Community Dividend

NeighborWorks America releases report on foreclosure counseling

Published January 1, 2009  |  January 2009 issue

NeighborWorks® America (NWA) has released its first report to Congress about foreclosure activities funded through the National Foreclosure Mitigation Counseling (NFMC) Program. The NFMC Program was among the first federal responses to the nationwide foreclosure crisis. It was created in December 2007 with the passage of the FY 2008 Consolidated Appropriations Bill, which authorized $180 million for foreclosure counseling efforts and named NWA as program administrator.

The report, titled National Foreclosure Mitigation Counseling Program Congressional Update: Activity through September 15, 2008, is based on data gathered from 130 foreclosure-mitigation and housing organizations that had received a total of $55 million in NFMC Program grants as of September 15, 2008. In addition to listing statistics about the NFMC Program's activities and funding, the report includes demographic information about the clients who have received foreclosure counseling through the program, descriptions of the challenges foreclosure counselors face in their work with clients and mortgage servicers, and a discussion of successful strategies that counselors employ.

According to the report, as of September 15, 2008, the NFMC Program had provided foreclosure-related counseling to 105,071 homeowners in all 50 states. Of the clients served, 55 percent are female and 30 percent are married with dependents. Nearly two-thirds are ages 35 to 54, while one-fifth of clients are age 55 or older. A majority of the clients—52 percent—are African American, Hispanic, or Asian or Pacific Islander, although these groups make up just 18 percent of all homeowners in the U.S. More than 40 percent of foreclosure counseling clients defaulted on their mortgages because of a loss of income. Only 9 percent defaulted because their loan payment increased. Forty-four percent of clients had adjustable-rate mortgages, or ARMs, and 45 percent had fixed-rate mortgages. In comparison, 22 percent of all mortgages in the U.S. are ARMs and 72 percent are fixed-rate. About 52 percent of clients reported spending more than 40 percent of their household income on housing, while 20 percent reported that their housing payments are more than 75 percent of their household income.

In addition to the $55 million that has been awarded directly to organizations that provide foreclosure-related counseling, the NFMC Program allocated $5 million to NWA to build the skills and capacity of the grant recipients. As of September 15, 2008, the capacity-building funds channeled through NWA had provided scholarships that enabled 2,555 staff members of the 130 grantee organizations to attend foreclosure counseling training. The funds also enabled grantees to hire 1,035 new foreclosure counselors.

To download the report, visit www.nw.org.

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