gang activity, a grant to help purchase home repair supplies or a community picnic where people gather and share in each other’s lives.

Have you served as a VISTA member or participated in another service program? Tell us about your experience below or contact us via Facebook or Twitter.

Youth Savings Builds Good Habits and Good Citizens

By Rebekkah Barger, NeighborWorks Umpqua
IDA program manager

The financial future of our children is determined, in part, by how much they know about money. NeighborWorks Umpqua offers classes that teach money management skills and financial wellness to our young people between 10 to 17; we call it the “Youth 3As.”  The class introduces financial management concepts at a kid’s level while allowing participants to earn matching dollars towards their own asset purchase. Those asset purchases can be anything athletic, artistic, or academic in nature, hence the name “3As.”Over the years we have worked with many young people, and I would like to believe that our classes have a long lasting effect. To be perfectly honest, though, it’s not that often that we hear back from the kids after they have made their purchase — that is, until I met Morgan and her sister, Quinn.

Morgan and Quinn contacted our office almost two years ago and wanted to save for dance lessons.  They had been very good savers, and by the end of the classes had reached their goal of saving $300 each. This qualified them for our 2:1 match of an additional $600 each — an impressive $1,800 for the two at the end of the program and enough to pay around 50% of their annual dance lesson costs ($1,500-2000 for each girl each year).

I didn’t hear about Morgan and Quinn again until a month ago when Morgan contacted me.  She explained that she was participating in the Miss Outstanding Teen pageant and had chosen financial education and goal setting as her platform. Her goal, she explained, was to teach the concept of goal setting and saving to little kids.  She had made arrangements with the local Boys and Girls Club and had even begun writing grants for some start up money.  She was off and rolling! 

I asked Morgan what inspired her to do this, and she explained that setting goals and then saving for them feels good. For six years, Morgan and her sister had been babysitting, dogwalking, selling doughnuts, doing chores for neighbors and many other fundraising activities to pay for their own dance classes and school trips. Cumulatively, she and her sister had raised thousands of dollars. 

Morgan liked being able to have the things that mattered to her, without needing her parents to pay for it. She thought others should learn to do the same and she is even writing a book about saving.  Morgan is a great example of how our programs create good savers, and good citizens.  

For information about Morgan, or other programs offered by NeighborWorks Umpqua, email Rebekah Barger at rbarger@nwumpqua.org  or visit our website at www.nwumpqua.org

Twin Cities CDC Remakes and Markets Elm Street Area Neighborhood

By Ascala Sisk, Senior Manager
Neighborhood Stabilization
NeighborWorks America

Reposted from StableCommunities.org

Rebuilding and rebranding long struggling neighborhoods isn’t an instantaneous process. As our Stable Communities’ Neighborhood Marketing Program participants know, the work of redeveloping and marketing a neighborhood’s image –and making the substantive improvements that that image shift is built upon—takes time and dedication. This past week, I was excited to join Twin Cities Community Development Corporation, a NeighborWorks network organization, to celebrate another step towards success in these efforts.

On Tuesday, April 9th, I joined the Twin Cities CDC and local and national elected officials at a ribbon cutting in Fitchburg, Massachusetts, where a formerly blighted property has been turned into family-friendly housing. The event celebrated more than the rehabilitation of the seven-unit building, it highlighted the work that Twin Cities CDC has put into the slowly transforming the Elm Street Area Neighborhood, the focus of their neighborhood marketing efforts.

At the event, Congresswoman Niki Tsongas noted the catalytic effect these efforts have on their surrounding neighborhoods, saying, "Strong and healthy communities are built around high-quality and affordable housing…In Fitchburg and across the Commonwealth [of Massachusetts], strong public-private partnerships are helping to provide means and mechanisms for revitalizing our cities and towns.”

It is investments like those being made in Fitchburg that are adding strength to local real estate markets and bolstering community pride. I congratulate Executive Director Mark Dohan and the Twin Cities team for their hard work and terrific achievements and look forward to seeing how Twin Cities’ continued, targeted approach to revitalization transforms Elm Street and all of Fitchburg in the months and years ahead.

Read more about the event here.

Read more about NeighborWorks’ Neighborhood Marketing Program here.

Additional Funding for Foreclosure Mitigation Counseling Program

By Jeanne Fekade-Sellassie
director, NeighborWorks America National Foreclosure Mitigation Counseling Program

Today, NeighborWorks America announced that $70.1 million has been awarded to 30 state housing finance agencies (HFAs), 17 HUD-approved housing counseling intermediaries, and 72 community-based NeighborWorks organizations to provide counseling to families and individuals facing the threat of foreclosure.  Just one month after the seventh round of National Foreclosure Mitigation Counseling (NFMC) Program funds were appropriated, communities across our country will be able to put the funds to immediate use.

At a time when foreclosures continue to affect communities around the country and unemployment rates remain high, the need for the NFMC funding is critical.  Demand for these funds far exceeded the amount of funding available; eligible applicants requested over $105 million in NFMC grant funds.



In total, more than 1,200 nonprofit counseling agencies and local NeighborWorks organizations across the country are expected to be engaged in the NFMC Program as a result of these awards.  These organizations provide invaluable, free assistance to families at risk of losing their homes, determine client eligibility for the Making Home Affordable programs, help clients understand the complex foreclosure process, and identify possible courses of action so their clients can make informed decisions and take action.

To date, more than 1,560,000 families in all 50 states, Puerto Rico and Guam have received foreclosure counseling through the NFMC Program.  It is estimated that 193,000 families facing the threat of foreclosure will be directly assisted with this seventh round of funding.

In addition to the grant funding, the NFMC appropriations provide funding to train foreclosure counselors and to administer the program.  With these funds, NeighborWorks has conducted over 156 local, regional, and national trainings and has provided over 12,100 training scholarships and over 23,000 course completion certificates to individuals attending these trainings.  Nearly 5,800 participants have completed one or more of the three foreclosure e-learning courses developed with NFMC funds: Foreclosure Basics, Understanding and Applying Loss-Mitigation Tools, and Using Effective Practices to Improve your Foreclosure Counseling Program.  NeighborWorks expects to train 2,000 counselors with the seventh round of NFMC funding.

Learn more at http://nw.org/network/foreclosure/nfmcp/round7.asp 

How Tax Prep Sites Help Recruit New Clients

By Darren Hamm,
deputy director, NHSGC

The yearly obligation to file taxes is often a rare opportunity for people to really reflect on their finances and to connect with community organizations that can help them year-round. This can help save them money and help nonprofits reach new clients.

Last year Neighborhood Housing Services of Greater Cleveland (NHSGC) started a financial capability program and this tax season marks the second year of our first Volunteer Income Tax Assistance (VITA) program, which helps Cleveland residents of lower incomes receive free help filing their taxes. We chose to run this VITA site because, if you’re talking about asset building, there’s really nothing more direct than saving someone $450 in tax prep and having their refund— often 50% of their annual income—invested in the local environment (utilities, groceries, car repair, tuition) or helping that person pay down debt.

So far this season, NHSGC has assisted in returning more than $750,000 in income tax returns to more than 400 people throughout northeast Ohio, further saving these taxpayers more than $160,000 in filing fees.  This is great for the residents and it’s also an important way for NHSGC to reach new clients.

We identify potential clients by having VITA site tax filers complete surveys on how they will use their refund, their biggest challenges financially and other such questions that can assess their financial capability. We then connect tax filers to services that can address those needs. Sometimes the services are ones we provide and other times we connect tax filers to our local partners. Our hope is that those who haven’t worked with us yet will remember we are here if need arises.

Volunteers from Charter One Bank and Darren Hamm, NHSGC

This approach has already paid off for us and for our new clients. In the past few months we’ve assisted tax filers with foreclosure, helped them register and take homeownership courses, and apply for home repair loans. We’ve been able to help these new clients because they share many characteristics with our current clients, such as geographic location. However, as a group, the new clients/tax filers are more likely to rent than own and they generally have more modest incomes, so we keep that in mind when explaining our services.

Overall, we feel it’s been a successful tax season and we hope to maintain relationships with clients in the coming year.  To close out, we’re hosting a Super Saturday event on April 13 in partnership with Charter One Bank. Tax filers will have their taxes prepared, learn about opportunities to save their tax refund, and be entered into a Cleveland Saves drawing for opening up a savings account on site.

Mountain Housing Opportunities: Building Homes as a Community

This blog is part of our 35th Anniversary Celebration series, highlighting NeighborWorks member organizations which are celebrating milestone years marking either their membership in the network or their incorporation as an organization.

By Brittany Hutson, NeighborWorks
America Public Relations fellow

Twenty-five years ago, a group of 10 volunteers completed seven home repairs in seven months for seniors in the Asheville area. These repairs included roof and porch repairs, replacing furnaces, correcting electrical hazards, and water and sewer problems. Out of this effort was born Mountain Housing Opportunities, a community development corporation based in Asheville, North Carolina, that builds and improves homes, neighborhoods, and communities for people of Asheville and Buncombe County. Several of those volunteers served on the original board of directors of Mountain Housing, including Executive Director Scott Dedman. Today, the organization completes 150 emergency home repairs each year for families with children and elderly and disabled homeowners.

In the early 1990s, Mountain Housing moved into developing single family homes and affordable/workforce apartments, and later townhomes and condominiums for first-time homebuyers.  Since the financial crisis, Mountain Housing has temporarily stopped producing multifamily homes for homeownership.

Self Help Homeownership families work together to frame a house

“We are building single family homes and have expanded our production of apartments since the rental market continues to expand dramatically,” says Dedman. As part of the organization’s single family home development effort, Mountain Housing worked with the U.S. Department of Agriculture, Rural Development office to start a Self-Help Homeownership program, where families spend approximately 20 hours per week building their own homes for about eight months. “We build six homes per years with families through that program,” explains Dedman. Production for apartments averages about 60 per year. To date, 535 apartments have been completed.

Two members of the six Self Help HomeOwnership
families measure wood to cut for their home

Mountain Housing became a NeighborWorks charter member five years ago, and since then, Dedman says the organization has dramatically grown in production and services. For example, after becoming a member, Mountain Housing began a down payment assistance program that provides an average of 25 to 30 homebuyers per year with loans for as much as $15,000 per home.

Since Mountain Housing earned a LEED Gold certification for a building completed in 2010, they have been incorporating even more green features into their developments. Dedman is also proud that Mountain Housing has helped more than 4,500 families and individuals. “We’ve saved people’s homes and lives through emergency repair,” he says. “We’re providing families with children and elderly and disabled folks a safe and attractive apartment in good neighborhoods. We’ve helped families move up in their quality of life.” 

Learn more about Mountain Housing Opportunities at http://www.mtnhousing.org 

Joining forces: Habitat and NeighborWorks in Michigan

NeighborWorks America recently announced that Habitat for Humanity of Michigan is now part of our network of chartered members. This is an exciting opportunity for two nationally recognized affordable housing organizations to expand services in a state that has suffered greatly in recent years.  To bring you more of the story, Alexandra Chaikin, online media project manager at NeighborWorks America, interviewed Sandra Pearson, president and CEO for Habitat for Humanity Michigan.

Sandy Pearson, president and CEO
Habitat for Humanity Michigan

What does Habitat for Humanity of Michigan do?

We serve 75 local chapters of Habitat operating in all 83 counties of Michigan. We offer families and individuals access to services like financial capability, homebuyer education and debt management. In 2009, we became a full service company offering mortgage origination, servicing and collections; and we are a licensed lender. This gives us a platform that will allow us to work with financial institutions in new ways to help them meet their goals to serve people who don’t qualify for conventional mortgage products and, ultimately, the goal for us is to provide financing for low-income people who want to buy a home, but who cannot qualify for traditional mortgages. The ability to work with financial institutions and investors in new ways to bring more capital to all that we do allows us to take families who want to be homeowners further down the path to achieving their goals.

How did you first hear about NeighborWorks America?

My first experience with NeighborWorks was when I worked at Michigan State Housing Development Housing Development Authority. When families were ready to buy a house, I helped get them financing. There were only three places that could serve nontraditional applicants with lowest incomes: Habitat for Humanity, the USDA 502 direct program and a NeighborWorks affiliate in Toledo, Ohio which had a loan pool. That program in Toledo actually inspired the statewide loan fund program I’m working to fund here in Michigan.

You went to an organization in Ohio to help people in Michigan?

I will go anywhere. I’m working with a company in California right now. If I can’t get it in Michigan, I’ll go someplace else.

What are the advantages of becoming a member of the NeighborWorks network?

This is a huge personal goal for me. One of my initial goals was becoming a chartered NeighborWorks member because we could really partner to help more families. We can refer clients to each other, provide more financing options and do more in areas like financial capability, homebuyer education and debt management.

Habitat for Humanity's Women Build program helps women
learn construction skills and build homes and communities. 

When you have Habitat for Humanity and NeighborWorks America, the two largest national affordable housing organizations, working together, the possibilities are beyond what you could imagine. It’s going to be the biggest thing I’ve ever been involved in in 20 years of affordable housing.

Can you say more about the loan fund you’re developing?

Capital is scarce these days and particularly so here in Michigan, so we’re interested in closing the gap between need and availability. Habitat for Humanity Michigan has established a structure for the Habitat for Humanity Michigan fund. The goal is a $20 million mortgage purchase loan pool, which I’m working now to get funded. We will establish a revolving loan fund that financial institutions and other capital investors may invest in to bring more capital to finance mortgages and home repairs. Funds will directly benefit individuals and bring more capital to allow affiliates to partner with more families in more ways than ever. Staffing for the loan fund is statewide which frees local staff and volunteers to focus on what they do best.  Basically the fund is tapping into a network of community development experts and private sources of funding to allow more efficiencies statewide and therefore help a greater number of people.
I’m also working on program with the state housing finance agency and a state bank to create a sort of secondary market for the loans. This will increase organization’s cash flow and their ability to relend to other families. I anticipate that the loan fund will happen by June of this year.

Who will benefit from this loan fund?

 Loans will go directly to anyone served by NeighborWorks America, Habitat for Humanity Michigan or the USDA 502 direct program. Since Habitat for Humanity Michigan serves all 88 counties of the state, the benefits essentially are open to anyone who qualifies and comes to us or to NeighborWorks America or the USDA 502 direct program. There is potential for this to expand to other states.

Any closing thoughts?

Millard Fuller, Habitat's founder said “The poor do not need charity; they need capital. A hand up and not a hand out.” In my mind, this partnership works toward that statement – a catalyst to bring capital to more people.