$73 million in federal grants awarded to housing-counseling groups
Thursday, December 23, 2010; 10:17 PM
The Obama administration announced $73 million in grants Thursday to housing-counseling agencies nationwide, the largest amount awarded since the program began in 1968.
About $19.6 million went to organizations headquartered in the District, Virginia and Maryland that will disburse the funds to grass-roots organizations nationwide, including the National Community Reinvestment Coalition, HomeFree USA and Catholic Charities.
An additional $1.6 million was awarded to groups in all three jurisdictions that will use the funds locally. Virginia won the largest share of those funds, $946,455; followed by Maryland, $480,561; and the District, $141,434. The grants help the organizations offer an array of services ranging from rental assistance to foreclosure prevention.
As the foreclosure crisis has unfolded, housing-counseling groups have played an increasingly important role as intermediaries between troubled homeowners and their lenders. Federal money has been pumped into these groups to help them cope with the deluge of people coming their way and to assist in properly training counselors.
The amount granted to these groups in this fiscal year's budget was 22 percent higher than it was last year, Shaun Donovan, secretary of the Department of Housing and Urban Development, told reporters Thursday.
"These organizations are on the front lines of helping families who are desperate to remain in their homes," Donovan said in a statement. "Now, more than ever, it's crucial that we support these agencies that are working with struggling families on a one-to-one basis to manage their money, navigate the homebuying process, and secure their financial futures."
Some of the grant money will go toward training counselors, helping borrowers avoid mortgage scams and advising elderly homeowners on reverse mortgages, which enable seniors to make use of equity in their homes. About $53 million will go toward comprehensive counseling services. HUD estimates 40 percent of that money will be used for foreclosure prevention.
A study released this week by the D.C.-based Urban Institute found that struggling borrowers who receive housing counseling are more likely to avoid foreclosure and have their mortgage payments reduced significantly than borrowers who do not.
The study was prepared for NeighborWorks America, a nonprofit group that administers the National Foreclosure Mitigation Counseling Program. The report found that, on average, a homeowner who works with an NMFC counselor is 1.7 times as likely to avoid foreclosure as a homeowner who doesn't work with one.
The study also reported that homeowners who have their mortgages modified with the help of an NMFC counselor save an average of $555 a month, compared with the $288 a month average for homeowners who don't work with an NFMC counselor.
Also, 64 percent of homeowners who have their mortgages modified with help from NFMC counselors remained out of serious delinquency or foreclosure, compared with 51 percent of homeowners who did not receive NFMC counseling, the report said.