By James Perry and Seth Weingart
Home is where the heart is. Or at least it used to be. For many Americans over the last few years, homeownership has been rife with heartache -- the reality of trying to make ends meet during the worst economic era since the Great Depression. And of course, the fundamental causes of the entire downturn were multiple failures by most of the players in the mortgage lending and sales industries. A hardline focus on profitability above all else created a market destined for failure.
As the government stepped in to make things right, they turned to housing counselors to do the legwork. Housing counselors are professionals trained in helping families navigate the business of homeownership, and skilled in confronting even the most unscrupulous lenders. They have had to keep pace with an ever-changing maze of new rules and programs to help keep families in their homes. Despite the best efforts of housing counselors across America, we have yet to make it out of the woods, because of continued intransigence from lenders. The U.S. housing market is still mired in a horrible slump, with depressed home prices, a weak sales market, and pathetic levels of new home construction.
Despite the ongoing need and the clear evidence that housing counseling represents a key component to resuscitating the housing market, Congress just took a swipe at America's fragile recovery. They voted to dismantle funding for housing counseling, a program that helps millions of Americans become homeowners and save their homes from foreclosures caused by greedy and reckless lending practices. Housing counseling agencies are on the frontline of the housing crisis, so why would Congress cut all funding for the program?
The Department of Housing and Urban Development's (HUD) Housing Counseling Program provided $88 million in grants to non-profit housing counseling agencies across the country last year to provide counseling and education to potential homeowners and homeowners facing foreclosures. The budget deal Congress has agreed to in order to fund the federal government for the remainder of this year cut that same $88 million from the budget, obliterating a program that has received broad, bi-partisan support in the past. The Housing Counseling Program represents a minuscule portion of the total budget, and its removal would have a negligible effect on reducing the deficit, but it provides critical services at a time when so many homeowners need assistance.
Dealing with foreclosure is hard enough, but doing it alone is almost impossible. With foreclosures across the country in the millions, mortgage companies accustomed to just collecting payments have been pressured to actually work with borrowers to find solutions to avoid foreclosure. Disappointingly, these mortgage companies haven't stepped up their efforts to meet the needs of borrowers, so housing counselors have taken that role. Lenders still seem intent on foreclosing even when a loan modification is a beneficial outcome for the borrower and lender, as evidenced by the continuing stream of controversies regarding robo-signing, illegal foreclosures against active-duty service members, and foreclosing on homes that don't even have mortgages. Even when lenders can help save a home for a family, they rush full-steam ahead with a foreclosure. The media is full of what sounds like impossible stories, but housing counselors deal with these circumstances all the time. This is where housing counselors really make a difference.
One of the most effective ways for homeowners to avoid foreclosure and keep their houses is to work with a certified foreclosure prevention counselor. The Mortgage Bankers Association, no great friend of counseling, just released a report indicating that homeowners who work with a counselor are more likely to receive a loan modification than those who do not. The National Foreclosure Mitigation Counseling Program has shown that a trained counselor can make the difference between foreclosure and a loan modification. When homeowners call their bank, all they hear are threats of being kicked out of their home and humiliated, and that's probably after hours of being routed and rerouted on phones across the world to whichever customer service representative has the least amount of information about the loan, and absolutely no authority to approve a loan modification. But, when a housing counselor calls the bank, they get a very different response, and with the knowledge of how the loan modification process works, are better able to reach a resolution, even if the bank initially said "no."
Housing counselors have helped homeowners get loan modifications and other payment plans that keep families in their homes time and again, even after the homeowners were told that they are ineligible for assistance. Whether it be through creating a real household budget, documenting a homeowner's hardship, reaching out to higher levels of management at the bank, or filing complaints with regulatory agencies, housing counselors have the tools and skills to help families save their homes. Further, they have the perseverance to make sure homeowners are not being misled, misinformed, and taken advantage of. If the U.S. is ever to dig itself out of the financial hole caused by banks' quest for excessive profits, housing counselors have already proven their worth, and are going to lead the way to recovery. We just need to keep giving them the tools to do so.
Visit http://www.gnofairhousing.org/HOP.html to learn more about the housing counseling that our agency provides.