Strengthening the U.S. Housing Finance System With Housing Counseling Services

Strengthening the U.S. Housing Finance System With Housing Counseling Services

House Financial Services Committee Hearing
Sustainable Housing Finance:
An Update from the Director of the Federal Housing Finance Authority
January 27, 2015

Statement Submitted for the Record by: David Berenbaum, Chief Executive Officer,
The Homeownership Preservation Foundation
dberenbaum@995HOPE.org/ 202.480.2774

Strengthening the U.S. Housing Finance System With Housing Counseling Services

The Homeownership Preservation Foundation (HPF) is honored to help the nation’s homeowners navigate the legacy of the housing crisis. We operate the Homeowner’s Hope Hotline (888-995-HOPE), which is staffed and ready to assist homeowners every day around the clock. HPF’s service began in 2007 at the invitation of the Bush administration and has continued at the invitation of the Obama administration in 2009.  We are a non-partisan, independent, national nonprofit.

Since our inception, HPF has responded to over 8 million calls for assistance and provided comprehensive housing counseling to over 2 million homeowners, helping the majority of them to avoid foreclosure and forge a path to a sustainable recovery.  HPF is dedicated to guiding consumers on the path of sustainable homeownership and improving their overall financial health.

HPF has worked in a bipartisan manner with all key stakeholders in the U.S. housing finance system including many members of the Congress, Department of the Treasury, Department of Housing and Urban Development and major financial institutions. We also work closely with the Enterprises – Fannie Mae and Freddie Mac – and the Federal Housing Finance Agency (FHFA).  In addition to supporting our day-to-day operations, the Enterprises have also helped us to operate a national anti-mortgage scam service and provide special post-modification default prevention counseling for homeowners that have received modifications.

HPF applauds FHFA’s stewardship of the Enterprises during the housing crisis and its encouragement of the Enterprises to incorporate housing counseling in their risk management activities. Our work with the Enterprises has centered on a component of FHFA’s Strategic Plan for 2015 – 2019, Goal 2: “Develop and actively promote home retention and loss mitigation programs.”  As stated in the FHFA Strategic Plan,

Home retention initiatives, such as loan modification and refinancing programs, help reduce the number of defaults and foreclosures by allowing eligible borrowers to realize more favorable rates or terms on their mortgages. Such initiatives reduce losses to the Enterprises and contribute to greater stability and liquidity in housing markets and neighborhoods.[1]

We are pleased that the FHFA Strategic Plan calls for the Enterprises to work with us to “improve the effectiveness of pre-purchase and early delinquency counseling . . .,” which will extend the benefits of housing counseling to first-time homebuyers. The intensity of the housing crisis is abating but nearly 4.0 million homeowners remain delinquent or in the foreclosure process. They need our help and HPF looks forward to continuing to work with the Enterprises, and others, to reduce the number of homeowners who are at-risk. At the same time, we support FHFA’s focus on expanding access to credit for credit-worthy, responsible homebuyers.

As FHFA notes in its Strategic Plan, the housing market continues to lag the national economic recovery. FHFA cites “distress sales, fears of future decline in house prices, and homebuyers’ concerns about the vitality and sustainability of the economic recovery” as factors. FHFA also cites tight credit standards and weaknesses in the
credit profiles and capacity of first-time homebuyers as likely contributors to the housing market’s weak recovery.

We are encouraged that FHFA is taking critically-important and prudent steps to expand access to housing credit for qualified borrowers by allowing the Enterprises to offer flexibilities in the underwriting process, such as lower down payments. These changes will facilitate access to homeownership for more first-time homebuyers, which should bolster the recovery of the housing markets and economy.

HPF is turning its attention to ways that we can work with the Enterprises to help aspiring homeowners gain access to these products and be successful in managing the risks and responsibilities of homeownership.  Despite the legacy of the crisis, homeownership remains an aspiration for most Americans, which can be facilitated with appropriate products, services and support systems. There are many Americans – disproportionately those in minority and low-to-moderate income communities – whose dreams of homeownership are being shattered due to weaknesses in their credit and financial profiles.  HPF is solely focused on serving the needs of homeowners using methodologies and procedures that meet the stringent consumer engagement requirements of our organization and our public and private partners.

HPF’s is working to leverage our national platform and the extensive work done during the crisis to ensure that all people have access to life of loan housing counseling and financial coaching. Our organizing theme is “Achieving the Dream,” which builds on the aspirations of potential homebuyers and connects them with a high-quality support process designed to facilitate achievement of their dreams.

Our new platform blends HPF’s Gold Standard Housing Counseling and Financial Coaching programs with the integration of improved consumer engagement technologies and an expanded network of partners to achieve outcomes that benefit homebuyers, their communities and the entire nation.  We look forward to working with FHFA and the Enterprises to develop and deliver these expanded services while we continue our ongoing efforts.

HPF is proud to have served a leading role in delivering support to American homeowners. We envision a nation where everyone has a place to call home and the ability to achieve their financial dreams. We deeply appreciate the support of the Congress, FHFA and other federal agencies, as well as private financial institutions, and look forward to a continued partnership as we serve our nation.

Background:

The use of housing counseling in supporting homeownership has benefited from bipartisan support. In 2013, the Bipartisan Policy Center Housing Commission   on recommended use of housing counseling to broaden access to affordable mortgage lending and the Commission encouraged stakeholders to sustain the service for consumers:

The commission believes that housing counseling can improve prospective borrowers’ access to affordable, prudent mortgage loans, especially for families that otherwise might not qualify or who may experience other barriers to mainstream lending. There is a wide public benefit from investment in housing education and counseling programs, and the commission therefore supports continued federal

appropriations for housing counseling, and recommends that stakeholders who benefit from a borrower’s access to counseling services be expected to contribute to the cost of the service. [2]