- Homeowners facing foreclosure continue to hold higher rate mortgages
- Underemployment and unemployment remain top reasons for default
WASHINGTON, D.C. – October 23, 2013 – (RealEstateRama) –Nearly 1.6 million homeowners have received foreclosure prevention counseling by local nonprofits, national intermediaries and state housing finance agencies participating in the National Foreclosure Mitigation Counseling (NFMC) program. The NFMC program is administered by NeighborWorks® America, one of the nation’s largest community development corporations.
“Although the economy is improving, there are still many homeowners who need foreclosure prevention counseling and the NFMC program continues to assist thousands of families,” said NeighborWorks America CEO Eileen Fitzgerald. “A homeowner who receives help from the NFMC program saves significant money and time and, importantly, often is able to remain in their home. The NFMC program has provided counseling in every state, the District of Columbia and Puerto Rico. We’re proud to spotlight the excellence and perseverance of homeownership counselors in helping people to stay in their homes.”
Many Homeowners Continue to Hold Higher Rate Mortgages
The latest NFMC report found that nearly 20 percent of homeowners seeking foreclosure prevention counseling have a mortgage rate that is eight percent or higher, down from 40 percent in October 2008. Notably, the report also shows the percentage of clients who reported having fixed-rate mortgages with interest rates below 8 percent increased from 30 percent in October 2008 – to nearly 59 percent – in May 2013.
Although many homeowners in distress hold mortgages with relatively high rates and may not be able to refinance or find payment relief through traditional means, homeowners who do work with NFMC foreclosure prevention housing counselors reap significant reductions in their monthly payments through mortgage modification. Based on an independent program report prepared by the Urban Institute, NFMC clients who received a mortgage modification with the help of an NFMC counselor generally lowered their monthly mortgage payment, on average, $176 more per month than non-NFMC clients. This represents $372 million in annual savings to NFMC-counseled homeowners.
Underemployment and unemployment remain top reasons for mortgage default
The U.S. job market continues to improve, but data from the latest NFMC report show that job loss and underemployment remain the main reasons for mortgage default. Nearly 62% of homeowners who seek NFMC foreclosure prevention counseling reported that their mortgage default was due to either reduced income or loss of income – up from 41 percent in October 2008.
NOTE: Join a live discussion of the latest NFMC report taking place on Twitter this Friday, October 25 at 3:30 pm Eastern time. Follow the conversation at #NFMC
The following are examples of clients the National Foreclosure Mitigation Counseling program has served:
Helped following a reduction in income
Jennifer Lynn Hamilton and her husband Richard Lindsey of Flagstaff, AZ experienced what Ms. Hamilton referred to as “one of the most difficult and stressful time periods ever in our life.” Mr. Linsdsey had surgery and missed four months of work. Meanwhile, employment opportunities, as a reflection of the economy at this time, became extremely scarce. When he was ready to go back to work as a carpenter, there wasn’t any work to be found. The reduction in income left them unable to meet all of their obligations.
The couple looked to the Internet for help and decided to call BOTHANDS, Inc., an NFMC program sub-grantee of the Arizona Department of Housing/Arizona Housing Finance Authority. Cher Ferry, a foreclosure counselor, worked with them for two years to assist them in obtaining a loan modification, while continuing to work with them on their budget and finances. A loan modification was finally obtained. With their mortgage payments reduced by almost $250 per month, they were able to get back on track after a severe delinquency. “I am finally seeing the light,” said a very positive Ms. Hamilton.
Overcoming delinquency brought on by medical issues
Heidi Swartz is married with five children. Two decades ago, Ms. Swartz’s parents gave her $3,000 toward the purchase of her first home. This investment grew to over $50,000, after upgrading her home twice to accommodate her growing family. In 2010, she was diagnosed with a chronic illness and could no longer operate her daycare business. Her husband, who tried to care for her and assist with the daycare business along with working his own job, became overwhelmed. With the substantial loss in income, the family now faced the possibility that they would not be able to keep their home. Delinquent mortgage payments were amassing and the foreseeable future looked hopeless. Ms. Swartz was referred by her sister — who herself received a mortgage modification — to Randy Rehling at Consumer Credit Counseling Services of Lutheran Social Services in Sioux Falls, an NFMC program sub-grantee of the South Dakota Housing Development Authority.
Ms. Rehling worked with Ms. Swartz to obtain a trial modification, even with her eight months of mortgage arrearages, and successfully brought her monthly payment down from $1,500 to $1,000.
Ms. Swartz recommended, “For every person out there who needs help, get to an agency such as Consumer Credit Counseling Services for help.”
The full report to Congress on the NFMC program is available at http://www.nw.org/network/foreclosure/nfmcp/congressional_reports.asp
About NeighborWorks America
For 35 years, NeighborWorks America has created opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated more than $19.5 billion in reinvestment in these communities. NeighborWorks America is the nation’s leading trainer of community development and affordable housing professionals.
Contact: Doug Robinson, , 202-870-3583, Twitter: @neighborworks