Demand for free foreclosure-counseling grants continues to exceed by far the amounts of federal and other funds available, according to NeighborWorks America.
Eligible applicants requested over $212.7 million in National Foreclosure Mitigation Counseling Program grant funds but received only about one third of the amount needed.
Up to $67.7 million in NFMC program funds have been granted to 37 state housing finance agencies, 17 Housing and Urban Development approved counseling intermediaries, and 84 community-based NeighborWorks organizations to provide counseling to families and individuals at risk of foreclosure.
An estimated 184,000 families facing the threat of foreclosure will be directly assisted with this fifth round of funding now available for use.
Given the still high unemployment rate that keeps delinquency and foreclosure risk at high levels the need for counseling remains critical. Participating organizations say they have to make up for the difference by applying for state funds if there is any available, or private funds.
Spokesperson Douglas Robinson told this publication that as the administrator of the funds, NeighborWorks’ role is to review the applications, evaluate and score applicants and then distribute the funds to the organizations that work in areas with more pressing needs. From this round NeighborWorks community-based organizations will receive a total of $6.8 million at an average of $81,000 for each participating group.
Over 1,400 nonprofit counseling agencies and local NeighborWorks organizations across the country are expected to participate. The funds are earmarked to provide free assistance to families at risk of losing their homes, determine eligibility for the Making Home Affordable programs, help homeowners understand the foreclosure process, and identify possible courses of action.
To date the NFMC program has assisted 1,186,000 families nationwide.
Among others February 2011 findings from an Urban Institute review of the NFMC in 2008 and 2009 show the odds of curing a foreclosure is 1.7 times greater for a homeowner who works with an NFMC counselor, compared to those who do not receive counseling.
Also, re-defaults on modified loans, or recidivism decreased among homeowners who received NFMC counseling since homeowners who obtained a mortgage modification due to the NFMC Program counseling saved an average of $555 per month through lower payments, compared to $288 for homeowners who did not work with an NFMC Program counselor.
