1.4 Million Foreclosure Counseling Sessions Not Enough

Written by Posted On Thursday, 15 August 2013 17:00

We gotta have more counseling for struggling homeowners.

Six years after the foreclosure crisis, the NeighborWorks America's National Foreclosure Mitigation Counseling Program has assisted more than 1.4 million homeowners with foreclosure counseling, and provided mortgage-related legal assistance to more than 39,000 homeowners.

Banks, mortgage lenders, state programs, community services and other programs have assisted scores of other homeowners struggling to make their mortgage payments during the same period.

Yet borrowers across the country are still struggling with mortgage payments and seek help from housing counselors to help manage their finances and guide them through the mortgage modification maze, according to a report from the Center For Responsible Lending.

Home ownership counseling has become as necessary for retaining home ownership as the money needed to invest in what’s likely a consumer's most valuable asset.

Studies reveal why certified counseling should be the No.1 step on the road to home ownership – before checking your credit, before hiring a real estate agent – and why many of today’s mortgages and mortgage assistance programs are unavailable without it.

Likewise, studies reveal counseling is a great deterrent against foreclosure.

CRL analyzed areas of greatest need for continued counseling to help identify which metropolitan and rural areas have been hardest hit by the foreclosure crisis and remain areas of greatest need for additional foreclosure counseling resources.

CRL used the following criteria to determine areas of greatest need:

Non-Prime, Owner Occupied Loans

  • Number of non-prime loans that are 30-90 days delinquent
  • Percent of non-prime loans that are 30-90 days delinquent
  • Percent of non-prime loans that are in the foreclosure process or REO
  • Percent of loans originated between 2004 and 2006 that were higher- priced (subprime)

Prime, Owner Occupied Loans

  • Number of prime loans that are 30- 90 days delinquent
  • Percent of prime loans that are 30-90 days delinquent
  • Percent of prime loans that are in the foreclosure process or REO

CRL ranked metropolitan and micropolitan areas were separately ranked in each category. In the first part of the analysis, every metropolitan area that was in the top quintile for at least one of the criteria was considered an area of greatest need.

But the majority of areas checked were in the top quintile for both criteria.

For rural areas, states where half or more of the micropolitan areas met at least one criterion were considered areas of greatest need.

In the second part of the analysis, CRL limited areas of greatest need as follows: every metropolitan area that was in the top quintile for at least two of the criteria, and for rural areas, states where half or more of the micropolitan areas met at least two criteria.

CRL said the share higher-priced loans comes from the Home Mortgage Disclosure Act (HMDA), and reflect the percent of owner-occupied loans originated between 2004 and 2006 that were higher-priced, a proxy for subprime.

Higher-priced loans are defined as those with rates three or more percentage points higher than the comparable Treasury rate.

Data for non-prime loans comes from BlackBox, which covers over 90 percent of non-agency pools, including jumbo, subprime and Alt-A mortgages.

BlackBox coverage of the U.S. market includes nearly 7,600 deals, over 5,700 of which are active.

Loan performance was measured in January of 2013.

Data for prime loans comes from Lender Processing Services Analytics Inc. (LPS), which collects loan-level data from servicers. Estimates suggest that LPS has extensive coverage, equal to 66 percent of the first-lien mortgages reported to federal regulators in HMDA data from 2005 through 2008.

Non-prime loans in LPS were removed from the analysis. Loan performance was measured in January of 2013.

Overall, data was analyzed for 366 metropolitan and 576 micropolitan areas.

States with many cities (6 or more) revealing the worst quintile for both measures included, in alphabetical order, Alabama, California, Florida, Georgia, Louisiana, Michigan, New York, Ohio and Texas.

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