Foreclosure Counseling Outcome Study: Final Report

2y ago
10 Views
2 Downloads
9.31 MB
198 Pages
Last View : 22d ago
Last Download : 2m ago
Upload by : Ciara Libby
Transcription

FORECLOSURECOUNSELINGOutcome Study: Final ReportHousing Counseling Outcome EvaluationU.S. Department of Housing and Urban Development Office of Policy Development and Research

Visit PD&R’s websitewww.huduser.orgto find this report and others sponsored by HUD’s Office of Policy Development and Research (PD&R). Other services ofHUD USER, PD&R’s research information service, include listservs, special interest reports, bimonthly publications (bestpractices, significant studies from other sources), access to public use databases, and a hotline (800-245-2691) for helpaccessing the information you need.

FORECLOSURECOUNSELINGOutcome Study: Final ReportHousing Counseling Outcome EvaluationPrepared forU.S. Department of Housingand Urban DevelopmentWashington, D.C.Submitted byAbt Associates Inc.55 Wheeler StreetCambridge, MA 02138Anna JeffersonJonathan SpaderJennifer TurnhamShawn MoultonIn Partnership withIMPAQ International LLCMay 2012

ACKNOWLEDGEMENTSACKNOWLEDGMENTSThe authors thank the many U.S. Department of Housing and Urban Development (HUD) staff whosupported the project and provided critical input along the way. Marina Myhre of HUD’s Office ofPolicy Development and Research (PD&R) served as Government Technical Representative, assistingthe Abt team at all stages of the project. In addition, Kevin Neary, Mark Shroder, Carol Star, and PamBlumenthal from HUD PD&R provided critical review of study deliverables. Sarah Gerecke, RuthRoman, and Brian Siebenlist from HUD’s Office of Housing also played a key role in supporting theproject and provided input for this report.The authors also acknowledge the many individuals on the Abt Associates project team whocontributed to this report and the research on which it was based. Within Abt Associates, JillKhadduri provided expert technical review, Nancy McGarry and David Bell-Feins supportedthe analysis with programming and data documentation, and Missy Robinson provided desktoppublishing and production support. Nichole Fiore, Louise Rothschild, and Christopher Blainesupported the data collection effort.IMPAQ International, under subcontract to Abt Associates, was responsible for the survey datacollection for the study, including designing the counseling services data system (CSDS) that collectedinformation on the services received by study participants and fielding the follow-up telephonesurvey. The IMPAQ team was led by Ted Shen, with support from Lisa Lin, Stephanie Naber, GoskaGrodsky, and a team of skilled telephone and field interviewers.The authors also especially thank Christopher Herbert of the Joint Center for Housing Studiesat Harvard University, who led the first phase of the study while at Abt Associates and served asa consultant to the project for the remainder of the study. Dr. Herbert provided key input in thedevelopment of this report.The study would not have been possible without the cooperation of the 24 housing counselingagencies whose counselors filled out surveys, recruited their clients to participate, and collected dataon the services they provided over a 6-month period. The agencies are Auriton Solutions; CatholicCharities Housing Resource Center; Chicanos Por La Causa, Inc.; Consumer Credit CounselingService (CCCS) of Fort Worth, a Division of Money Management International (MMI); CCCS ofKern and Tulare Counties; CCCS of Lutheran Social Services of South Dakota; CCCS of the GulfCoast Area; CCCS of the Midwest; CCCS South West Phone Center; CCCS of Greater Dallas;CredAbility; DuPage Homeownership Center; Family Services, Inc.; GreenPath Debt Solutions;Houston Area Urban League, Inc.; Mission of Peace Community Development Corporation;National Council on Agricultural Life and Labor (NCALL) Research, Inc.; Neighborhood AssistanceFORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATION

ACKNOWLEDGEMENTS/DISCLAIMERCorporation of America (NACA) Buffalo; NACA Charleston; Neighborhood Housing Services(NHS) of Chicago, Inc.; NHS of Greater Berks; Novadebt ; Springboard Nonprofit Consumer CreditManagement, Inc.; and St. Petersburg Neighborhood Housing Services, Inc. We are very grateful fortheir participation.In addition, we appreciate the willingness of NeighborWorks America to provide administrative datacollected through the National Foreclosure Mitigation Counseling (NFMC) program to assist withnonresponse bias analysis.Finally, the authors thank the 824 homeowners who shared their time to explain their experienceswith foreclosure mitigation counseling. Their willingness to participate in the study at a very difficulttime in their lives made possible the findings of this report.DISCLAIMERThe contents of this report are the views of the authors and do not necessarily reflect the views orpolicies of the U.S. Department of Housing and Urban Development or the U.S. Government.FORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATION

FOREWORDFOREWORDThe Department of Housing and Urban Development (HUD) has supported housing counselingprograms through grants since 1968, which provide funding for programs that counsel consumers on,among other issues, seeking, financing, maintaining, renting, or owning a home. To better understandthe counseling services consumers receive, their outcomes, and the effectiveness of counseling, HUDinitiated a series of studies on HUD’s housing counseling program in 2006. The first report, “TheState of the Housing Counseling Industry,” published in 2008, presented the first systematic overviewof the housing counseling industry and HUD-approved housing counseling agencies and the clientsthey serve.We are pleased to add to the limited literature on housing counseling programs with the publication oftwo separate reports from the Housing Counseling Outcome Evaluation, the second study in this series.This evaluation is designed to document the circumstances of housing counseling clients enrolled inforeclosure and pre-purchase counseling in the fall of 2009 at a broad sample of HUD-funded housingcounseling agencies across the country. The study findings are being published as two separate reports,Foreclosure Counseling Outcome Study and Pre-Purchase Counseling Outcome Study.The Foreclosure Counseling Outcome Study provides information on who accesses counseling serviceswhen facing challenges in paying their mortgage loan, what services those clients obtain, and identifiesthe outcomes the clients experienced in the following 18 months (though it cannot assert that thecounseling caused the outcomes). A few of the interesting findings from the report are: Most study participants had tried to contact their servicer when they first fell behind but hadnot been successful in negotiating with their lenders. With a counselor’s help, 69 percent of counselees obtained a mortgage remedy, and 56 percentwere able to become current on their mortgages. Nearly 70 percent of clients who sought counseling before becoming delinquent were in theirhome and current on their mortgage payments at the 18-month follow-up period, whereas only30 percent of clients who were 6 or more months behind at the time they entered counselingwere in their home and current at follow-up. Telephone counseling clients tended to have higher incomes, higher savings, were lesspercentage minority, and more geographically dispersed than in-person counseling clients.Telephone counseling clients also achieved stronger housing outcomes (more mortgagemodifications, more balance reductions, and more likely to be in their home and current atfollow-up) than in-person counseling clients. This does not constitute proof that telephonecounseling is as effective as in-person counseling for any individual client. Nevertheless, itFORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATION

FOREWORDsuggests that the expansion of telephone counseling during the foreclosure crisis provided animportant alternative resource for individuals and communities—particularly those living inareas without an in-person counseling provider.The Foreclosure Counseling Outcome Study is one of the few studies that documents housingoutcomes in relation to specific counseling services received. The findings of the ForeclosureCounseling Outcome study suggest that counseling helped motivated but vulnerable homeowners inthe study to understand their options and navigate the loss mitigation process. Because early contactwith an agency may be the most important factor in determining the options available to a distressedhomeowner, dedicating resources to ensuring broad coverage of counseling services and to intensiveoutreach activities is likely to be valuable—even as experimental research such as HUD’s new study ofthe impact of different kinds of pre-purchase counseling on sustainable homeownership continues totry to identify the most effective counseling models.Raphael W. Bostic, Ph.D.Assistant Secretary for PolicyDevelopment and ResearchFORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATION

TABLE OF CONTENTSFORECLOSURE COUNSELINGOUTCOME STUDY: FINAL REPORTTABLE OF CONTENTSExecutive Summary xi1. Introduction 11.1 Study Background 21.2 Study Research Questions 131.3 Organization of the Report 152. Sampling and Data Collection 172.1 Sample Selection and Recruitment 172.2 Data Sources and Data Collection Methods 233. Characteristics of Counseling Clients 293.1 Demographic Characteristics 293.2 Housing Characteristics 323.3 Financial Characteristics 343.4 Chapter Summary 404. Mortgage Characteristics, Reasons for Delinquency, and Lender InteractionsBefore Seeking Counseling 424.1 Length of Tenure, Incidence of Refinancing, and Use of Refinance Cash 424.2 Home Mortgage Loan Search Process 454.3 Mortgage Characteristics 484.4 Extent of and Reasons for Getting Behind on Mortgage 554.5 Contact With Lenders Before Seeking Counseling 604.6 Chapter Summary 635. Counseling Services 665.1 Entry Into Housing Counseling 665.2 Characteristics of Foreclosure Mitigation Counselors 695.3 Housing Counseling Services Received 745.4 Housing Remedies Used by Foreclosure Mitigation Clients 805.5 Satisfaction With Counseling Services 855.6 Chapter Summary 866. Counseling Outcomes and Factors That Affect Outcomes 886.1 Outcomes 18 Months After the Initial Counseling Session 886.2 Housing Outcomes and Homeowner Characteristics 936.3 Characteristics of In-Person and Telephone Counseling Clients 99FORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATIONvi

TABLE OF CONTENTS6.4 Counseling Services and Outcomes for In-Person and Telephone Counselees 1026.5 Chapter Summary 1196.6 Overall Study Conclusions 120Appendix A.Statistical Weighting to Account for Sampling and Nonresponse Bias 122Appendix B.Baseline Survey 125Appendix C.Service Tracking Survey 137Appendix D.Mortgage Characteristics Survey 141Appendix E.Counselor Survey 143Appendix F.Follow-up Telephone Survey 146Appendix G.Foreclosure Proceedings and Legal Stays 166References 171FORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATIONvii

LIST OF EXHIBITSLIST OF EXHIBITSExhibit 1-1.Options for Avoiding Foreclosure and Staying in the Home 5Exhibit 1-2.Options for Avoiding Foreclosure and Leaving the Home 7Exhibit 1-3.Making Home Affordable Program Components 10Exhibit 2-1.Agencies Participating in the Housing Counseling Outcome Evaluation,Foreclosure Mitigation Counseling Study 19Exhibit 3-1.Select Characteristics of Study Participants, National Foreclosure MitigationCounseling Counselees, and All U.S. Homeowners 31Exhibit 3-2.Race and Ethnicity of Study Participants Compared With All Recipients ofHUD-Funded Counseling and Education 32Exhibit 3-3.Location and Housing Characteristics of Study Participants 33Exhibit 3-4.Study Participants’ Annual Income at Study Enrollment, Self-Reported 35Exhibit 3-5.Study Participants’ Sources of Income at Study Enrollment, Self-Reported 35Exhibit 3-6.Study Participants’ Nonretirement Savings, Retirement Savings, and TotalRetirement and Nonretirement Savings at Study Enrollment 36Exhibit 3-7.Distribution of FICO Scores and VantageScores at Baseline 37Exhibit 3-8.Study Participants’ Gross Monthly Income and Monthly ScheduledDebt Payments 38Exhibit 3-9.Study Participants’ Prior Mortgage Delinquency and Foreclosure asReported in Baseline Survey 39Exhibit 4-1.Percent of Counselees by Year of Purchase 43Exhibit 4-2.Study Participants’ Incidence of Refinancing at Time of Seeking Counseling 43Exhibit 4-3.Study Participants’ Incidence of Refinancing by Counselee Age 44Exhibit 4-4.Most Common Uses of Cash From Refinancing 45Exhibit 4-5.Lender Type, Source of Lender, and Number of Lenders Contacted 46Exhibit 4-6.Lender Type by Number of Lenders Contacted 47Exhibit 4-7.Study Participants’ Perceptions of Lender Treatment at Loan Origination 48Exhibit 4-8.Study Participants’ Loan Type at Time of Seeking Counseling 49Exhibit 4-9.October 2009 FICO Score by Mortgage Type 50Exhibit 4-10. Number of Lenders Contacted by Loan Type 50Exhibit 4-11. Mortgage Interest Rates at Loan Origination 51Exhibit 4-12. Interest Rate on Fixed-rate Mortgages for Study Participants ComparedWith National Average, by Year of Loan Origination, 1994–2009 52Exhibit 4-13. Interest Rate on Adjustable-rate Mortgages for Study Participants ComparedWith National Average, by Year of Loan Origination, 2002–2007 53Exhibit 4-14. Mortgage Loan Amount and Estimated Home Value at Time ofSeeking Counseling 54FORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATIONviii

LIST OF EXHIBITSExhibit 4-15. Loan-to-Value Ratio at the Study Participants’ Time of Seeking CounselingBased on Counselor-Provided Information 54Exhibit 4-16. Percent of Study Participants by Number of Months Behind on Mortgage atTime of Seeking Foreclosure Counseling 56Exhibit 4-17. Distribution of Number of Months Behind on Mortgage Among StudyParticipants Reporting Being Behind 56Exhibit 4-18. Reasons for Getting Behind on Mortgage, Among Counselees Who WereBehind at Time of Seeking Assistance 58Exhibit 4-19. Groupings of Reasons for Falling Behind 59Exhibit 4-20. Percent of Study Participants Behind on Mortgage by Reason Grouping 60Exhibit 4-21. Lender/Servicer Advice to Homeowner 61Exhibit 4-22. Reasons Study Participants Did Not Contact a Lender When RealizedBehind on Payments 62Exhibit 4-23. What Study Participants Would Do Differently Given the Opportunity 63Exhibit 5-1.Study Participants’ Main Reasons for Seeking Counseling 67Exhibit 5-2.Top Sources of Referral to HUD Housing Counseling Agency 68Exhibit 5-3.Housing Counseling or Financial Education for Study Participantsin 3 Previous Years 69Exhibit 5-4.Demographic Characteristics of Counselors 70Exhibit 5-5.Counselors’ Years of Experience in 2009 71Exhibit 5-6.Year Counselors Entered the Housing Counseling Field 72Exhibit 5-7.Counselor Training and Certifications 73Exhibit 5-8.Type of Counseling Services Received (percent of clients) 75Exhibit 5-9.Mode of Counseling Service Delivery 76Exhibit 5-10. Time in Counseling by Mode of Counseling 76Exhibit 5-11. Total Hours of Counseling or Education 77Exhibit 5-12. Percent of Service Engagements by Session Type 78Exhibit 5-13. Key Activities Undertaken With Study Participants in Individual Sessions 79Exhibit 5-14. Topics Covered In Counseling Study Participants on Delinquency Options 80Exhibit 5-15. Strategies for Avoiding Foreclosure 80Exhibit 5-16. Next Steps to be Taken by Counselor or Client 81Exhibit 5-17. Housing Remedies Obtained by Counselees 84Exhibit 5-18. Homeowner Satisfaction With Housing Counseling Received 85Exhibit 6-1.Housing and Mortgage Status at the 18-Month Follow-up 89Exhibit 6-2.Outcomes for Study Participants No Longer in the Home at Follow-up 90Exhibit 6-3.Comparison of Homeowner Incomes at Baseline and Follow-up 91FORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATIONix

LIST OF EXHIBITSExhibit 6-4.Underwriting Characteristics at Baseline and Follow-up 92Exhibit 6-5.Test for Whether Clients With Different Housing Outcomes Have Different MeanCharacteristics, Underwriting Characteristics, Months Behind on Mortgage,Loan Characteristics, and Reasons for Being Behind 95Exhibit 6-6.Test for Whether Clients With Different Housing Outcomes Have DifferentMean Characteristics, Client Financial, and Demographic Characteristics 96Exhibit 6-7.Housing Outcomes by Client Characteristics: Underwriting Characteristics, MonthsBehind on Mortgage, Loan Characteristics, and Reasons for Being Behind 97Exhibit 6-8.Housing Outcomes by Client Characteristics, Client Financial,and Demographic Characteristics 98Exhibit 6-9.Housing Outcomes at Follow-up by Months Behind on Mortgage at Baseline 99Exhibit 6-10. Client and Neighborhood Characteristics of In-Person and TelephoneCounseling Clients 101Exhibit 6-11. Mortgage Delinquency, Underwriting Characteristics, Loan Features, andReason for Being Behind, Among In-Person and Telephone Clients 102Exhibit 6-12. Counseling Duration and Counselor Intervention With Lender,by Counseling Type 103Exhibit 6-13. Specification and Definition of Covariate Measures 105Exhibit 6-14. Telephone Counseling and Factors Associated With Counseling Duration andIntervention With Lender 108Exhibit 6-15. Receipt of Mortgage Remedies Among In-Person and Telephone Clients 110Exhibit 6-16. Telephone Counseling and Factors Associated With Mortgage Remedies Received 114Exhibit 6-17. Housing Outcome by Counseling Type 115Exhibit 6-18. Housing Outcomes by Mortgage Remedy Categories 116Exhibit 6-19. Telephone Counseling and Factors Associated With Housing Outcomes 118FORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATIONx

EXECUTIVE SUMMARYEXECUTIVE SUMMARYINTRODUCTION TO STUDYThe Foreclosure Counseling Outcome Study enrolled 824 homeowners seeking foreclosure mitigationservices in the fall of 2009 from 24 HUD-funded counseling agencies across the country. The studycollected information on counselees’ personal and financial characteristics, the circumstances that ledthem to seek housing counseling services, the services they received over a 6-month period, and selecthousing outcomes approximately 18 months later.This report describes in detail the characteristics of homeowners struggling to keep their homes andthe counseling services that they received. The study does not include a control group or causal designand therefore cannot say what would have happened to this group of homeowners had they notreceived foreclosure counseling through a HUD-funded agency. Instead, the objective of the studyis to document the extent and nature of the counseling services, mortgage remedies, and housingoutcomes among a broad sample of foreclosure counseling clients—as well as the characteristics ofthose clients.The results of the study are consistent with counseling helping distressed homeowners who wantto stay in their homes. In particular, the study finds that home retention was much more commonamong homeowners in the study who were able to secure some type of mortgage remedy and that alarge share of counseled homeowners were able to obtain such a remedy within the 18-month followup period.Given the increasing use of telephone-based counseling to deliver counseling services, the study alsoexamines client characteristics and study outcomes separately for in-person clients and for telephoneclients. The results do not provide any evidence that the use of telephone-based services was any lesseffective than in-person counseling for the study participants. Instead, the study finds substantialdifferences in the characteristics of the clients who sought counseling through each channel that likelyaffected their housing outcomes.STUDY CONTEXTThe fall of 2009, when counseling clients enrolled in the study, presented homeowners with both theworst housing market since the Great Depression and an expanded, evolving range of resources to helpthem keep their homes. Whereas earlier defaults in the national foreclosure crisis were largely causedby risky loans, serious mortgage delinquencies continued to rise in 2009 because of unemployment,FORECLOSURE COUNSELING OUTCOME STUDY: FINAL REPORT HOUSING COUNSELING OUTCOME EVALUATIONxi

EXECUTIVE SUMMARYunderemployment, and lost wages. Unemployment poses a more difficult problem for home retentionthan loans with excessive or adjusting interest rates that might simply be frozen to help resolve themortgage delinquency. Homeowners also saw their homes lose value. As a result, many homeownerscould not afford to make their mortgage payments and also could not refinance their mortgages or selltheir homes.Faced with these challenges, millions of homeowners sought free housing counseling providedby HUD-approved counseling agencies. Those agencies had access to increased federal funding,both through HUD appropriations and through the National Foreclosure Mitigation Counseling(NFMC) program—a tremendous expansion of funding for foreclosure prevention channeled throughNeighborWorks America. The increased federal funds allowed agencies to hire new counselors,many with prior experience in real estate or lending, and to train existing housing counselors inforeclosure mitigation.At the time counselees enrolled in this study, the federal Home Affordable Modification Program(HAMP) and lender-specific mortgage modification programs were newly available and offeredmore options for homeowners at risk of foreclosure.1 Prior to HAMP, modifications were less likelyto reduce borrowers’ monthly payments, with less than one-half of modifications in 2008 resultingin a reduction in borrowers’ monthly payments.2 Since the advent of HAMP in 2009 and the lenderprograms, the vast majority of loan modifications now reduce monthly payments to increase thechance that borrowers will be able to stay in their homes.Most counselees in this study were also affected by one of two types of foreclosure stays, which is animportant contextual factor to bear in mind in assessing their housing outcomes. A foreclosure stayplaces foreclosure proceedings temporarily on hold and extends the overall timeline to complete theforeclosure. The types of stays were those enacted by state governments (some applied only in certaincities, counties, or court jurisdictions), and those enacted in the wake of the robo-signing scandal.Legal stays on foreclosures were in effect in 20 states where counselees participating in this studylived. As a result, up to 61 percent of study participants may have gained more time before foreclosureto negotiate an alterna

Finally, the authors thank the 824 homeowners who shared their time to explain their experiences . with foreclosure mitigation counseling. Their willingness to participate in the study at a very difficult time in their lives made possible the findings of this report. DISCLAIMER

Related Documents:

4931—70. Note that the foreclosure statute received a significant overhaul in 2012. Vermont has three methods of foreclosure: Strict foreclosure under 12 V.S.A. § 4941; Judicial sale foreclosure under 12 V.S.A. §§ 4945-4954; and Nonjudicial foreclosure under 12 V.S.A. §§ 4961-70.

foreclosure process, foreclosure starts, has followed a similar pattern, with foreclosure starts exceeding the national level in every quarter since the third quarter of 1998. Introducing Regression To investigate the high levels of foreclosure in Indiana, the determinants of foreclosure rates are examined across the 50 states and Washington,

INDIANA FORECLOSURE PREVENTION NETWORK IFPN was created to help Hoosier homeowners prevent foreclosure. Free foreclosure prevention counseling is available to all Indiana homeowners. Counseling services are offered through a network of HUD certified housing agencies. Qualifying homeowners can apply for Hardest Hit Fund (HHF) through the IFPN.

at the Foreclosure Sale. 18. High Bidder: The bidder at Foreclosure Sale that submits the highest responsive bid amount to the Foreclosure Commissioner. 19. Invitation: This Invitation to Bid including all the accompanying exhibits, which sets forth he terms and conditions of the sale of the Property at the Foreclosure Sale and includes

Finally, the authors thank the 824 homeowners who shared their time to explain their experiences . with foreclosure mitigation counseling. Their willingness to participate in the study at a very difficult time in their lives made possible the findings of this report. DISCLAIMER

100.460 Foreclosure against unit; receiver for unit; power of board of directors to bid at foreclosure sale 100.465 Circumstances in which deed in lieu of foreclosure extinguishes lien 100.470 Lien foreclosure; other legal action by declarant, association or owner; attorney fees 100.475 Personal liability for assessment; joint liability of .

a legal expert before you make any decisions with your foreclosure. 4. Chapter 13 Bankruptcy - If these other avenues fail to stop the foreclosure, homeowners can file Chapter 13 bankruptcy which legally puts a stay on the foreclosure. At this point, all creditors are legally bound to stop their collection

ASTM C167 - Thickness and Density of Blanket or Batt Thermal Insulations ASTM C177 - Thermal Conductivity of Materials by Means of the Guarded Hot Plate ASTM E477 - Duct Liner Materials and Prefabricated Silencers for Acoustical and Airflow Performance ASTM C518 - Test Method for Steady-State Thermal Transmission Properties by Means of the Heat Flow Meter NFPA Standard 90A - Installation of .