Skip to main content

Study Finds Counseled Homebuyers Make Wiser Homeowners

NationalMortgageProfessional.com
Mar 08, 2013

CDCLI has announced the results of new research on the effectiveness of NeighborWorks pre-purchase housing counseling and education that shows that homebuyers who received such advice were one-third less likely to fall behind on their mortgages 90 days or more, two years after taking out the loan, compared to homebuyers who didn’t receive similar counseling and education. The research was done for NeighborWorks America, a national nonprofit affiliated with CDCLI, by Neil Mayer and Associates and Experian, and is based on approximately 75,000 mortgage loans originated in 2007, 2008 and 2009. “Mortgage delinquency and foreclosure continue to be stubbornly high here on Long Island and throughout the country. This new research clearly tells us what works to help families with their housing issues ahead of time, staving off family stress, financial difficulties and costs that are borne by neighbors and local government,” said Marianne Garvin, president and CEO of CDCLI. The research findings have important implications for CDCLI and the entire housing counseling and education industry. “While we have long known anecdotally that pre-purchase housing counseling and education provided by certified professionals that work at CDCLI is effective at helping to create homeowners who are less likely to default, this research actually proves it,” said Garvin. The research could also become an important tool for lenders in the Long Island area. Because homebuyers who receive NeighborWorks pre-purchase housing counseling and education are less likely to be three months or more late on their mortgage, the likelihood of foreclosure or other default related costs are reduced, helping a lender’s or servicer’s bottom line. “Supporting pre-purchase housing counseling by certified staff affiliated with NeighborWorks organizations like ours is a win-win for the homebuyer and the mortgage industry,” said Garvin. The NeighborWorks America research shows how a small investment up front that finances the availability of pre-purchase housing counseling and education can help homeowners avoid financial losses by potentially staving off serious delinquency that has a good chance of extending into foreclosure, help prevent disruption of family life, and help keep communities stable that might be hurt by home foreclosure. Estimates vary, but total losses due to foreclosure borne by local governments, servicers and households can exceed $50,000 per foreclosure, according to a report from the Joint Economic Committee of the U.S. Congress. According to the Mortgage Bankers Association National Delinquency Survey for the fourth quarter of 2012, the percentage of residential mortgage loans 90 days or more past due across the country was 6.78 percent, and 3.74 percent of homeowners nationwide were in foreclosure. By providing NeighborWorks pre-purchase housing counseling and education to more consumers it’s likely that tens of thousands of the more than 1.5 million homeowners who received a default notice in 2012 may have been able to avoid entering foreclosure. Interestingly, the NeighborWorks America research shows that even repeat homebuyers benefit from receiving NeighborWorks pre-purchase housing counseling and education. According to the report, repeat homebuyers who received the services also are about one-third less likely to fall 90 days or more behind in their mortgages than repeat homebuyers who didn’t receive NeighborWorks pre-purchase housing counseling and education. “More analysis of the data is required to determine the factors for the repeat homebuyer results,” said NeighborWorks America CEO Eileen Fitzgerald. “But one thing is clear from the data: housing counseling is effective, even if you’ve been a homeowner before.”
Published
Mar 08, 2013
PenFed CU Sees Record Annual Mortgage Lending Volume

PenFed Credit Union announced it's financial highlights from 2021 which includes record annual mortgage lending volume.

Industry News
Jan 21, 2022
Angel Oak Lending Platform Reveals Record-Setting 2021

Last year was a record-setting year for many companies in the mortgage lending space, especially for the Angel Oak lending platform that consists of Angel Oak Mortgage Solutions and Angel Oak Home Loans.

Non-QM
Jan 21, 2022
What Are The Biggest Deal-Breakers For Homebuyers?

The housing market is holding strong but that doesn't mean homebuyers don't have their fair share of deal-breakers when it comes to purchasing a home.

Analysis and Data
Jan 20, 2022
Popular Bank Names National Director Of Residential Lending

Popular Bank named Adam Dejak as its national director of residential lending for Popular Mortgage.

Industry News
Jan 20, 2022
Total Expert Appoints Gaydos As President

Former Talkdesk and SAP senior executive brings extensive cloud, go-to-market, sales, and operations experience.

Industry News
Jan 20, 2022
Sagent Appoints Thompson As Chief Product Officer

Founder of fintech managment consulting firm Consigliera will lead and expand product development.

Industry News
Jan 20, 2022