Foreclosure counseling success rates.
Homeowners who use foreclosure counseling services, many of which are free, will have more success when it comes to saving their home than those who do not use counseling. HUD and the NFCC (Non Profit Credit Counseling Services) have completed studies that show the benefits of getting counseling when facing a foreclosure. The data shows that as many as 70% of people who received help from a HUD agency or non-profit will be able to continue to live in their home.
Data shows HUD counseling is very beneficial
A study from 2012, which was updated in 2023 by the U.S. Department of Housing and Urban Development (HUD) revealed that 69% of homeowners who received counseling obtained a mortgage relief. In addition, an incredible 56% were able to become current on their mortgages.
The studies go on to show shows that almost 70 percent of homeowners who seeks foreclosure help from a counseling agency before becoming delinquent on their mortgage were still living in their home after eighteen months. And even better, they were caught up and current with their mortgage after that timeframe as well. So asking for assistance early can lead to up to a 70% success rate. When considering all advice is confidential, and much of it is free, there is almost no downside to reaching out for guidance from a professional.
Many who seek counseling from a HUD agency or non-profit had tried to contact their bank or mortgage servicer first. They tried to negotiate on their own, but they were unsuccessful for any number of reasons. So that initial contact to their lender actually delayed the process from starting, and just put people further behind the proverbial eight ball. The data from the 2023 HUD study known as Housing Counseling Works: 2023 Update is here https://www.huduser.gov/portal/sites/default/files/pdf/Housing-Counseling-Works-2023-Update.pdf?utm_source=chatgpt.com.
The non-profit NFCC also has studies that show how successful using a non-profit organization can be. NFCC has done various climate impact studies over the years, some in partnership with groups such as Ohio State University and others. The results show that people that receive counseling with their debt (mortgage, credit cards, etc.) have a much higher chance of success. The majority of participants are able to prevent a foreclosure, improve their credit scores and pay down other bills with the NFCC impact study here https://www.nfcc.org/client-impact/.
Why counseling to prevent a foreclosure works
Housing counselors provide personalized assistance, helping homeowners understand their financial situation and explore available options. There are two primary methods.
- The first is in person or face to face at a local HUD or non-profit office.
- The second is telephone consultations or using online video calls.
Both were shown to be very effective, with little difference between the two. However, maybe surprisingly, telephone / online counseling clients also achieved even stronger outcomes than face to face.
A major reason for the better outcomes using a foreclosure counseling is that the professional can negotiate with lenders on behalf of the homeowner. They will also clarify complex mortgage terms, help people process any applications for financial help and develop realistic budgets. This support empowers homeowners to make informed decisions and take proactive steps to avoid foreclosure. The counseling process will cover all the various options for mortgage help, as there are many programs out there.
Telephone counseling is more successful too. For example, telephone counseling clients tended to have higher household incomes, they were more geographically dispersed than in-person visits, and people who called on the phone would tend to have higher savings. One thought is that people who get foreclosure counseling over the phone or online often work full time (if not more) which may lead to a higher income, and the long work hours prevent a visit to a HUD office.
Whatever the reason why telephone foreclosure counseling clients were more successful at receiving mortgage modifications, more principal reductions, and more likely to be able to save their home and continue to live in it over the long term. It is offered as an option for any individual client who seeks help from a Housing and Urban Development certified agency. Telephone counseling provides an important alternative resource for families and communities, especially if there is no local HUD or NFCC office to stop by at.
Accessing counseling services
HUD-approved housing counseling agencies offer services nationwide. There are also local as well as nationwide Non Profit Credit Counseling Services offices. These agencies provide free or low-cost counseling to homeowners facing foreclosure.
To find a local HUD-approved housing counseling agency, homeowners can use the HUD Housing Counselor Locator or call HUD's toll-free housing counseling hotline at 1-800-569-4287. There are also national / local non-profit credit counselors that can help people with their mortgage.
Conclusion - foreclosure counseling works
The results of this Housing and Urban Development (HUD) study show and confirms dozens of other independent studies. The message is strong and consistent. Those who seek help fully gain the benefit of confidential government approved housing counseling or the help from a non-profit credit counseling organization. Much of this is not news to people who are involved in the industry, as counselors have learned first-hand over the years that the support they provide helps thousands of homeowners avoid foreclosure.
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