Consumers reject counseling, opportunity for strong homeownership

homeschool

Some consumers are skipping financial counseling for misguided reasons and without counseling they reduce their chances of owning a home and are more vulnerable to losing a home they may already own.

A National Foundation for Credit Counseling (NFCC) online survey with more than 2,000 respondents found 47 percent of them shunned counseling because they were confused about where to find help.

Another 24 percent did not think they could afford the assistance offered by a credit counseling agency.

“The poll numbers are disturbing on many levels,” said Gail Cunningham, spokesperson for the NFCC who suggested fear of fraud and real experiences with scams have turned off consumers who need financial guidance.

“Many well-meaning consumers have been duped by unscrupulous businesses which charged them high fees, yet delivered little if any real help. Unfortunately, these types of activities not only tar the sector, but prevent consumers from seeking the help they need,” Cunningham added.

The survey also reflected despair – 13 percent said they felt either their situation was beyond help and another 6 percent were just fed up with trying to resolve their financial concern.

Only ten percent felt they could handle their situation without counseling.

Studies reveal those who don’t reach out for help miss out on financial opportunities of a life time.

Counseling rewards

The U.S. Department of Housing and Urban Development (HUD) recently reported that 35 percent of HUD-approved counseling recipients became homeowners within 18 months of pre-purchase counseling and only one of those buyers subsequently fell behind on mortgage payments.

Also, nearly 70 percent of homeowners who faced foreclosure managed to obtain some mortgage remedy to retain their home – after they received counseling. More than half of those who faced foreclosure and were counseled learned enough to cure their default and become current on their existing mortgage.

A few years ago NeighborWorks America (NWA) gave new meaning to “homeschooled,” in a study that found the foreclosure rate for low-income homeowners, who attended home ownership education programs, had a foreclosure rate that was 20 times less severe than that for subprime borrowers and three times better than that found in the prime mortgage market.

In yet another study, NWA found that homeowners who get counseling for a mortgage modification through NWA’s National Foreclosure Mitigation Counseling (NFMC) program, lower their payment pressure by an average $175 a month, for an annual mortgage payment savings of $2,100 a year.

Accredited counseling

That’s a total $372 million in annual savings enjoyed by homeowners counseled under the NFMC program administered by NeighborWorks America (NWA), a national affordable housing and community development operation.

Counseling is often free and easy to obtain from a host of reliable sources.

• For example NFCC members must retain accreditation by the Council on Accreditation (COA), an independent, not-for-profit, third-party accrediting organization that mandates compliance with a rigorous set of best-practice standards.

NFCC members’ counseling services are offered free or at low cost and members can’t deny assistance based on a consumer’s inability to pay.

HUD-certified counselors, available at no cost nationwide, through public and private agencies like NFCC and via 888-995-4673, must pass grueling training and scrutiny before obtaining certification.

• Likewise, bankruptcy law enforced by the U.S. Department of Justice (DOJ) comes with a list of approved credit counseling and debtor education pursuant to federal bankruptcy law. Mandatory counseling comes before filing for bankruptcy and later, with the cost of filing for bankruptcy.

Counseling is also often required for a host of today’s mortgage programs and loans including those from the Obama Administration’s Making Home Affordable programs (HAMP, HARP and HAFA), certain Federal Housing Administration (FHA) loans and refinances and local programs including Keep Your Home California.

“The NFCC wants to send a loud message to consumers who are experiencing financial distress, and that message is that legitimate help is available,” said Cunningham.

“People owe it to themselves and to their family to reach out to a trained and certified counselor for a review of their situation. Delaying action only makes the problem harder to resolve,” she added.

About the author

A DeadlineNews.Com Silicon Valley Contributing Writer, with a penchant for the quick, story-telling capability of infographics, Mark K. Hicks is broker/owner of The Seabrooke Group in San Jose, CA. Hicks, who takes a "client for life" approach to business, has more than 20 years real estate experience, including creative financing, foreclosure acquisition, probate sales and tax-deferred exchanges. Network with Hicks on LinkedIn.

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