Press Release:Low Income Borrowers Do Better With Homeownership Counseling

A new national loan performance analysis of mortgages made to low income homeowners who have participated in homeownerships education programs through NeighborWorks organizations like Neighborhood Housing Services of Baltimore, shows a foreclosure start rate that is 20 times less severe tan that for the subprime borrowers and three times better than the conventional conforming mortgage market.

“The facts tell the real story,” said Felix Torres, Executive Director of NHS of Baltimore. “The vast majority of mortgages facilitated by NHS of Baltimore and other NeighborWorks organizations across the nation are to buyers with low to moderate incomes and less than perfect credit scores. Yet by providing quality mortgage advice, these homeowners have been able to sustain homeownership during the most severe housing crisis since the Great Depression.”

Comparing foreclosure data provided by the Mortgage Bankers Association, NeighborWorks shows that while its own loan portfolio had a foreclosure start rate of 0.21% in the second quarter of 2008, the overall market’s foreclosure start rate was 1.08%, more than five times as great.

Moreover, NeighborWorks mortgages hold up very well against a comparison to only the conventional conforming market. According to the MBA, the foreclosure start rate for conventional conforming mortgages was 0.61% in the second quarter, compared again to 0.21% for NeighborWorks mortgages.

Between March 1st and June 30th of this year, NHS of Baltimore counselors saw 66 households that were facing foreclosure and of those they were able to refinance 5, modify 24, give an emergency bridge loan to 9, recommend legal action for 3 and initiate a forbearance/repayment plan for 10. Furthermore, NHS of Baltimore has hosted more than 600 households at our homeownership classes and out of those, 80 have become homeowners this year.

“NeighborWorks organizations like NHS of Baltimore have a track record of providing one-on-one mortgage advice, encouraging homebuyers to avoid loans that they can not afford for the long term,” said Kenneth D. Wade, CEO of NeighborWorks America. “That dedication to community stability and strength is the foundation of what we’re doing in the Baltimore region and more than 4,400 communities around the country everyday.”