Homebuyers who receive pre-purchase housing counseling and education could save the country tens of millions of dollars, according to new research from NeighborWorks America.
Looking at 75,000 mortgage loans originated in 2007, 2008 and 2009, NeighborWorks found that homebuyers are nearly one-third less likely to fall behind 90 days or more on their mortgages after receiving counseling.
“NeighborWorks America has long known that pre-purchase housing counseling and education, provided by certified professionals in our network helps create homeowners who are less likely to become seriously delinquent on their mortgages,” said NeighborWorks America CEO Eileen Fitzgerald.
On average, 14% of mortgage loans that are seriously delinquent end up in foreclosure, according to data from the National Association of Realtors.
While estimates vary, NeighborWorks notes that total losses due to foreclosures borne by local governments, servicers and households can exceed $50,000 per foreclosure, based on a report from the Joint Economic Committee of the U.S. Congress.
“Policy makers and lenders should take note,” said Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University. “This study provides compelling evidence that pre-purchase counseling has a significant impact on reducing serious loan delinquencies within the first two years after a mortgage loan is originated.”
Written by Jason Oliva