Mortgage relief programs seen as assistance of last resort
(6/6/2012) The last place struggling homeowners will go to seek help with
their mortgage is the plethora of mortgage programs designed to address
In a recent Money Management International
(MMI) survey, those surveyed said they would first seek help from family
or friends (50 percent) and their lender (26 percent) before considering
housing counseling or mortgage relief program (13 percent).
Another 11 percent said they'd stick their heads in the sand and ask no
one for help.
Money Management said the tendency for struggling homeowners to seek help
from family and friends may be a human condition based on the assumption
that it might be easier for people to admit problems to individuals they
know and trust rather than an institution.
That's unfortunate because while family and friends may not have the
stiff qualification requirements that come with some mortgage relief
programs, individuals typically can't provide the home ownership-saving
benefits that come with the relief programs.
All relief programs come with a mandate that the struggling homeowner get
counseling and counseling, time and again, has proven to be a real life
saver for homeownership.
A ream of studies reveal had mandated housing
counseling programs been in place before the housing boom, the crash
likely would have cost far fewer foreclosures.
In one of the most recent studies the U.S. Department of Housing and
Urban Development (HUD) found that among the 35 percent of HUD-approved
counseling recipients who became homeowners within 18 months of pre-purchase
counseling only one subsequently fell behind in mortgage payments.
Also, nearly 70 percent of those facing foreclosure managed to obtain
some mortgage remedy to retain their home - after they received counseling.
More than half of those who faced foreclosure and were counseled learned
enough to cure their default and become current on their existing mortgage
without outside assistance, according to the HUD study.
When MMI asked about concerns regarding available resources and options
for mortgage assistance, survey respondents stated they were concerned about
scams/fraudulent services (53 percent), that the
services would cost them money that they couldn't afford to pay (51
percent), and that the process was confusing or they would choose a solution they did not
fully understand (45 percent).
"Homeowners face real concerns when considering who to turn to for help
with mortgage troubles," said Jo Kerstetter, vice president of education and
community relations for MMI.
"For the millions of homeowners who still face possible foreclosure, it
is important to remember that quality help is available for free from
HUD-certified housing counselors nationwide," Kerstetter added.
The survey also found:
Most people (a whopping 80 percent) are not getting any help with
A majority, 57 percent, would seek help only after a job loss, 35
percent if they knew they would miss at least one mortgage payment, and 27
percent if they had missed one mortgage payment.
Prevailing advice suggests homeowners get help before they miss a
Among those who sought help, 63 percent did so when they were one
to three months behind on their mortgage payments; 22 percent were four to
six months behind, and 4 percent were seven or more months behind before
they sought help.
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