The number of foreclosure filings are on the increase in many areas in the country.Â Some mortgage lenders may have held off on the filing of a foreclosure, and just now they seem to be taking action to begin the foreclosure process with more homeowners.Â Â Â
The good news is many of those filings actually will never become a full blown foreclosure with the homeowner losing the home to the legal foreclosure sale of the home.Â Despite news reports, homeowners do often find solutions to resolve their mortgage delinquency issues before the house gets sold at a foreclosure auction.Â Getting advice about your options is critical to making the best decision that you can for your circumstances.Â Foreclosures are complicated and the options to avoid them are equally complicated.Â Homeowners might be able to catch up the payments, refinance the loan if not yet behind on payments, modify the original terms of the loan, sell or short sell the home, ask the lender to take a deed in lieu of foreclosure, or move and rent the property until they can better afford the payment.Â Each of these choices has their own set of necessary steps to take and consequences to consider.Â
A program throughout the United States called the National Foreclosure Mitigation Counseling Program (NFMCP) has helped many homeowners get the FREE housing counseling and advice that they need.Â Through a newly releasedÂ studyÂ there is a strong indication that homeowners who seek out a US Department of Housing & Urban Development (HUD)-certified housing counseling agency to provide them guidance were much more successful in avoiding foreclosure.Â
The Urban Institute released the following press release after it recently completed its evaluation of Rounds 1 and 2 of the National Foreclosure Mitigation Counseling (NFMC) program.Â The final report demonstrates significant positive effects for NFMC participants:Â counseled homeowners were more likely to receive better loan modifications, cure a serious delinquency or foreclosure and stay current, and avoid a foreclosure completion altogether.
- Counseling greatly increased the ability of homeowners to stay current once they cured a serious delinquency or foreclosure.Â Counseled homeowners were at least 67% more likely to remain current on their mortgage nine months after receiving a loan modification cure.Â A small part of this effect is attributable to the impact of counseling on the size of monthly payment reductions.Â However, a significant part is attributable to other positive impacts of counseling, such as helping homeowners improve their financial management skills and assisting them in managing relationships with servicers.Â
- NFMC counseling made it more likely that homeowners would receive a modification cure in the first place â€“ nearly doubling the odds of modification cures for counseled homeowners compared to non-counseled ones.Â The Home Affordable Modification Program which is a government program to encourage modifications amplified this positive effect.Â In the period before HAMP, 8% of homeowners receiving counseling assistance had modification cures, compared to 5% who did not receive counseling.Â Post-HAMP, 17% of homeowners receiving counseling assistance had modification cures, compared to 9% without.
- Counseled homeowners received loan modifications resulting in a monthly payment that was $176 less, on average, than non-counseled borrowers â€“ a savings of close to $2,100 a year. This savings was achieved on loans modified either before or after HAMP was implemented.
Overall, the Urban Institute evaluation demonstrates that the NFMC program is having its intended effect of helping homeowners facing loss of their homes through foreclosure. The positive effects demonstrated in the final report are strong and are consistent with those found in prior analyses of Rounds 1 and 2.
To find a HUD approved housing counseling agency in your area, go to www.hud.gov and search for Housing Counseling.Â GreenPath Debt Solutions is a HUD approved housing counseling agency and housing counselors are available to help homeowners evaluate their options.Â A number of for-profit providers often charge high up-front fees and these should be avoided.Â Getting help may feel overwhelming, but the study above proves it may be the only way to go so that you can know all of your options.
Sara Gilbert is Group Manager for the Colorado branch of GreenPath Debt Solutions; a member of the National Foundation for Credit Counseling.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.