NEWS
BYTES
August 2008
from the hud.gov website
New
HUD Report shows sharp increase in foreclosure counseling
WASHINGTON - Housing counseling agencies all across the country
are experiencing surging demand for their services, especially
among families hoping to avoid losing their homes through foreclosure.
According to a new report from the U.S. Department of Housing
and Urban Development, beginning in 2005, individuals and families
increasingly sought counseling to address mortgage delinquencies.
Secretary Steve Preston announced the report at a HUD-sponsored
roundtable discussion with more than two dozen housing counseling
agencies from across the country.
HUD's
report, The State of the Housing Counseling Industry shows that
between 2006 and 2007 there was a 55 percent increase in the
number of clients receiving foreclosure prevention counseling.
This growth is expected to be much higher in 2008.
"Individual
homeowners that are being foreclosed upon or at risk of foreclosure
should seek out housing counseling" said Preston. "This
report shows that there are more than 1,800 HUD-approved housing
counseling agencies on the ground helping homeowners review
their financial situation and negotiate with their lenders in
order to find the best solution for them."
Preston
held the roundtable session to hear how agencies are using federal
funding to address capacity issues and meet the demands of borrowers
facing foreclosure or trying purchasing a home for the first
time. Counselors discussed challenges they face in helping homeowners
and shared best practices to improve communications with struggling
borrowers and strengthen financial literacy efforts.
HUD
support had been growing for housing counseling agencies, from
$20 million in 2001 to $50 million in 2008. In addition, federal
support has now grown exponentially with $360 million in additional
funds in 2008 specifically for foreclosure prevention counseling.
HUD has requested another $65 million to support local housing
counseling agencies in FY 2009. This report documents the characteristics
of the HUD-approved counseling agencies and how they provide
their counseling services. It also shows how these agencies
are dramatically retooling their workforce to meet the increased
demand for foreclosure mitigation counseling.
Households
with a wide variety of housing counseling needs are served by
these agencies. HUD-approved housing counselors provided counseling
to more than 1.7 million individuals and households in 2007,
including pre-purchase, foreclosure prevention, reverse mortgages,
rental, and homeless assistance.
The
study noted a 55 percent increase in the number of clients receiving
foreclosure prevention counseling between 2006 and 2007. Of
the approximately 136,000 families that completed this counseling
during 2007, 45 percent were able to remain in their homes while
14 percent ultimately lost their home through foreclosure. Outcomes
for the remaining 41 percent of clients are not known.
This
report also finds that in the years leading up to the current
crisis, more than 55 percent of low-income families seeking
to buy their first home did not seek out pre-purchase counseling.
This lack of counseling likely left them unprepared to make
one of the biggest financial commitments of their lives and
may have contributed to some of today's high rates of default
and foreclosure.
The
housing counseling industry has grown in capacity and sophistication
in response to the increase in demand for pre-purchase counseling
since the 1990s. In response to the mortgage crisis, housing
counseling agencies are retraining and hiring new staff to meet
demand for default counseling. In recent years there have been
important efforts to promote industry standards for prepurchase
and default counseling and provide increased training opportunities
for staff of housing counseling agencies.
Compared
to the U.S. population as a whole, counseling clients are substantially
more likely to be minority. Of the 1.7 million individuals that
received counseling services from a HUD-approved agency in 2007,
54 percent were white, 36 percent were African-American and
approximately 20 percent were Hispanic. Most clients that received
counseling from a HUD-approved agency are very low- or low-income.
The following is a breakdown of the services clients received
in 2007:
308,389
sought pre-purchase counseling
264, 989 sought help to resolve or prevent mortgage delinquency
202,795 clients received mortgage refinance and reverse mortgage
counseling
380,006 persons received rental counseling
48,593 clients sought counseling on shelter or other homeless
assistance programs
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HUD
is the nation's housing agency committed to increasing homeownership,
particularly among minorities; creating affordable housing opportunities
for low-income Americans; and supporting the homeless, elderly,
people with disabilities and people living with AIDS. The Department
also promotes economic and community development and enforces
the nation's fair housing laws. More information about HUD and
its programs is available on the Internet at www.hud.gov and
espanol.hud.gov.
