NeighborWorks Report Shows Hispanic Homeowners More Likely to Hold ARMs than Fixed Rate Mortgages

Today NeighborWorks America, the administrator of the Congressionally authorized National Foreclosure Mitigation Counseling (NFMC) program, announced that of the more than 363,000 homeowners who received foreclosure prevention counseling as a result of NFMC funding through March 31, 2009, 21 percent were Hispanic homeowners, nearly twice their representation of total homeowners. In all, 53 percent of NFMC Program clients were minority homeowners, or more than twice the overall percentage of minority homeowners.

The data reported today are part of the third NFMC report distributed to Congress in June 2009, and are based on client information provided from more than 1,700 HUD-approved housing counseling intermediaries, state housing finance agencies, and nonprofit housing counseling agencies that received NFMC funding through March 31, 2009. As of June 30, 2009, more than 540,000 homeowners have received foreclosure prevention counseling as a result of NFMC funding.

Nationwide, Hispanic homeowners make up only 11 percent of the nation’s homeowners, according to industry studies. Twenty-four percent of the nation’s homeowners are racial/ethnic minorities, with African American homeowners accounting for 9 percent, and Asian/Pacific Islanders accounting for 4 percent.

Also according to the NeighborWorks America NFMC report, Hispanic clients who sought foreclosure prevention counseling were the only group of homeowners more likely to hold adjustable rate mortgages (ARMs) than fixed rate mortgages. Forty-seven percent of Hispanic NFMC clients held ARMs, and 41 percent held fixed rate mortgages. Nationwide, only 18 percent of outstanding mortgages are ARMs.

All other NFMC clients were more likely to hold fixed rate mortgages than ARMs. Fifty-one percent of African American clients held fixed rate mortgages, and 38 percent held ARMs. Like African American NFMC clients, White NFMC clients were more likely to hold fixed rate mortgages (59 percent) than ARMs (31 percent).

For more information about the NFMC Program, visit www.nw.org/nfmc.

NeighborWorks' Marietta Rodriguez Calls for Servicers to Compensate Counselors

Mortgage foreclosures are continuing to increase, but recently many of the country's largest mortgage servicers -- the companies that homeowners mail their monthly payments to and the firms responsible for making loan modifications -- sat down with government officials to improve things.

NeighborWorks America's Marietta Rodriguez, director for Homeownership and Lending, told National Public Radio's Marketplace program, what she thought mortgage servicers should be doing better to help families stay in their homes.

Marietta outlines some basic improvements that servicers need to make such as increasing communication back and forth between the borrower, the counselor working with them and more standardization. She noted that forms to process a loan modification are lost by servicers and that the homeowner, already under stress, has to fill the documents out multiple times in some cases. That fact is illustrated by reports from counselors who are part of the National Foreclosure Mitigation Counseling program.

According to Marietta, counselors are working very hard to get borrowers in trouble to work with their servicers and that work is making the servicer's job easier. As a result, in comments edited out of the Marketplace interview, Marietta said that the servicing industry needs to begin compensating counselors for this work that is saving the mortgage industry time and money.

"Counselors provide a real, tangible benefit to servicers just like any other professional like lawyers and title companies. Counselors should be compensated for this work."

New Resource for Planning and Implementing an REO Program Released

The current economic climate has drawn attention to the issue of Real Estate Owned (REO) properties, with tens of thousands of foreclosed properties appearing in our communities.

Affordable housing practitioners and community development organizations are looking for ways to handle these properties, which are often left vacant and vulnerable to vandals and the elements. When properties deteriorate, neighborhoods undergo stress and destabilization, and there's a lost opportunity to match properties with lower-income families.

In addition to a growing number of courses focused on the acquisition, management and sale of REO properties, as well as classes on stabilizing neighborhoods and helping prospective homeowners purchase foreclosed properties, NeighborWorks America is pleased to offer a free, half-hour webinar that guides boards, executive directors and other key decision-makers in planning and implementing a REO program. The webinar can be viewed here, and note that there is a link at the end for a printed copy with speaker's notes.

NeighborWorks Organizations Apply for $938M in Neighborhood Stabilization Program Funding

Today NeighborWorks America announced that 48 NeighborWorks organizations with their local and regional partners are applying for $938 million in Neighborhood Stabilization Program (NSP) funds in the second round of competitive funding. More than eight million homes are expected to enter into foreclosure through 2012, which means millions of homes are likely to be left vacant and abandoned, deteriorating neighborhoods and destabilizing communities.

“The nation is faced with rapid downward pressure on neighborhoods that is unlike anything we have seen in generations. The crisis has not only affected our housing market, but our entire economy, and requires a response as intense and comprehensive as the challenge itself,” said Ken Wade, CEO of NeighborWorks America.

A comprehensive response is exactly why many of the local NeighborWorks organizations have partnered with their state or local government, the private sector, and other nonprofit partners in applying for the second round of NSP funding.

Consortium partnerships that submitted applications to the U.S. Department of Housing and Urban Development will likely be among the most competitive applicants for NSP 2 funds. Each partner brings their unique strengths and expertise in a variety of disciplines needed to effectively stabilize communities, including assembling capital, property acquisition, rehabilitation or demolition, homeownership education, land banking, and asset management. Nonprofit housing and community development organizations, government and private sector partners that combine their strengths will amplify their ability to transform the housing crisis into an opportunity to rebuild neighborhoods and create healthy, stable communities. These cross-sector partnerships will be most effective in navigating their community through the crisis.

For more information about NeighborWorks' community stabilization efforts, visit www.nw.org or visit www.stablecommunities.org.

Report Shows African American Homeowners Are Hard Hit by Foreclosure Crisis

Today NeighborWorks America, the administrator of the Congressionally authorized National Foreclosure Mitigation Counseling (NFMC) program, announced that of the more than 363,000 homeowners who received foreclosure prevention counseling as a result of NFMC funding through March 31, 2009, 28 percent were African American homeowners, more than twice their representation in the overall public, and more than three times their representation of total homeowners. In all, 53 percent of NFMC Program clients were minority homeowners, or more than twice the overall percent of minority homeowners.

Nationwide, African American homeowners make up only 9 percent of the nation’s homeowners. Twenty-four percent of the nation’s homeowners are racial/ethnic minorities, with Hispanic homeowners accounting for 11 percent, and Asian/Pacific Islanders accounting for 4 percent.

Also according to the NeighborWorks America NFMC report, which analyzed client data through March 31, 2009, of all NFMC Program clients that held mortgages with interest rates above 8 percent, 35 percent are African American homeowners. Yet African American homeowners only account for 19 percent of the nation’s subprime mortgages.

In addition, African American clients who sought foreclosure prevention counseling were more likely to hold fixed rate mortgages than adjustable rate mortgages (ARMs) —
51 percent of clients held fixed rate mortgages, and 38 percent held ARMs, compared to Hispanic clients, who were more likely to hold ARMs (47 percent) than fixed rate mortgages (41 percent). Like African American clients, White clients were more likely to hold fixed rate mortgages (59 percent) than ARMs (31 percent).

The report also noted that lower-income homeowners are likely to have a greater rate of foreclosure starts than higher-income homeowners. Fifty-eight percent of African American NFMC clients reported earning 80 percent or below their Area Median Income.

To learn more, download the latest NFMC report.