Thursday, December 29, 2011

Counseled Homeowners Get Better Loan Mods, Avoid Foreclosure

A report issued yesterday by NeighborWorks America shows that homeowners who received National Foreclosure Mitigation Counseling Program assistance were nearly twice as likely to obtain a mortgage modification and at least 67 percent more likely to remain current on their mortgage nine months after receiving one.

The study (, prepared for NeighborWorks America by the Urban Institute on the consumer benefits of the NFMC program, also showed that homeowners received, on average, a mortgage modification that lowered their payment by $176 more per month, than homeowners who didn’t work with an NFMC counselor--a savings of nearly $2,100 a year. “By significantly reducing the chance that a homeowner re-defaults after a mortgage modification, servicers are saved added expense,” said NeighborWorks America CEO Eileen Fitzgerald. “This tells us that increased servicer investment in partnerships with nonprofit counselors is a win for everyone.”

The Urban Institute recently completed a three-year evaluation
of Rounds 1 and 2 of the NFMC program. Using a representative NFMC sample of 180,000 loans and a comparison non-NFMC sample of 155,000 loans, the Urban Institute was able to isolate the impact of NFMC counseling on loan performance through December 2010.
The final evaluation of Rounds 1 and 2 conducted by Urban Institute demonstrated positive effects for homeowners participating in the NFMC program. Counseled homeowners were more likely to receive better loan modifications, cure a serious delinquency or foreclosure and stay current, and avoid a foreclosure completion altogether.
Other findings of the study:
• Counseling greatly increased the ability of homeowners to stay
current once they cured a serious delinquency or foreclosure. Counseled
homeowners were at least 67 percent more likely to remain current on their mortgage nine months after receiving a loan modification cure. A small part of this effect is attributable to the impact of counseling on the size of monthly payment reductions. However, the study noted a significant part is attributable to other positive impacts of counseling, such as helping homeowners improve their financial management skills and assisting them in managing relationships with servicers.
• NFMC counseling made it more likely that homeowners would
receive a loan modification cure in the first place, increasing by at least 89 percent the relative odds of modification cures for counseled homeowners compared to non-counseled ones. The study said the federal Home Affordable Mortgage Progam amplified this positive effect. In the period before HAMP, 8 percent of homeowners receiving counseling assistance had modification cures, compared to 5 percent who did not receive counseling. Post-HAMP, 17 percent of homeowners receiving counseling assistance had modification cures, compared to 9 percent without.
• Counseled homeowners received loan modifications resulting in
a monthly payment that was $176 less, on average, than non-counseled borrowers, a savings of close to $2,100 a year. This savings was achieved on loans modified either before or after HAMP was implemented.
The study said “the great bulk of the sustainability benefit resulted from other impacts of counseling, such as helping borrowers to improve
their financial management skills, assisting them in managing relationships with servicers/investors, and providing other types of support.”

Last month, the Obama Administration released its November Housing Scorecard, reporting more than 5.4 million modification arrangements were started between April 2009 and the end of October. The reported modifications included more than 1.7 million HAMP trial modification starts; more than 1.1 million FHA loss mitigation and early delinquency interventions; and more than 2.5 million proprietary modifications
under HOPE NOW, the voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors (of
which the Mortgage Bankers Association is a founding member).
HOPE NOW said its October data showed that permanent loan modifications totaled nearly 80,000 for the month, bringing the total for the year to 885,000.Also last month, a white paper from STRATMOR
Group, Jacksonville, Fla., reported that providing holistic financial
counseling to borrowers who are at risk of default and foreclosure can not only prevent foreclosure, but also can reduce re-default rates for borrowers. The study, The Impact of Consumer Credit Counseling on Distressed Mortgage Loan Losses, said holistic financial counseling could reduce losses on a 10,000-file portfolio by as much as $71.5 million. The STRATMOR study said for borrowers receiving basic counseling, the losses avoided are estimated at $3,894 per borrower (or 185 bps for a $210,000 average loan balance). This benefit increases to $5,754 to $7,147 (274 bps to 340 bps) if borrowers receive "holistic" counseling that addresses not only mortgage debt but also credit card debt and modifications to personal spending patterns. Applied to a portfolio of 10,000 borrowers who receive
counseling, the $7,147 scalable benefit would translate into $71.47 million in losses avoided.

Matthew Lind, managing director of the STRATMOR Group and author of the study, said while traditional borrower counseling in default servicing focuses mainly on the monthly mortgage payment, integrating
holistic financial counseling addresses the entire spectrum of a borrower’s financial picture, including lifestyle decisions. He said holistic financial counselors help borrowers assess all the factors that go into monthly spending, including credit card debt, car payments and discretionary spending.

The NFMC program was launched in December 2007 with funds
appropriated by Congress to address the nationwide foreclosure crisis by
increasing availability of housing counseling for families at risk of
foreclosure. NeighborWorks America distributes funds to competitively selected grantee organizations, which in turn provide the counseling services, either directly or through subgrantee organizations. Grants are also being made to fund legal assistance to homeowners, and to train foreclosure counselors. Upwards of 1,700 counseling agencies operate under the program.

Tuesday, December 20, 2011

Impact of Credit Counseling on Distressed Mortgage Loan

From the White Paper prepared by the Stratmor Group

Based on the best of recent research investigating the impact of providing counseling to distressed mortgage borrowers, this research (White Paper) analyzes the incremental economic benefits, as measured by foreclosure, deed-in-lieu and short sale losses avoided, accruing to investors and servicers per counseled borrower versus non-counseled
borrowers, without regard to the costs of counseling. Additional benefits from loss avoidance, including expected improved cash flows and portfolio value, liquidity, operational and legal cost savings, etc. are not considered.
For borrowers receiving basic credit counseling, our analysis projects an average benefit per borrower of $3,894, without regard to whether or not the counseled obtained a loan modification. For counseled borrowers who obtain a modification, the incremental benefit increases to $17,948.

When borrowers receive "holistic"counseling --- counseling that not only addresses mortgage monthly payment but also credit card payment as well as modifications that result in lower personal spending patterns --- the average benefit per borrower increases to $5,754 to $7,147 as a result of additional monthly cash flow made available to meet mortgage obligations. This freed up cash, as a result of the borrower debt payment/personal spending restructuring, and estimated at an additional $300 per month, sharply lowers the redefault rate of borrowers who initially cure their loan through a loan modification.

The full White Paper canbe viewed at

Monday, December 12, 2011

Consumer Credit Counseling Services Is Reaccredited

The Council on Accreditation (COA) is delighted to inform you that Consumer Credit Counseling Services of Buffalo, Inc. has been accredited. COA’s commitment to maintaining the highest level of standards and quality improvement is designed to identify providers that have set high performance standards for themselves and have made a commitment to their constituents to deliver the highest quality
services. COA is proud to recognize Consumer Credit Counseling Services of Buffalo, Inc. as one of these outstanding providers.

COA reaccreditation is an objective and reliable verification that provides confidence and support to an organization’s service recipients, board members, staff and community partners. The COA reaccreditation process involves a detailed review and analysis
of both an organization’s administrative operations and its service delivery practices. All are “measured” against national standards of best practice. These standards emphasize services that are accessible, appropriate, culturally responsive, evidence based, and outcomes-oriented, In addition, they confirm that the services are provided by a skilled and supported workforce and that all individuals are treated with dignity and respect.

Because COA reviews and reaccredits the entire organization, not just specific programs, you can have confidence in the credibility, integrity and achievement of your entire organization.

COA congratulates Consumer Credit Counseling Services of Buffalo, Inc. for their hard work and wonderful achievement and is proud to have it as part of COA’s Community of Excellence.

Founded in 1977, COA is an independent not-for-profit international accreditor of the full continuum of community-based behavioral health care and human service organizations. Today, over 1800 organizations—public and private—are either COA accredited or are in the process of seeking accreditation. These organizations serve over 7 million of our most vulnerable individuals each year!

Tuesday, December 6, 2011


The November poll hosted on the National Foundation for Credit Counseling (NFCC) website,, revealed that 40 percent of respondents do not intend to spend any money on holiday purchases, as they anticipate experiencing further financial distress in the future.

The poll sends a strong signal that in spite of the increase
in sales during Black Friday and Cyber Monday, a significant number of people lack enough confidence in their financial future to begin spending, even on traditional holiday expenses.

“Historically, consumers have put aside their financial concerns during the holidays, even if to their detriment, and spent at some level,” said Paul C. Atkinson, President and CEO of Consumer Credit Counseling Service of Buffalo Inc. “These figures provide a snapshot of the
desperate situation in which consumers find themselves, and how seriously they are taking their situation.”

Of note is the statistically significant increase reflected in the year-over-year trend. The NFCC posed the identical set of poll questions in the same month one year ago. Between November 2010 and November 2011, there was a six percentage point increase in the number of consumers who indicated they will spend zero dollars during the holiday season, evidence of the depth of the financial despair in the country.

Also disturbing is that slightly more than half of all poll respondents indicated they would cut back on holiday spending, as their financial situation is worse this year than last. Combining those who will cut back on spending with those who will not spend at all, a full 91 percent of consumers are clearly concerned enough about their financial circumstances that they will remain on the spending sidelines this holiday season.

Looking at the two categories with the lowest responses,seven percent revealed that they will spend as they did in 2010, and a modest three percent will spend more than they did last year.

“Consumers are doing themselves a disservice if they do not
reach out to a legitimate credit counseling agency for help surviving these difficult economic times, as there may be solutions available that have not been considered,” continued Atkinson.

For professional assistance regarding your financial questions, consider an appointment with a certified consumer credit counselor at an NFCC Member Agency. Counselors are on hand to help you at Consumer Credit Counseling Service Inc. Call us at 712-2060.