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The Department of Housing and Urban Development says FHA/HUD approved housing counseling is an important option for families who purchase their first homes and those struggling to prevent foreclosure.

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FHA Loan Articles

News and Updates for Homeowners

Options for First-time Home Buyers and Those at Risk of Foreclosure

July 5, 2012 - The Department of Housing and Urban Development says FHA/HUD approved housing counseling is an important option "for families who purchase their first homes and those struggling to prevent foreclosure." Pre-purchase housing counseling and foreclosure avoidance counseling were the focus of two recent HUD research projects.

According a press release from the Department of Housing and Urban Development, " HUD found housing counseling significantly improved the likelihood homeowners remained in their homes" . According to the press release, the pre-purchase counseling and foreclosure counseling studies enrolled clients in 2009 through 2010 and found, "35 percent of participants became homeowners within 18 months of pre-purchase counseling and only one of those buyers subsequently fell behind in their mortgage payments."

Other results of the study? With a counselor's help, "nearly 70 percent of those counseled obtained a mortgage remedy to retain their home, and 56 percent cured their defaults and became current on their mortgages."

Raphael Bostic, HUD's Assistant Secretary for Policy Development and Research, says of the two studies, "The evidence is clear, with a little investment on the front end, we can go a long way toward improving the chances families will buy a home they can afford and sustain their homes in the long run."

Important findings of the pre-purchase counseling study include some attention-worthy statistics for first-time home buyers.

"35 percent of the study participants had become homeowners 18 months after seeking pre-purchase counseling.Most purchasers had a FICO score of 620 or higher (71 percent), and were reported as having completed counseling by their housing counselor (72 percent)" according to the press release, which adds, "Only one of the purchasers had fallen at least 30 days behind on mortgage payments 12-18 months after receiving pre-purchase counseling services." (emphasis ours.)

Data from the foreclosure study was equally revealing. "Most study participants attempted to contact their servicer when they first fell behind but were unsuccessful in negotiating with their lenders on their own." But, the study concludes, with a counselor's help, 69 percent of counselees were able to find a "mortgage remedy".

Another 56 percent were able to become "current on their mortgages.Nearly 70 percent of clients who sought counseling before becoming delinquent were in their home and current on their mortgage payments at the 18-month follow-up period, whereas only 30 percent of clients who were six or more months behind at the time they entered counseling were in their home and current at follow-up."

The revelations from these studies are important for FHA home loan applicants and those who are already paying on FHA guaranteed home loans--future borrowers and current homeowners with FHA loans should seriously consider housing counseling from an FHA-referred agency.

For more information on FHA-approved housing counseling, call 1-800-CALL FHA.