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SOURCE: Springboard Nonprofit Consumer Credit Management
Homeowners Receiving Counseling are Less Likely to Default on Mortgage Loans
Riverside, CA (PRWEB) June 08, 2012
Springboard Nonprofit Consumer Credit Management, Inc., (“Springboard”) commented today on study findings released by the U.S. Department of Housing and Urban Development (“HUD”) that validate the value and effectiveness of housing counseling at facilitating sustainable homeownership.
Through counseling, HUD found homeowners are more likely to stay in their homes, even when facing foreclosure. The HUD study reports on two types of counseling: pre-purchase and foreclosure prevention. In both studies, HUD found housing counseling significantly improved the likelihood homeowners would remain in their homes.
The 18-month study examined the impact of HUD-approved housing counseling for families considering the purchase of a first time home and for those facing foreclosure. According to independent research, housing counseling significantly improved the likelihood of continued homeownership for both study groups. Nearly seventy percent of those counseled for foreclosure prevention obtained a mortgage remedy, with more than half subsequently becoming current on their mortgages. In addition, thirty-five percent of those receiving pre-purchase counseling became homeowners, with only one homeowner eventually falling behind on their mortgage payments, a greatly improved outcome over prevailing delinquency rates within the general population.
Another significant finding released by HUD revealed the importance of the expansion of telephone counseling during the foreclosures crisis as an important alternative resource for individuals and communities.
Established in 1974, Springboard is a HUD-approved 501 (c)(3) nonprofit community service organization that works to strengthen communities and improve the lives of consumers by offering services that promote financial literacy, stable homeownership and a healthy economy. Springboard is the largest HUD-approved housing counseling agency on the West Coast.
In addition, Springboard is a network counseling partner of The Homeownership Preservation Foundation (HPF), an independent national nonprofit that has received more than six million telephone calls from distressed homeowners seeking to avoid foreclosure. Through its affiliation with HPF, Springboard’s housing counselors provide financial education and information to distressed homeowners calling HPF's Homeowner’s HOPE™ Hotline at 888-995-HOPE™. Independent research underscores the efficacy of phone-based counseling for homeowners in need. With the housing crisis still among us, homeowners need to have choices on where they can turn for help and the findings released by HUD confirmed that those counseled via the telephone had positive housing outcomes in terms of loan modification, principle reduction, and overall likelihood to remain in their home and be current on their loans.
“These findings are positive and confirm the value of counseling. The results of these studies reinforce the need for housing counseling,” said Todd Emerson, Springboard President and CEO. “As a HUD-approved housing counseling agency, we provide a valuable service to homeowners that works and is proven to greatly improve the likelihood that individuals and families can remain in their homes,” said Emerson.
The study tracked the characteristics, experiences, and outcomes of 824 homeowners who sought foreclosure mitigation counseling and 573 clients who sought pre-purchase counseling. The final reports from the study were published in May and are available on HUD’s website: Pre-Purchase Counseling Outcome Study and Foreclosure Counseling Outcome Study.
This study provides information on who accesses counseling services when facing challenges in paying their mortgage loan, what services those clients obtain, and identifies the outcomes the clients experienced in the following 18 months. Please note that this study was designed to determine the correlation among the data, but was not designed to predict causation among the data. The report’s findings include:
? Most study participants attempted to contact their servicer when they first fell behind but were unsuccessful in negotiating with their lenders on their own.
? With a counselor’s help, 69 percent of counselees obtained a mortgage remedy, and 56 percent were able to become current on their mortgages.
? Nearly 70 percent of clients who sought counseling before becoming delinquent were in their home and current on their mortgage payments at the 18-month follow-up period, whereas only 30 percent of clients who were six or more months behind at the time they entered counseling were in their home and current at follow-up.
The results suggest that counseling can help many homeowners at risk of foreclosure to negotiate and obtain mortgage remedies, and to become current on their mortgage payments. In addition, homeowners in the study who were able to obtain mortgage remedies were more likely to stay in their homes. The HUD study is also one of the few studies that documents housing outcomes in relation to specific counseling services received.
About three-quarters of the homeowners who had fallen behind on their payments did so because
of a loss of income, and very few had any savings to draw upon to pay missed mortgage payments. The study finds that large shares of counseled homeowners were able to obtain a remedy, retain their home, and become current on their mortgages. These outcomes were much more common among homeowners in the study who sought counseling before becoming delinquent or in the early stages of delinquency (1-3 months).
Springboard was one of 24 housing counseling agencies that participated in the evaluation of the outcomes of housing counseling funded by HUD and conducted by Abt Associates, Inc.
Springboard’s web portal, http://www.HomeOwnership.org, provides consumers with the latest information on housing, including loan modification, refinance, and pre-purchase education.
About Springboard Nonprofit Consumer Credit Management
SPRINGBOARD® Nonprofit Consumer Credit Management is a 501(c)(3) nonprofit personal financial education and counseling organization founded in 1974. Springboard is a HUD-approved housing counseling agency and a member of the National Foundation for Credit Counseling, a national organization of nonprofit credit counseling agencies, and a member of the Association of Independent Credit Counseling Agencies. The agency offers personal financial education and assistance with credit counseling, housing counseling, debt and money management through educational programs and confidential counseling. Springboard is accredited by the Council on Accreditation, signifying the highest standards for agency governance, fiscal integrity, counselor certification and service delivery policies. The agency provides pre-bankruptcy counseling and debtor education as mandated by the bankruptcy reform law. The agency offers nationwide phone counseling services and has locations in California, Arizona, Nevada, New Mexico, Texas, South Carolina and Massachusetts for in-person counseling sessions. Not all types of counseling are available in-person at all locations, please call for details. For more information on Springboard, call 800.449.9818 or visit their web site at http://www.springboard.org.
For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2012/6/prweb9577701.htm
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