Foreclosure Network to Provide Funding to Housing Counseling Agencies Overwhelmed by Demand for Services

Oct 13, 2010

WASHINGTON - A regional foreclosure prevention group today said it will establish a fund to provide support to housing counseling agencies in metropolitan Washington being overwhelmed by clients in foreclosure.

The organization, the Capital Area Foreclosure Network (CAFN,) led by the Metropolitan Washington Council of Governments (COG) and the Nonprofit Roundtable of Greater Washington, is acting in response to its own survey showing housing counselors were able to offer foreclosure prevention counseling to only 20,000 clients in 2009 while more than 148,000 mortgages in the region were delinquent or in foreclosure.

The research was conducted by the Urban Institute and funded by Fannie Mae and Freddie Mac. Overall, it shows that Prince George’s County in Maryland and Prince William County and the cities of Manassas and Manassas Park in Northern Virginia have some of the largest concentrations of foreclosures in the region. 

“The region’s foreclosure prevention counselors are the unsung heroes of the foreclosure crisis,” Chuck Bean, CAFN’s co-chair, told the COG Board today. Mr. Bean, who also is executive director of the Nonprofit Roundtable, presented results from the survey of 25 counseling organizations, Rising Foreclosures Overwhelm Washington Area Counseling Organizations. The report shows that more than half of the organizations had three or fewer full-time equivalent staff working on foreclosure prevention counseling, and most had a prevention budget that was less than $200,000 in 2009.

Information on how to apply for help from the fund will be released on Monday, October 18. Additional details can be found at www.cafn.org.

NeighborWorks America, a national nonprofit organization created by Congress to provide financial support, technical assistance, and training for community-based revitalization efforts,  has provided a leadership grant to the CAFN fund.  “Many of the clients overwhelming these organizations have been victimized by predatory lending practices or have lost their jobs,” said Tim Adams, NeighborWorks’ Mid-Atlantic District Director. “Scam artists continue to prey on homeowners making them pay for promises, such as guaranteed loan modifications, they just can’t keep.  NeighborWorks is partnering with CAFN to help get the word out on how to avoid scams. Contacting a certified nonprofit housing counselor for free help is a great place to start.” NeighborWorks America is providing 10 partial scholarships to its multi-day training institutes to help agencies learn about tools that are working in other parts of the country,” Adams added.

Bill Hanbury, President and Chief Executive Officer, of the United Way of the National Capital Area, said his organization has provided a leadership grant to the fund because “foreclosures have a negative impact on almost every United Way program area, including health, children’s educational attainment and neighborhood stability.”  Starting in November 2010 participants in United Way’s workplace giving campaign will have the opportunity to designate their gifts to this fund. Key findings from the report include:

  • Prince George’s County has a substantial need for counseling services, with more than 45,000 mortgages delinquent or in foreclosure in December 2009. To review some of the largest concentrations of foreclosures in the region, see attached map.
  • Many Northern Virginia organizations providing foreclosure prevention counseling have a limited geographic service area and served fewer clients than organizations in Maryland and the District of Columbia. Counseling organizations who worked in Maryland in 2009 served an average of 685 foreclosure prevention clients, while those working in the District of Columbia served an average of 502, and in Virginia only an average of 337.
  • Only two organizations had more than 7 full time employees on staff for foreclosure prevention. Eleven out of 17 organizations reported that their foreclosure prevention counseling budget was less than $200,000 in 2009.
  • Recent work by the Urban Institute has shown that counseling helps homeowners threatened by foreclosure achieve better outcomes. The Urban Institute’s evaluation of the congressionally funded National Foreclosure Mitigation Counseling Program (NFMC), has shown that, on average in 2008, the relative odds of avoiding foreclosure were 1.6 times higher than for homeowners who did not receive counseling. Furthermore, on average, homeowners who went to a NFMC grantee for counseling received loan modifications that resulted in monthly payments that were $454 lower than the loan modification they would have obtained without NFMC counseling.
  • Of the 11 organizations that responded to the survey question on the number of clients who received foreclosure prevention counseling in 2007, 2008, and 2009, 10 experienced an increase in clients and 7 expanded their caseload by more than 100 clients. The average number of foreclosure prevention clients per organization increased from 287 clients in 2007 to 423 clients in 2009
  • On average, across the 16 organizations that responded to the question, 61 percent of their clientele were African-American, 20 percent were Latino or Hispanic, about 2 percent were Asian, 10 percent were white non-Hispanic, and the remaining 8 percent were of other or unknown race. 
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