Consumer Education Is Needed Now More Than Ever, Many Feel

It may well be personal misperception but the consumer education frenzy of the past several years seems to have slowly turned off.

I checked with several industry insiders at the Mortgage Bankers Association's National Mortgage Servicing Conference in San Diego recently and opinions vary. The consensus, however, is that consumer education remains a key ingredient of the mortgage process especially when dealing with loan modifications and newly delinquent borrowers or even those who are not yet delinquent but have lost their job or face other hardships.

What's new? Some may say probably the surprise is that the industry as a whole cannot afford to keep the same pace let alone slow down its education and counseling efforts.

Cary Sternberg, president of Excellen REO, a new full-service asset management unit of Titanium Holdings Inc., says that people in Florida can live their house for three years before they have to move. "So you can choose not to pay your mortgage for three years. They [some counselors] tell you, don't make your payment, we won't talk to you for a modification unless you're behind."

Did everybody miss out on something?

Exactly one year ago the National Foundation for Credit Counseling, Silver Spring, Md., released the findings of its third annual financial literacy survey at a congressional briefing on Capitol Hill. Its key finding: Up to 41% of U.S. adults, or more than 92 million people living in America, gave themselves a grade of C, D or F on their knowledge of personal finance, suggesting there is considerable room for improvement. The survey re-affirmed the need for financial education, the customer advocacy group said, calling for a national movement. It was another way of saying the industry must improve its efforts.

These results "are startling, but not surprising," said Susan Keating, president and CEO of the NFCC. "We know consumers are struggling financially, and that a lack of financial knowledge is contributing to the problems.

"It is time that we work together to create a national movement to address the need for more financial education."

Another finding: 80% of adults agree that they would benefit from advice and answers to everyday financial questions from a professional. The know-how about budgeting, debt and credit cards, housing and mortgages, savings, spending, credit scores and retirement planning was generally insufficient.

Data show there is an urgent need to take action and "invest in America's future with a national commitment to financial education," Ms. Keating said.

One positive change appears to be the fact that more people want to know better and take advantage of free financial education opportunities.

In January over 1,800 at-risk homeowners flocked to homeownership preservation events in Fort Myers and Coral Springs, Fla., for a chance to meet face-to-face with their mortgage servicer or a HUD-approved housing counselor.

"The region has been hit hard by foreclosures and it was important for these borrowers to learn about the available options to avoid foreclosure," said Hope Now executive director Faith Schwartz.

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