Report Finds Counseled Homeowners More Likely to Receive Loan Mods
A report issued by NeighborWorks America prepared by the Urban Institute on the consumer benefits of the National Foreclosure Mitigation Counseling (NFMC) Program shows that homeowners who received NFMC counseling were nearly twice as likely to obtain a loan modification and are at least 67 percent more likely to remain current on their mortgage nine months after receiving one, saving servicers considerable time and expense. The data compares the results against homeowners who obtained a mortgage modification without the assistance of an NFMC foreclosure prevention counselor. The report, "National Foreclosure Mitigation Counseling Program Evaluation," also showed that homeowners received, on average, a loan modification that lowered their payment by $176 more per month, than homeowners who didn't work with an NFMC counselor—a savings of close to $2,100 a year. "The NFMC program works incredibly well for homeowners and communities," said Eileen Fitzgerald, NeighborWorks America chief executive officer. "Importantly, the NFMC program is an investment that also has benefits for mortgage servicers. By significantly reducing the chance that a homeowner re-defaults after a mortgage modification, servicers are saved added expense. This tells us that increased servicer investment in partnerships with non-profit counselors is a win for everyone." The improved long-term sustainability—reduced re-default rate—of the borrower is led largely by the financial counseling that is a part of foreclosure prevention, not by the lower mortgage payment obtained. The Urban Institute's NFMC analysis noted that, "the great bulk of the sustainability benefit resulted from other impacts of counseling, such as helping borrowers to improve their financial management skills, assisting them in managing relationships with servicers/investors, and providing other types of support."