The September 2014 Urban Institute Report on the National Foreclosure Mitigation Counseling (NFMC) Program concluded that homeowners in default or in danger of defaulting who consult NFMC counselors are almost three times more likely to prevent foreclosure by way of mortgage modification, almost twice as likely to square their mortgages without a modification, and 60 percent less likely to re-default on their loans after a serious delinquency on their mortgage than those homeowners not working with NFMC counselors. The average annual payment reduction for an NFMC-counseled homeowner who obtained a mortgage modification was $4,980, according to the study.
The study also found that homeowners who consult NFMC counselors are often able to complete a short sale of their homes faster than those not working with counselors.
"If there was any lingering doubt about the value of NFMC counseling for homeowners and the broader real estate industry, the research announced today should put those doubts to rest," NeighborWorks America acting CEO Chuck Wehrwein said. "Whether measured by benefits to homeowners through more likely mortgage modifications, sustainability of those modification or mortgage cures, the research answers all housing counseling benefit questions with a resounding 'yes.'"
The NFMC program, administered by Neighborworks America, began in March 2008 and has helped 1.8 million homeowners avoid foreclosure since then, according to the Urban Institute. The recent study conducted was based on the outcomes of nearly 240,000 homeowners (137,000 who were working with NFMC counselors and 103,000 who were not) through June 2013.
The study suggests that servicers and realtors stand to benefit from working with homeowners in default who have consulted or are consulting NFMC counselors, since the servicers will save lost revenues by converting defaults into performing loans. The study also states that servicers should take note that homeowners working with NFMC counselors were more likely to square their loans without modification than those not working with foreclosure prevention counselors, and that it is good business for realtors to help clients negotiate short sales more quickly to help those clients erase their troubled loans.
"The bottom line for the servicing industry is that housing counseling saves them time and money,” Wehrwein said. "Servicers that increase their partnership with NFMC program counselors are benefiting their shareholders and mortgage customers."