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The Evidence on Homeownership Education and Counseling

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Spring 2016   


The Evidence on Homeownership Education and Counseling


      • Prospective homebuyers often do not know or understand their financing options, and homeowners can encounter unexpected costs, struggle to maintain their initial payment plans, and encounter foreclosure rescue scams.
      • Research demonstrates that homeownership education and counseling, both for those considering a home purchase and for those who are already homeowners, can provide timely, powerful support as people assess their options and make decisions.
      • People benefit most from homeownership education and counseling when the support is appropriate for their needs, easily accessible, and offered early in the homebuying process.

Homeownership is complicated. Choosing and maintaining a home, as well as deciding whether to buy a home at all, can be difficult, and many people struggle to understand their choices. It is difficult to learn how to buy a home from experience: most people only buy a few homes, at most, over the course of their lifetimes.

People’s “mental accounting” can lead them to inaccurately estimate costs, such as by focusing only on the affordability of monthly housing expenses without considering other costs such as points or fees.1 Customers are often confused by mortgage terms, such as the difference between contract interest rates and annual percentage rates (which include the actual interest rate as well as fees, points, and other charges for the loan).2 In general, people systematically overestimate their ability to stick to a financial plan.3 These challenges can be particularly keen for low- and moderate-income households. Nearly one-third of low- and moderateincome homebuyers underestimate their household debt by $5,000 or more, and consumers who underestimate their mortgage debt tend to take out mortgages that are large relative to their income.4

Many prospective homebuyers do not shop around for home financing, even though having access to more options might lower their costs. The Consumer Financial Protection Bureau’s survey of 2013 mortgage borrowers found that approximately one-half of borrowers seriously considered only one lender or broker before deciding where to apply and that 77 percent of borrowers submitted an application to only one lender or broker.5 Borrowers who were less familiar with the mortgage process were also less likely to shop around for mortgages and were much more likely to rely on information from real estate agents, friends, relatives, or coworkers when shopping.6 Before the mortgage and credit crisis, 30 to 50 percent of subprime borrowers could have qualified for a prime loan instead,7 and many subprime borrowers who had adjustable-rate loans did not know that their initial fixed rate applied for only a limited period of time or that they were being charged substantial fees.8 According to Richard Green, the mortgage crisis could have been prevented if borrowers had more information on the costs and risks of their loans.9

Once homeowners buy a home, they can encounter unexpected costs and struggle to maintain their initial payment plans.10 Nearly half of all first-time, low-income homeowners experience significant unexpected home repairs.11 Homeowners who fall into delinquency may be overwhelmed by their situation and struggle to manage their debts or negotiate workout options with their mortgage servicers.12

Struggling homeowners may also fall victim to foreclosure rescue schemes, which promise mortgage modifications that are fraudulent and trick homeowners out of their mortgage payments.13 These schemes have become more complex and prevalent in the wake of the housing market crash.14 These scams not only defraud homeowners of thousands of dollars15 but also waste homeowners’ time that could have been spent on real counseling and can even lead homeowners into foreclosure.16

Homeownership education and counseling (HEC) can address these challenges. HEC participants working with a HUD-approved housing counseling agency receive independent, expert, and unbiased advice from a counselor whose ultimate duty is to the consumer. People can better understand their options, avoid scams, and make more informed decisions. HEC can complement new consumer protections for homebuyers — and some of these rules require that certain prospective homebuyers receive HEC.

HEC, in turn, can promote sustainable homeownership at each stage of the process by helping people distinguish between financing options, stay current on their payments, or avoid foreclosure if they fall delinquent on their payments. A growing body of evidence — primarily considering HUD-regulated programs for low- and moderate-income households — on large-scale HEC programs, bolstered by evidence on individual agencies, demonstrates that HEC can substantially help participants in many ways.

What Is Homeownership Education and Counseling?

Homeownership education and counseling includes many types of support that vary in timing, method of delivery, intensity, and focus.17 For support to qualify as counseling rather than education, it must be one on one and customized to participants’ individual needs.18 In practice, the line between education and counseling can blur, especially when support is offered by phone or on the Internet.19 Many programs include both education (for instance, group classes) and counseling.

HEC can help people who are considering a home purchase (“prepurchase”) and after they become homeowners (“postpurchase”). Prepurchase education and counseling covers topics such as money management; selecting a home; options for financing; and avoiding scams, discrimination, and inappropriate loans.20 According to HUD’s 2012 study of prepurchase counseling, nearly all (90%) of the participants in prepurchase HEC learn about homeownership readiness, budgeting and credit, home financing, and shopping for a home, and a smaller but still substantial proportion learn about home maintenance (63%) or resolving or preventing mortgage delinquency (47%).21 Postpurchase HEC most often addresses mortgage delinquency and default to help families stay current on their loans and avoid foreclosure. HUD’s 2012 study of foreclosure counseling, for instance, found that counselors helped participants prepare household budgets and loss mitigation packets, explained the range of options to retain their homes, and sometimes intervened directly with a lender on the participant’s behalf.22 Postpurchase HEC can also cover home repair, postpurchase budgeting, and decisions about refinancing and reverse mortgages.

A woman explains paperwork to a couple sitting in front of her in an office.
The Consumer Financial Protection Bureau reports that many first-time homebuyers unfamiliar with the mortgage process do not shop around when applying for financing.

The Housing and Urban Development Act of 1968 first enabled HUD to authorize public and private organizations to provide housing counseling.23 Congress believed that counseling was an essential complement to new mortgage insurance programs for lower-income families. The act’s committee report comments, “While many families who would be eligible for mortgage insurance. . . have strong aspirations to become homeowners, their experience in handling large financial responsibilities may be meager. Through counseling, these families can be helped to use their resources efficiently in meeting homeownership responsibilities.”24 In the short term, significant default rates among households participating in the Section 235 program — created in the 1968 act as HUD’s first large low-income homeownership program — motivated Congress to institutionalize HEC within HUD.25 HUD began certifying HEC in 1971 and began directly funding it in 1974.26 Since then, funding for HEC has steadily increased, and the program has broadened in scope.27

In the late 1980s and early 1990s, the focus of HEC shifted from home retention to prepurchase counseling as lenders tried to minimize the risks of lending to lower-income prospective homebuyers.28 In 2007, at the start of the housing crisis, Congress authorized hundreds of millions of dollars for HEC through the new National Foreclosure Mitigation Counseling (NFMC) program. NFMC operated alongside an array of related programs such as the Neighborhood Stabilization Program, the Making Home Affordable program, and the Emergency Homeowner Loan Program; most of these programs required or encouraged the use of HUD-approved housing counseling agencies.

In 2010, Congress created a centralized Office of Housing Counseling within HUD to oversee the Housing Counseling Program’s agencies, counselors, and counseling services. The Office of Housing Counseling certifies counseling agencies and has proposed regulations to certify individual counselors, as the 2010 legislation requires; only HUD-approved agencies can apply for Housing Counseling Program grants. HUD standards address the content and process of HEC, outline requirements for the training and expertise of counselors, and prohibit steering and conflicts of interest.29

The number of people participating in homeownership education and counseling has multiplied over the past 20 years. In 1994, 244,000 individuals received one-on-one counseling through HUD-approved counseling agencies.30 In fiscal year 2015, HUD-approved agencies provided education or counseling to 1,336,920 households: 363,113 received group education, 973,807 received counseling, and 100,872 received both.31 HUD-certified HEC disproportionately serves minorities and low- and moderate-income households. For fiscal year 2015, the most common topics for education were prepurchase homebuyer education (64%) and financial literacy, including home affordability, budgeting, and understanding the use of credit (17%).32 Nearly half of HUD-certified housing counseling covered mortgage delinquency or default resolution or prevention (46%); other common topics included prepurchase or homebuying counseling (24%), rental topics (12%), and reverse mortgages (10%).

About 2,000 HEC agencies are part of HUD’s network as of 2016. The most recent comprehensive review of the housing counseling industry, published by HUD in 2008, found that HUD-certified nonprofit organizations were “by far” the most common HEC providers; others include state and local governments as well as entities not eligible for HUD approval, such as lenders, real estate agents, and mortgage companies.33 HUD’s 2008 review also found that most agencies were relatively small, with 15 or fewer employees and serving fewer than 500 clients per year.34 Housing counseling agencies use a wide array of curricula,35 and several other sets of HEC standards complement HUD’s. The voluntary and self-certified National Industry Standards for Homeownership Education and Counseling, for example, have been widely adopted. These standards impose a code of ethics; describe minimum operating standards, such as training and certification expectations for homeownership counselors; and create minimum content standards, such as key topics for homeownership education.36

Do HEC Programs Work, and How So?

Homebuyer education and counseling can provide timely, powerful support for prospective and current homeowners as they assess their options and make decisions. The evidence demonstrates that HEC can help participants expand their housing searches and enjoy more options; avoid risky purchases and mortgages; lower their housing costs; improve their credit scores; save more and keep more residual income; and avoid or resolve delinquency, default, and foreclosure. HEC could also have a positive impact at a larger scale, such as by helping stabilize the neighborhoods where HEC participants live.37

HEC programs, which address complex issues over the short- and long-term, pose challenges for evaluation. Programs differ in many ways, from curriculum to target population. Obtaining long-term data on participants’ mortgage payment history and delinquency can prove difficult.38 Recent research on HEC, however, has accounted for these challenges and has demonstrated how and in which contexts HEC can help prospective and struggling homebuyers.

The new research fills in gaps in the base of evidence. In 2010, Collins and O’Rourke commented that HEC programs do not share a common theoretical framework, so evaluators often had considered the actual interventions as a “black box.”39 Timing also matters: the mortgage market has changed substantially since the financial crash, so precrash findings might be less relevant in the context of today’s market. In particular, many early studies of HEC programs did not include a randomized control group and instead compared HEC participants’ outcomes with those of similar borrowers who did not receive HEC. Comparing participants in this way assumes that the two groups of borrowers share key characteristics that affect their outcomes (such as credit, income, and loan amount) save one important distinction: participation in the HEC program. In the context of HEC, however, this assumption might be flawed if studies do not account for motivation; in other words, people motivated to participate in HEC might also be more likely to experience successful homeownership and pay their mortgages on time.40 Indeed, HUD’s qualitative study of homeowners seeking help with foreclosure mitigation found that a relatively high proportion (82%) of those studied had tried to contact their servicer before entering counseling, suggesting that people who seek counseling might be more proactive than other homeowners.41

Prepurchase HEC. A number of prepurchase HEC programs appear to have helped borrowers avoid delinquency or defaults. In particular, a large-scale 2013 study considered nearly 75,000 borrowers: 18,258 participants in HEC programs provided by NeighborWorks America’s national network of agencies matched with 56,298 borrowers using Experian credit reports and other records. Most of the participants studied were first-time homebuyers, relatively young, and earning modest incomes. The study matched participants with similar borrowers who did not receive HEC using a more rigorous method that included extensive data on borrowers’ backgrounds, such as their Experian credit files. This study is also important because it included a substantial number of nonprofits from across the nation, not just a few agencies, and the participants all received HEC following a consistent framework, the NeighborWorks standards. According to the study, NeighborWorks participants — both first-time homebuyers and repeat buyers — were one-third less likely to become 90 or more days delinquent during the 2 years after they obtained their loans.42

A rigorous43 but smaller-scale 2010 study suggests that extensive, continuous pre- and postpurchase HEC by an organization with a stake in participants’ performance can substantially reduce default rates. The Indianapolis Neighborhood Housing Partnership, a HUD-approved housing counseling agency, provided low- and moderate-income households with a three-hour prepurchase class on money management, one-on-one counseling for up to two years, and a capstone eight-hour class on homebuying. Participants graduated once they met lender underwriting requirements and qualified for a mortgage. Compared with similar borrowers, graduates referred for private mortgages were 5.8 percentage points less likely to default within 18 months, and graduates who qualified for loans with the partnership based on nonpublic, “soft” information gathered during counseling were 10.7 percentage points less likely to default. Although the study considered loans originated from 2005 to 2007, the study’s data on defaults continued through 2008, well after the beginning of the housing crash.44

Homebuyers who participate in HEC could also become more creditworthy. To test this idea, the Federal Reserve Bank of Philadelphia conducted a five-year randomized experiment comparing homebuyers who received a single two-hour prepurchase workshop with those who received the workshop along with one-on-one purchase counseling by a HUD-approved housing counseling agency.45 Although the experiment had methodological limitations,46 it suggests that prepurchase one-on-one counseling can help participants — both those who subsequently buy a home and those who don’t — reduce delinquent payments on debts to a greater degree than they would have otherwise.47

Prepurchase HEC might be particularly powerful when combined with effective financing programs. Families who participated between 1990 and 2010 in Massachusetts’ SoftSecond mortgage program, which helps first-time homebuyers with lower incomes finance downpayments, experienced lower delinquency rates than subprime or even prime borrowers in the state over the same period. The combination of strong underwriting and HEC requirements appear responsible for these results; SoftSecond participants were required to take a two-day prepurchase education class and a postpurchase workshop, and counseling agencies proactively reached out to borrowers who became delinquent.48

HEC can help participants better understand their options to resolve default and avoid foreclosure, such as loan modifications or declaring bankruptcy.49 Tennessee’s downpayment assistance program for first-time homebuyers earning low and moderate incomes required participants to receive education on both prepurchase and postpurchase topics from a HUD-certified agency, mostly in a classroom setting.50 Tennessee did not enforce the education requirement for the first half of 2002, creating a natural experiment to compare participants for that year who were required to complete the education component with those who were not.51 The participants who received homebuyer education were much less likely (10.7%) to have experienced foreclosure by 2009 than the comparison group (17.6%), and the amount of money the households saved by avoiding foreclosure far exceeded the cost of the education. Those receiving education were not less likely to default, however, suggesting that the primary effect of homebuyer education was helping them address financial trouble.52

Requiring prepurchase counseling could also encourage borrowers to wait for the right time to buy or choose lower-risk loans. HUD’s 2012 study on prepurchase HEC found that participants who did not buy a home received as much counseling as those who did, suggesting that for some clients, waiting to buy is a successful outcome.53 A 2006 to 2007 legislative pilot in Chicago required that mortgage applicants who sought risky loans or had low credit scores receive counseling concerning common borrowing pitfalls from a HUD-certified agency. The state of Illinois had struggled to directly regulate issuers, who would introduce new types of risky products to avoid regulatory restrictions. The pilot was intended to counteract predatory lending through a different strategy — by educating borrowers rather than targeting issuers. Because the legislative pilot’s requirements applied only to certain ZIP codes, researchers were able to obtain solid evidence on the requirement’s effect: applicants chose less risky loans to avoid the counseling requirement.54

A group of potential homebuyers seated at tables arranged in rows participate in a homebuyer education class.
Potential homebuyers participate in a homebuyer education class conducted by HomeSource east tennessee, a NeighborWorks America organization. Photo courtesy of HomeSource east Tennessee

Postpurchase HEC. Postpurchase HEC can help borrowers avoid delinquencies and defaults, address issues before entering foreclosure, and lower their monthly costs. Recent studies have demonstrated several of these benefits on a large scale.

The 2014 study of the National Foreclosure Mitigation Counseling (NFMC) program analyzed a sample of approximately 240,000 loans from 2009 to 2012 and found that participants were nearly three times more likely than nonparticipants to get a loan modification. In addition, among borrowers who received a modification, NFMC participants were 70 percent less likely to redefault.55 The study also estimated that NFMC helped homeowners save $518 million a year — an average of almost $5,000 per client — by making both better modifications and new modifications, in addition to the savings homeowners would have achieved without a counselor’s help. NFMC funded individualized counseling with two steps: first, the counselor developed a budget and written action plan for the client; second, the counselor verified the client’s budget and worked to achieve that plan. Although the study matched participants to homeowners with similar characteristics, it addressed some of the possible selection bias by including information on how both groups tried to fix their problems before participants received counseling.56

Similarly, a 2013 study of borrowers in the period following the housing market crash found that those who received telephone counseling from a large national counseling network had better outcomes than did nonparticipants. Borrowers who received counseling were more likely to receive a loan modification, and those borrowers who received a modification were less likely to become delinquent; participants in general were less likely to experience foreclosure. Participants were also more likely to improve their status after their loans became seriously delinquent regardless of the amount of counseling they received. It is important to note that before receiving counseling, participants were more likely to be delinquent on their loans, which might have made them more likely to seek counseling. The study matched participants with nonparticipants but used several statistical methods to address unobservable differences between the two groups.57

A 2015 randomized experiment demonstrated that education combined with postpurchase coaching could help borrowers avoid defaults at a low cost. About 400 first-time homebuyers earning low and moderate incomes participated in the Ohio Housing Finance Agency’s MyMoneyPath program in 2011 and 2012. Both the treatment and control group completed an online financial assessment before buying a home, covering topics such as budgeting and borrowing, and received a concise report of their financial health. Participating homebuyers then completed an online, interactive financial goals planning module, followed by postpurchase quarterly coaching by email and phone to monitor participants’ progress and help them turn those goals into actionable steps. Compared with a randomized control group, participants were 20 percent less likely to default during their first year of homeownership. The program, which cost only $100 to $300 per participant, appeared to work by improving participants’ financial attentiveness and decisionmaking, which helped them reduce their debt and increase their savings.58

Factors Affecting HEC Outcomes. Context matters for HEC. In particular, the point at which consumers receive either prepurchase or postpurchase HEC appears to make a significant difference.59 In the prepurchase context, earlier HEC can inform more stages of a consumer’s decisionmaking process. The National Industry Standards for Homeownership Education and Counseling, for instance, reflect the housing industry’s consensus that clients who receive earlier prepurchase HEC have better outcomes.60 And as the Bipartisan Policy Center comments, housing counseling’s “most important contribution may be helping prospective buyers understand when is not the right time for them to purchase a home.”61

A couple listens to their realtor while walking in a residential neighborhood.
Prepurchase counseling can help homebuyers make informed choices.

Some prepurchase participants have already signed a purchase agreement before receiving counseling.62 Borrowers who received prepurchase counseling during the Chicago experiment, which required counseling for low-credit borrowers or high-risk loans, did not appear more likely to walk away from potentially troublesome, risky mortgages, perhaps because the counseling occurred relatively late in their homebuying process.63 Early information appears to make a difference; in states that require borrowers to receive enhanced warnings or counseling about foreclosures before signing for riskier mortgages, borrowers are more likely to reject lenders’ high-cost mortgage refinancing offers.64 More evidence could illuminate how prepurchase HEC affects participants’ decisions about mortgage products. The NeighborWorks study, for instance, does not address this issue, both because of data limitations and because some people might be referred to counseling after seeking certain mortgage products.65

Earlier HEC could also help homeowners avoid foreclosure. Evidence from a 2010 study of postpurchase counseling suggests that borrowers who receive counseling in the early stages of default may be much more likely to receive a loan modification or keep their homes compared with those who received counseling only after were already seriously delinquent or in foreclosure. This study considered national data on homeowners who called a mortgage foreclosure hotline from 2007 to 2009, in the midst of the housing crisis. The authors used multiple methods to account for selection bias, including considering the timing of targeted outreach events by the agency sponsoring the hotline. These findings suggest that counseling leads borrowers to prioritize mortgage payments, which also suggests that borrowers with income might benefit more from earlier HEC than would those without.66

Social networks can affect people’s participation in HEC. According to a 2015 qualitative study, working-class homeowners are more likely than middle-class homeowners to share information about the loan modification process with their social networks; middle-class homeowners are more likely to be embarrassed by their struggles with their mortgages.67 Similarly, a 2015 study of a New York City counseling network found that homeowners were much less likely to seek counseling services if they lived in neighborhoods with higher median home prices or lower housing burdens, even accounting for lower rates of foreclosure — perhaps because homeowners in these neighborhoods, which had relatively strong housing markets, underestimated the risk of foreclosure.68

Geography can play a role, too. The 2015 New York City study also found that homeowners who lived farther from counseling services were more likely to withdraw from counseling, although they did not necessarily have worse outcomes.69 In Ohio, with all other factors being equal, homeowners who initially registered for homeowner assistance were slightly more likely to finish their applications when they lived closer to the counseling agency that completed intake for assistance.70

On the other hand, the amount of counseling participants receive does not appear to affect their outcomes. A 2013 national study of telephone foreclosure mitigation counseling after the housing crash found that the amount of counseling homeowners received did not appear to matter; in fact, borrowers who received any amount of counseling appeared more likely to improve their delinquency status and avoid foreclosure. This finding might be because counselors are able to determine the right amount of time an individual client needs, or because the effectiveness of a given counseling program is more closely related to the qualities of the person seeking counseling rather than the length of time he or she receives it.71 The 2015 New York City study suggested that participants who remained clients for longer periods experienced better outcomes, but the amount of time they received counseling did not matter.72 In one study that suggested that additional hours of counseling improved outcomes, participants also received housing assistance loans, and more motivated participants might have selected into receiving more hours.73

Also, although face-to-face counseling is generally assumed to be more effective than other methods of HEC, the evidence does not support that assertion.74 As this article discusses, Internet-based, telephone, and face-to-face HEC programs all appear to be effective in various situations. HUD’s 2012 qualitative study of foreclosure counseling found that telephone counseling did not appear to be less effective than in-person counseling; instead, the study indicated that helping as many people as possible access quality counseling is the most critical factor for HEC’s effectiveness.75 Because the accessibility of HEC likely affects take-up and outcomes, different modes of HEC can help people with different needs.

Evidence To Come

The evidence to date indicates that HEC can substantially improve prospective and current homeowners’ comprehension of their choices, financial decisionmaking, and ability to address issues that arise with their homes or finances. HEC can help participants lower their housing costs, save more income, improve their credit, avoid delinquency, address defaults, and avoid foreclosure. The rigor of the recent research indicates that HEC not only is associated with but causes these better outcomes.

Most of this research concerns low- and moderate-income homebuyers, who might stand to benefit most from HEC, and programs provided by HUD-approved counseling agencies. Both relatively low-cost initiatives related to HEC, such as the Ohio program that combined online education with coaching, and more intensive interventions, such as the National Foreclosure Mitigation Counseling program, appear to be cost effective. The evidence on timing suggests that the earlier homebuyers participate in pre- or postpurchase HEC, the better the outcome. Also, the amount of HEC homebuyers receive or the way they receive it appears to be less important than the fact that the HEC is appropriate for their needs and is easily accessible.

Additional research will continue to develop our understanding of HEC. New, large-scale, randomized controlled trials promise to provide additional, definitive findings on the effect and design of HEC. HUD’s in-progress, national First-Time Homebuyer Education and Counseling Demonstration, for instance, considers how prepurchase HEC affects outcomes for low-, moderate-, and middle-income first-time homebuyers. The study includes more than 5,800 participants who are randomly assigned to one of three groups: one that gives homebuyers in-person HEC from a HUD-approved counseling agency, one that provides online homebuyer education and telephone-based counseling, and a control group whose members receive no services. Research like this can further explain how best to tailor HEC to the diverse group of homebuyers who stand to benefit.

— Chase Sackett, HUD Staff

  1. Vanessa G. Perry. 2013. “Consumers in Mortgages Markets,” in Introduction to Mortgages and Mortgage Backed Securities, Richard K. Green, ed. Oxford: Elsevier, 143–60.
  2. Perry, citing: Jinkook Lee and Jeanne M. Hogarth. 1999. “Returns to Information Search: Consumer Mortgage Shopping Decisions,” Journal of Financial Counseling and Planning 10:1, 49–67.
  3. Stephanie Moulton, J. Michael Collins, Cäzilia Loibl, and Anya Samek. 2015. “Effects of Monitoring on Mortgage Delinquency: Evidence From a Randomized Field Study,” Journal of Policy Analysis and Management 34:1, 184–207.
  4. Stephanie Moulton, Cäzilia Loibl, Anya Samak, and J. Michael Collins. 2013. “Borrowing Capacity and Financial Decisions of Low-to-Moderate Income First-Time Homebuyers,” Journal of Consumer Affairs 47:3, 375–403.
  5. Consumer Financial Protection Bureau. 2015. “Consumers’ Mortgage Shopping Experience: A First Look at Results from the National Survey of Mortgage Brokers.”
  6. Ibid.
  7. Carolina Reid. 2006. “Preventing Foreclosure: Initiatives to Sustain Homeownership,” Community Investments 18:3, 10–4.
  8. Housing Action Illinois. 2007. “Findings from the HB 4050 Predatory Lending Database Pilot Program.”
  9. Richard K. Green. 2008. “Imperfect Information and the Housing Finance Crisis: A Descriptive Overview,” Journal of Housing Economics 17:4, 262–71.
  10. Moulton et al. 2015.
  11. Shannon Van Zandt and William M. Rohe. 2011. “The Sustainability of Low-Income Homeownership: The Incidence of Unexpected Costs and Needed Repairs Among Low-Income Home Buyers,” Housing Policy Debate 21:2, 317–41. (Described in Moulton et al. 2015).
  12. Desiree Fields, Francine Justa, Kimberly Libman, and Susan Saegert. 2007. “American Nightmare,” Shelterforce 150.
  13. Lawyers’ Committee for Civil Rights Under Law. 2014. “Foreclosure Rescue, Inc.”
  14. U.S. Government Accountability Office. 2013. “Foreclosure Rescue Schemes Have Become More Complex, and Efforts to Combat Them Continue.”
  15. Lawyers’ Committee for Civil Rights Under Law. 2014. “The Domino Effect of Foreclosure Rescue Fraud.”
  16. Lawyers’ Committee for Civil Rights Under Law. 2014. “Foreclosure Rescue, Inc.”
  17. See Scott R. Brown. 2016. “The Influence of Homebuyer Education on Default and Foreclosure Risk: A Natural Experiment,” Journal of Policy Analysis and Management 35:1, 145–72.
  18. As Collins and O’Rourke put it, compared with education, counseling is “less focused on transferring information and more focused on acute problem solving”; J. Michael Collins and Collin O’Rourke. 2011. “Homeownership Education and Counseling: Do We Know What Works?” Research Institute for Housing America and the Mortgage Bankers Association.
  19. Ibid.
  20. See U.S. Department of Housing and Urban Development, Office of Housing Counseling. “Best Practices for Expanding Housing Counseling Services.”
  21. Jennifer Turnham and Anna Jefferson. 2012. “Pre-Purchase Counseling Outcome Study: Research Brief,” U.S. Department of Housing and Urban Development.
  22. Anna Jefferson, Jonathan Spader, Jennifer Turnham, and Shawn Moulton. 2012. “Foreclosure Counseling Outcome Study: Final Report,” U.S. Department of Housing and Urban Development.
  23. Julie Birkenmaier, and Sabrina Tyuse. 2005. “Does Homeownership Education and Counseling (HEC) Help Credit Scores?” Journal of Social Science Research 32:2, 81–103.
  24. U.S. House of Representatives. 1968. House Report 1585, 90th Congress, Second Session, 11–2.
  25. Birkenmaier and Tyuse.
  26. Ibid.
  27. Bipartisan Policy Center. 2013. “Housing America’s Future: New Directions for National Policy.”
  28. Danielle Samalin. 2014. “Strengthening Neighborhood Stabilization: Refining Business Models for Housing Counseling,” Community Development Investment Review 9: 2, 53–61.
  29. 24 CFR pt. 214.
  30. Christopher E. Herbert, Jennifer Turnham, and Christopher N. Rodger. 2008. “The State of the Housing Counseling Industry,” U.S. Department of Housing and Urban Development.
  31. These figures account for each unit of education or counseling as opposed to each unique household served. Technically, HUD-approved agencies delivered 1.3 million “service types” to households; U.S. Department of Housing and Urban Development, Office of Housing Counseling. 2016. “Cumulative Totals: Fiscal Year 2015.”
  32. Ibid.
  33. Herbert, Turnham, and Rodger.
  34. Ibid.
  35. Collins and O’Rourke 2011.
  36. See National Industry Standards for Homeownership Education and Counseling. “Adopter List” ( Accessed 2 May 2016.
  37. See Samalin.
  38. Birkenmaier and Tyuse.
  39. J. Michael Collins and Collin M. O’Rourke. 2010. “Financial Education and Counseling—Still Holding Promise,” Journal of Consumer Affairs 44:3, 483–98.
  40. See Collins and O’Rourke 2011.
  41. Jefferson et al.
  42. Neil S. Mayer and Kenneth Temkin. 2013. “Pre-Purchase Counseling Impacts on Mortgage Performance: Empirical Analysis of NeighborWorks America’s Experience,” NeighborWorks America.
  43. See Collins and O’Rourke 2011, evaluating the study.
  44. Sumit Agarwal, Gene Amromin, Itzhak Ben-David, Souphala Chomsisengphet, and Douglas D. Evanoff. 2010. “Learning to Cope: Voluntary Financial Education and Loan Performance during a Housing Crisis,” American Economic Review 100:2, 495­–500.
  45. Marvin M. Smith, Daniel Hochberg, and William H. Greene. 2014. “The Effectiveness of Pre-Purchase Homeownership Counseling and Financial Management Skill,” Federal Reserve Bank of Philadelphia.
  46. The study compares only those members of the treatment group who actually received the one-on-one counseling, not the entire treatment group, to the con­trol group. Although the authors state that treatment group members who did not participate in counseling had similar credit scores to other treatment group members, there may be other important reasons, such as a lack of motivation, that explain why some treatment group members opted out of counseling.
  47. The study also found that the treatment group mem­bers who received one-on-one counseling experienced a 16-point, statistically significant increase in credit scores, although the difference between this increase and the control group’s 9-point increase was not significant; Smith, Hochberg, and Greene.
  48. The postpurchase counseling was developed by the Massachusetts Affordable Housing Alliance, a HUD-approved housing counseling agency, and was delivered by a network of counseling agencies; University of North Carolina Center for Community Capital. 2012. “Massachusetts’ SoftSecond® Loan Program,” in Regaining the Dream: Case Studies in Sustainable Low-Income Mortgage Lending, 6–9.
  49. See Brown.
  50. A small number of homebuyers who lived an hour or more from the nearest site for classroom education were able to receive one-on-one education.
  51. The study found no other statistically significant differences between these groups.
  52. Brown.
  53. Turnham and Jefferson.
  54. Sumit Agarwal, Gene Amromin, Itzhak Ben-David, Souphala Chomsisengphet, and Douglas Evanoff. 2014. “The Effectiveness of Mandatory Mortgage Counseling: Can One Dissuade Borrowers from Choosing Risky Mortgages?” working paper no. 19920, National Bureau of Economic Research.
  55. NFMC counseling was provided through HUD-approved counseling agencies; Kenneth M. Temkin, Neil S. Mayer, Charles A. Calhoun, and Peter A. Tatian. 2014. “National Foreclosure Mitigation Counseling Program Evaluation: Final Report, Rounds 3 Through 5,” Urban Institute.
  56. The study noted that some differences existed between NFMC clients and comparison borrowers: NFMC clients were more likely to cure their loans than the comparison group, suggesting unobservable differences between the two groups.
  57. J. Michael Collins and Maximilian Schmeiser. 2013. “The Effects of Foreclosure Counseling for Distressed Homeowners,” Journal of Policy Analysis and Management 32:1, 83–106.
  58. Moulton et al. 2015.
  59. See Collins and O’Rourke 2011 concerning postpurchase HEC programs.
  60. See Turnham and Jefferson.
  61. Bipartisan Policy Center.
  62. Jonathan Spader and Roberto G. Quercia. 2009. “Pre-Purchase Homeownership Counseling and Mortgage Source,” University of North Carolina Center for Community Capital.
  63. Agarwal et al. 2014.
  64. J. Michael Collins. 2014. “Protecting Mortgage Borrowers through Risk Awareness: Evidence from Variations in State Laws,” Journal of Consumer Affairs 48:1, 124–46.
  65. Mayer and Temkin 2013.
  66. J. Michael Collins and Maximilian D. Schmeiser. 2010. “Estimating the Effects of Foreclosure Counseling for Troubled Borrowers,” working paper no. 2010-06, FDIC Center for Financial Research.
  67. Lindsay A. Owens. 2015. “Intrinsically Advantageous? Reexamining the Production of Class Advantage in the Case of Home Mortgage Modification,” Social Forces 93:3, 1185–209.
  68. Kwan Ok Lee. 2015. “Pre- and Post-Delinquency Behavior: Cross-Neighborhood Variation in New York City,” Journal of Housing and the Built Environment 30:3, 359–82.
  69. Ibid.
  70. Blair D. Russell, Stephanie Moulton, and Robert T. Greenbaum. 2014. “Take-up of Mortgage Assistance for Distressed Homeowners: The Role of Geographic Accessibility,” Journal of Housing Economics 24, 57–74.
  71. Collins and Schmeiser 2013.
  72. Lee.
  73. See Collins and Schmeiser 2010, reviewing: Roberto G. Quercia and Spencer M. Cowan. 2008. “The Impacts of Community-based Foreclosure Prevention Programs,” Housing Studies 23:3, 451–83.
  74. See Collins and O’Rourke 2011. Although a 2002 study suggested that telephone prepurchase counseling did not affect delinquency rates among participants whereas face-to-face, classroom, and home study HEC did have an effect, there are methodological issues with that finding. As the article mentions, different types of borrowers select different types of HEC. The authors attempted to address differences between borrowers, but as they note, the model they used to do so was “not particularly well fitting” and had issues with multicollinearity. Note also that this study did not consider HUD-approved agencies or materials meeting HUD standards; Abdighani Hirad and Peter M. Zorn. 2002. “A Little Knowledge Is a Good Thing: Empirical Evidence of the Effectiveness of Pre-Purchase Homeownership Counseling,” in Low-Income Homeownership: Examining the Unexamined Goal, Nicolas P. Retsinas and Eric S. Belsky, eds. Cambridge, Joint Center for Housing Studies, 165. Reviewed by Collins and O’Rourke 2011.
  75. Jefferson et al.


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