Real Estate Market

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 their needs.

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 their mortgages.

• 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 payment.

• 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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