Congresswoman Waters Chairs Hearing Examining Effectiveness of Housing Counseling Programs
The House Financial Services Subcommittee on Housing and Community Opportunity, chaired by Congresswoman Maxine Waters (D-CA), today held a hearing to examine how housing counseling is being offered to vulnerable homeowners through NeighborWorks – a congressionally chartered corporation – and national housing counseling intermediaries.
"With 2.4 million foreclosures expected through the end of 2009, according to the Center for Responsible Lending, it will become increasingly important to ensure that housing counseling is effective, efficient and non-duplicative. We must make certain that housing counseling will reach the greatest number of homeowners possible and will produce real, sustainable solutions," Congresswoman Waters said.
In particular, Congresswoman Waters is concerned about whether the $410 million in federal funding provided to NeighborWorks through its National Foreclosure Mitigation Counseling program is distributed to eligible entities in a way that helps homeowners avoid foreclosure. The latest report to Congress from NeighborWorks notes that 69 percent of all counseling performed includes intake and developing a budget, rather than in-depth counseling that results in loan modifications or repayment plans.
The Congresswoman is also concerned about NeighborWorks' reimbursement policies, and whether intermediaries performing counseling receive reimbursements that cover the true cost of the services they perform. Without adequate reimbursements, many of these intermediaries will not be able to continue to assist homeowners.
NeighborWorks, created originally as the Neighborhood Reinvestment Corporation, has a mission to expand affordable rental and homeownership housing opportunities and to strengthen distressed urban, suburban and rural communities. The corporation provides services to a national network of affiliates that includes more than 230 nonprofit community-based organizations, representing more than 4,450 communities in all 50 states, the District of Columbia and Puerto Rico.
With the current scale of the foreclosure crisis, providing these services presents significant challenges. Representatives from national housing counseling intermediaries testified to the fact that their job is made more difficult by many mortgage servicers that are uncooperative, unresponsive and don't have the necessary infrastructure in place to deal with distressed homeowners.
"Although the Making Home Affordable program is a good start, given these challenges, it is clear that unless servicers are required to engage in loss mitigation, the rate of foreclosures will only continue to increase," Congresswoman Waters noted.###