Counseling Helps Families Prepare for Homeownership

Pre-Purchase Counseling Helps Families Prepare for Homeownership

The U.S. Department of Housing and Urban Development (HUD) released two reports on May 16, 2012 on the impact of HUD-approved housing counseling for those families who are purchasing their first homes and those struggling to prevent foreclosure.  In both studies, HUD found housing counseling significantly improved the likelihood homeowners remained in their homes.

The key findings of the first study regarding pre-purchase counseling include:

  • 35 percent of the study participants had become homeowners 18 months after seeking pre-purchase counseling.
  • Most purchasers had a FICO score of 620 or higher (71 percent), and were reported as having completed counseling by their housing counselor (72 percent).
  • Only one of the purchasers had fallen at least 30 days behind on mortgage payments 12-18 months after receiving pre-purchase counseling services.
  • Most were motivated to seek counseling to identify homebuyer assistance programs (58 percent) or to obtain down payment or closing cost assistance or to qualify for a specific loan program (58 percent).
  • Study participants were racially and ethnically diverse (52 percent African American, 32 percent White, 16 percent of another race or multi-racial, and 19 percent Hispanic), were more likely to be young (51 percent were under age 35), female (72 percent), have dependents under the age of 18 living with them (57 percent).

The key findings of the second report regarding foreclosure counseling 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.

To read the press release in its entirety, and to also read both the housing counseling studies, please click here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016. Inlanta Mortgage has recently earned the distinction of being named a 2012 Top Workplace in Southeastern Wisconsin.