Borrowers with home ownership counseling do substantially better than general market
Fact Box
"The vast majority of mortgages facilitated by CHRIC and other NeighborWorks organizations across the nation are to buyers with low and moderate incomes and less than perfect credit scores, yet by providing quality mortgage advice these homeowners have been able to sustain homeownership during our country's continuing housing crisis."
CHRIC Executive Director John Murphy
MAYVILLE - A new national loan performance analysis of mortgages made to low-income homeowners who have participated in homeownership education programs through NeighborWorks organizations like Chautauqua Home Rehabilitation and Improvement Corporation shows a foreclosure start rate that is 20 times less severe than that for subprime borrowers, and three times better than the conventional conforming mortgage market.
"The facts tell the real story," said John Murphy, executive director of Chautauqua Home Rehabilitation & Improvement Corporation. "The vast majority of mortgages facilitated by CHRIC and other NeighborWorks organizations across the nation are to buyers with low and moderate incomes and less than perfect credit scores, yet by providing quality mortgage advice these homeowners have been able to sustain homeownership during our country's continuing housing crisis."
Comparing foreclosure data provided by the Mortgage Bankers Association, NeighborWorks shows that while its own loan portfolio had a foreclosure start rate of 0.21 percent in the second quarter of 2008, the overall market's foreclosure start rate was 1.08 percent, more than five times as great.
Moreover, NeighborWorks mortgages hold up very well against a comparison to only the conventional conforming market. According to the MBA, the foreclosure start rate for conventional conforming mortgages was 0.61 percent in the second quarter, compared again to 0.21 percent for NeighborWorks mortgages.
CHRIC provides homeownership classes in English and Spanish in locations throughout Chautauqua County throughout the year, with more than 175 families counseled and moving to ownership over the past six years. "Sub-prime lending is a factor in our county's foreclosure and vacancy statistics," stated Murphy, "with many non-traditional mortgages not escrowing property taxes and insurance as part of a homeowner's monthly mortgage payment. It sets up another way for people to lose their homes through tax-foreclosure or loss of equity if their home catches on fire." CHRIC was recently awarded a grant to provide foreclosure counseling for county residents dealing with foreclosure from the New York State Banking Department.
"NeighborWorks organizations like CHRIC have a track record of providing one-on-one mortgage advice, encouraging homebuyers to avoid loans that they can not afford for the long-term." said Kenneth D. Wade, CEO of NeighborWorks America. "That dedication to community stability and strength is the foundation of what we're doing in Chautauqua County and more than 4,400 communities around the country every day. The idea that some observers now are pointing to low income people as the cause of the financial crisis we're facing today is just wrong."
