WASHINGTON, DC-- Today NeighborWorks(R) America, the administrator of the Congressionally authorized National Foreclosure Mitigation Counseling (NFMC) program, announced that of the more than 870,000 homeowners who received foreclosure prevention counseling as a result of NFMC funding through January 31, 2010, 26% were African American homeowners, nearly three times their representation of total homeowners. In all, 52 percent of NFMC Program clients were minority homeowners, or more than twice the overall percentage of minority homeowners.
The data reported today are part of the fifth NFMC report distributed to Congress in May 2010, and are based on client information provided from more than 1,700 HUD-approved housing counseling intermediaries, state housing finance agencies, and nonprofit housing counseling agencies that received NFMC funding through January 31, 2010. As of May 24, 2010, more than 967,000 homeowners have received foreclosure prevention counseling as a result of NFMC funding.
Nationwide, African American homeowners make up only 9% of the nation's homeowners. Twenty-one percent of the nation's homeowners are racial/ethnic minorities, with Hispanic homeowners accounting for 8% -- a decrease of 3% from 2009, and Asian/Pacific Islanders accounting for 4%.
Also according to the fifth NFMC report, of all NFMC Program clients that held mortgages with interest rates at or above 8%, 36% are African American homeowners. Yet African American homeowners only account for 20% of the nation's subprime mortgages.
For the first time, all NFMC clients who sought foreclosure prevention counseling were more likely to hold fixed rate mortgages than adjustable rate mortgages (ARMs). African American clients who sought foreclosure prevention counseling were twice as likely to hold fixed rate mortgages than ARMs -- 61% of clients held fixed rate mortgages, and 30% held ARMs. Fifty-four percent (54%) of Hispanic clients held fixed rate mortgages; 38% of Hispanic clients held ARMs. White clients were more than twice as likely to hold fixed rate mortgages (67%) than ARMs (25%). Nationwide, only 18% of outstanding mortgages are ARMs.
The report also noted that lower-income homeowners are likely to have a greater rate of foreclosure starts than higher-income homeowners. Thirty percent (30%) of African American NFMC clients reported earning 80% or below their Area Median Income.
"The foreclosure crisis is disproportionately affecting African American homeowners, who are more likely to have high cost mortgage loans," said Ken Wade, CEO of NeighborWorks(R) America. "We are encouraged that the data released today demonstrate the NFMC program is assisting the homeowners who have been hardest hit by the foreclosure crisis."
The NFMC program is positively affecting the lives of real people like Joseph of Columbus, Georgia.
Joseph, a single father, has two grown daughters and an infant granddaughter living with him, and also a young daughter who lives with her mother.
Joseph works for a company that trains and evaluates soldiers. An Army veteran himself, he had owned his home for five years and made his mortgage payments on time when he suddenly became ill and had to be hospitalized. "Between the birth of my grandbaby, having a child of my own, and this medical situation, I found myself in a hardship situation," said Joseph.
He was still working, but his salary wasn't enough with the unexpected expenses that popped up all at once. "I was robbing Peter to pay Paul, and it kept piling up," he said. Before he knew it, he was three months behind on his mortgage. He tried to negotiate with the bank on his own, but by that time a sale date was already in place.
"During that time I had shoved the mail aside, hoping the problem would go away," he said. The procrastination made things worse. "I began receiving all sorts of mail about foreclosure this, foreclosure that, and I was just tearing it up." When he received a flyer from NeighborWorks Columbus, a NeighborWorks organization and NFMC Program Grantee, he remembered seeing something about them on television and decided to ask them for help. "I didn't know what type of service they would provide, but I thought something was better than nothing," he recalled.
He went to the NeighborWorks Columbus office, where he filled out some paperwork with the receptionist and scheduled a meeting with Terry, his counselor, on Christmas Eve. "Their kind and courteous staff eased the burden and put my mind at ease," said Joseph. "It seemed like they worked with me all day, every day, in person, on the telephone and on email."
Shortly after their first meeting, Joseph received a phone call from bank and saying there was nothing he could do, and he should be prepared for the sale. He contacted Terry, who immediately started making phone calls. "They were under the impression they couldn't do anything, but she didn't stop," said Joseph.
Terry was able to postpone the sale date, giving them more time to get all the paperwork in order. Eventually she got the bank to modify the loan. The modification lowered the interest rate from 5.5% to 4%. The bank rolled the past due amount into the current loan, and now his monthly payment is $760, down from $960.
Joseph credits Terry's expertise for getting him out of trouble. "She really knew what she was doing," he said. "I was very impressed to say the least."
"We continue to urge homeowners facing foreclosure to talk to the right people -- nonprofit, HUD-approved housing counseling agencies, like those funded by the NFMC Program. If you are facing foreclosure, nonprofit housing counselors will work with you one-on-one to help you determine your best options in order to avoid foreclosure," said Ken Wade, CEO of NeighborWorks America.
Homeowners who would like to receive foreclosure counseling from a NFMC Program-funded counseling organization in their community can visit www.findaforeclosurecounselor.org.
For more information about the National Foreclosure Mitigation Counseling program, visitwww.nw.org/nfmc.