Housing counseling has been a primary tool in the effort to prevent foreclosures and help families recover from default, which makes the recent cuts in the federal budget for housing counseling programs all the more painful. To better understand the potential impact of these cuts, The Center for Housing Policy has compiled a fact sheet on the impacts housing counseling has been shown to have in reducing mortgage delinquency and foreclosure. In part:
- There is strong evidence that housing counseling can be an effective intervention in helping distressed homeowners avoid foreclosure.
- Early intervention is important.
- Families who participated in the national foreclosure mitigation counseling program were also able to negotiate lower monthly costs.
- There is also evidence that counseling provided before a household purchases a home can reduce the likelihood of mortgage delinquency.
- Pre-purchase counseling can help reduce the likelihood of default and foreclosure by helping individuals determine if they are ready for homeownership, and by connecting them with safer and more affordable mortgage products.
These studies are far from perfect, and more research is needed to understand the extent of the impact homeownerhip education and counseling can have. In particular, a randomized experiment involving pre-purchase counseling would make a significant contribution to the field. In the meantime, take a look at what evidence is out there.