Housing Counseling Is Good Business; Helping Home Buyers; Make Education a Central Component of the Mortgage Process

By Bond, Christopher | St Louis Post-Dispatch (MO), May 29, 2013 | Go to article overview

Housing Counseling Is Good Business; Helping Home Buyers; Make Education a Central Component of the Mortgage Process


Bond, Christopher, St Louis Post-Dispatch (MO)


Home sales in Missouri are up more than 9 percent from last year. While this progress is good news, it is essential we look at lessons learned over the past six years of the housing crisis. One of the most important lessons is that home purchase education and counseling must become a central component of the mortgage process, particularly for first-time home buyers. That's a key conclusion reached by the Bipartisan Policy Center's Housing Commission, which I co-chair, in its report, Housing America's Future: New Directions for National Policy.

For homeowners who lose a job, suffer a medical setback or experience another type of crisis, housing counselors can assist in developing an "emergency response plan" before they fall behind on their mortgage payments. I heard first-hand how counseling provided by incredible local organizations like Beyond Housing saved Missouri families from losing their homes. A recent Department of Housing and Urban Development study on foreclosure counseling reinforces the value of early intervention: According to the study, nearly 70 percent of homeowners who sought counseling before becoming delinquent on their mortgages were in their homes and current on their mortgage payments some 18 months later. By contrast, among homeowners who entered counseling six months or more after falling behind on their payments, only 30 percent were current on their mortgage and in their homes at the end of the follow-up period.

The bottom line is that counseling can help motivated but at- risk homeowners understand their options and avoid delinquency and foreclosure.

Counseling before a house is purchased is also critical, helping families decide whether they are ready to assume the financial obligations of homeownership. I have heard repeatedly from counselors, families, and civic leaders that pre-purchase counseling's most important contribution is helping prospective buyers understand when it is not the right time to purchase a home. I have no doubt that thousands of families would have been spared heartache and financial stress if they had received counseling before signing on to unsustainable mortgages during the housing bubble.

In a recent study examining 75,000 mortgages originated over a two-year period from October 2007 to September 2009, one of our country's leading community-development organizations, NeighborWorks America, provides the latest evidence of the power of pre-purchase counseling. 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 in the first two years after closing than those borrowers who did not receive counseling. …

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