Housing Groups Agree on Standards For Education and Counseling Work

Concluding a decade-long effort to prevent predatory and poor lending practices, a group of organizations has launched voluntary compliance-based education standards and a "code of ethics."

Initiated by NeighborWorks America Inc., the standards - developed by an advisory council of some of the country's largest for-profit and nonprofit organizations - can be found at homeownershipstandards.com.

It is the first time that representatives from all of the housing industry have agreed on a set of national benchmarks.

"The development of national standards for homeownership education and counseling together with a national code of conduct was spearheaded in a collaborative spirit," said Mike Haley, assistant commissioner of Minnesota Housing and national advisory council chair. "The ultimate beneficiaries will be homeowners."

The goal, NeighborWorks said, is to enable consumers to avoid unscrupulous mortgage brokers, avoid foreclosure due to inappropriate mortgage products and to bring some uniformity to the homeownership counseling industry. If broadly adopted, NeighborWorks said upon the launch, these standards "will help prevent in the future the wave of foreclosures that the housing market is experiencing today."

Industry standardization is expected to strengthen the professional credentials of more than 10,000 homeownership professionals currently working in the industry while assisting millions of potential and existing homeowners.

"I can see brokers caring about this news because it directly supports their own national efforts to bring some consistency to the mortgage education process," said NeighborWorks Center for Homeownership Education and Counseling director, Jayna Bower. "And I certainly can see servicers wanting to hear about activities intended to reduce foreclosures."

Advisory Council members include Bank of America, Chase, Wells Fargo, Countrywide Financial Corp., Fannie Mae, Freddie Mac, National Association of Real Estate Brokers, National Council of La Raza, the Department of Housing and Urban Development and the Federal Reserve. So far, lenders, community development organizations, real estate and mortgage insurance companies, and the secondary mortgage market entities have agreed to comply with and endorse the standards.

"I think we're at a unique setting. One of the value-added benefits is that today we have 39 organizations that in a very unified way are coming together and saying, 'We think this is extremely important.' The timing of this is important and we want to stand together and make our commitment to the value of what this brings to the marketplace," Ms. Bower said. "They have agreed to endorse the standards as part of their everyday business practice. It is a positive step from the service providers of homeownership education."

She recognizes, however, it is only the beginning. After securing the support of these organizations, she said, the goal is to start an organized outreach effort that will involve other key financial institutions and industry partners.

"We're confident that folks are ready to stand behind this," she said.

"As a lender, Minnesota Housing is a state housing finance agency and we buy first mortgage loans for a number of our products, we felt that there was a significant benefit to individuals receiving homeownership education and counseling, so they make smart choices and have successful, sustainable homeownership opportunities," Mr. Haley said. "Also, studies have been conducted that it has been quite effective."

"Now more than ever, the mortgage and real estate industries need to embrace the role of homebuyer education and counseling to help American households buy homes and obtain financing terms that are appropriate for them," said MGIC Investment Corp. chairman and CEO, Curt Culver.

The website is the starting point for a nationwide marketing effort.

"It is factitive that our announcement coincides with the current market changes. It helps us further demonstrate the tremendous need for customers to have the perfect amount of information to make a knowledgeable decision as it relates to buying and owning their home," said Ms. Bower. "This is an activity that helps provide some level of solution when we look at the rise in foreclosures. Many of the individuals who are facing foreclosure today did not necessarily have the right amount of information when they made their mortgage decision."

She is in good company. Many in the industry agree it is good timing to have a code of conduct, even though it is not a law and has to rely on voluntary compliance, experts say it can help. As of now, executives said, outreach and marketing efforts do not involve a specific budget but the collective power of opportunity deriving from the current participants. Beyond the website, she believes one of the best ways to reach out is through word of mouth.

Interest and a need for homeownership education and counseling emerged a decade ago. Recently it turned into a wider dialogue started by NeighborWorks. In 2005 the nonprofit created NeighborWorks Center for Homeownership Education and Counseling and convened a group of diverse key leaders within the industry to bring together as many perspectives as possible.

"NeighborWorks tried to harness the momentum around the various needs that we see within the marketplace and certainly standards for both operation and performance for service providers," Ms. Bower said.

Even though the process of coming up with a set of industry standards has been in the works for about 10 years, the dialogue and development of these standards started getting momentum only in the past few years. The industry felt it was very important "to advance the state of the art" in education and counseling, she said.

"This has been around as an issue for the last 10 years, but the efforts required not only a critical mass, but an organizer to put the discussion together so that we could actually get these standards created, endorsed and adapted by a variety of organizations around the country," Mr. Haley said. "That's what the advisory council was charged with doing. NeighborWorks was the convener of that effort."

Standards provide consumers an easy way to identify qualified homeownership educators and counselors. They will help low- to moderate-income families achieve and sustain homeownership, said NeighborWorks CEO, Ken Wade. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

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