Counseling programs for homebuyers discussed at event

This post was written by IL reporter Rebecca Berfanger.

While the Indiana Foreclosure Prevention Network continues its efforts to help prevent foreclosures through resources for loan modifications and other help for homeowners, including upcoming sessions at National Guard Armories around the state on Sept. 1, local organizations continue their work on the issue as well.

For instance, the Indianapolis Neighborhood Housing Partnership helps homeowners avoid foreclosure from the early stages of homeownership. INHP has provided counseling to homeowners before, during, and after the process of buying a home for 22 years. During its 2010 fiscal year, 1,715 families graduated from the organization’s money management or home-buyer education classes.

To celebrate the organization’s achievements and promote its current theme of Healthy Neighborhoods, Strong City, the organization hosted a breakfast Tuesday morning that featured CEO and president of the Federal Reserve Bank of Chicago, Charles L. Evans. The Fed had worked with INHP on a study of their counseling efforts, something Evans praised during his speech.

Even though INHP clients may have had lower credit scores and lower down payments compared with other borrowers, they had lower default rates on their mortgages – 3.8 percent compared with 6.3 percent for borrowers who had not gone through INHP’s counseling program, he said.

INHP will also tell potential home buyers if they are not in a good position to buy a home at this time, but they will work with them to help improve their credit scores and savings – but only if the client is also willing to work for it. Going through the program is not a guaranteed ticket to homeownership, but it will prepare those who are ready and qualified.

Evans compared the INHP counseling program to one in Chicago, which required counseling for home buyers looking to take out risky loan products. While that counseling program was found to have little effect, it still worked, he said, in the sense that because borrowers decided not to go through the required counseling for risky loans, they were less likely to take out high-risk loans. Instead, they would look for loans that didn’t require counseling.

Evans added some lenders with high-risk loans also decided to leave the market rather than go through the counseling programs and potentially be accused of predatory lending, which could also be considered something that made the program successful.

In addition to Evans’ address and question and answer session about the economy, the event included an inspiring performance by and a standing ovation for someone who was personally helped by INHP. The Harris family – Jonathan, Devonia, and their four young children – participated in the program for two years to get their credit and savings back on track to buy a home near the liberal arts high school where Jonathan teaches choir. To thank INHP and the supporters at the breakfast, he sang “You’ll Never Walk Alone.” He said the song should be the anthem of anyone who goes through what he called the “INHP Academy to Home Ownership.”

While it may be too late for those already in foreclosure who have exhausted their options or abandoned their properties, should counseling programs like the ones offered by INHP receive more attention and be more widely used on the front end to avoid future waves of foreclosures?