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Evaluation Reports

Urban Institution Evaluation

2014 Report on NFMC Program

Urban Institute Infographic
The Urban Institute recently completed a four-year evaluation of rounds three through five of the National Foreclosure Mitigation Counseling (NFMC) program. Using a representative NFMC sample of 137,000 loans and a comparison non-NFMC sample of 103,000 loans, the Urban Institute was able to employ robust statistical techniques to isolate the impact of NFMC counseling on loan performance through June 2013.

The final evaluation of rounds three through five conducted by Urban Institute indicates that the NFMC program continues to have positive effects for homeowners participating in the program. Counseled homeowners were more likely to cure a serious delinquency or foreclosure with a modification or other type cure, stay current after obtaining a cure, and for NFMC clients who cured a serious delinquency, avoid foreclosure altogether.

Overall, the Urban Institute evaluation demonstrates that the NFMC program is having its intended effect of helping homeowners facing loss of their homes through foreclosure. The positive effects demonstrated in the final report are strong and are consistent with those found in prior analyses of rounds one and two. 
 
  • Counseling greatly increased a homeowner’s ability to cure a serious delinquency or foreclosure. Counseled homeowners were nearly twice as likely to receive a cure for their serious delinquency or foreclosure as non-NFMC counseled homeowners. The study points out that counselors are more adept at identifying additional options for homeowners, and as a result, homeowners have benefited by utilizing the best cure for their particular situation.
  • Counseled homeowners were about 1.5 times more likely to not have their mortgage re-enter a troubled status after receiving a loan modification cure. Once cured, NFMC counseled homeowners are less likely to have their loans redefault. This effect is largely attributable to services provided by counselors, such as budgeting and financial management skills and developing an appropriate solution given the homeowner’s financial conditions. NFMC counselors help homeowners find alternatives to foreclosure when saving the home is not an option, and are more likely to obtain a short sale than non-counseled homeowners.
  • Counseled homeowners are nearly three times as likely to receive a loan modification cure compared to non-counseled homeowners. NFMC-counseled homeowners who received a modification had their annual payment reduced by an average of $4,980.

2011 Report on NFMC Program

Two people sit at their desks with computersIn 2011, the Urban Institute completed a three-year evaluation of rounds one and two of the National Foreclosure Mitigation Counseling (NFMC) program.  Using a representative NFMC sample of 180,000 loans and a comparison non-NFMC sample of 155,000 loans, the Urban Institute was able to employ robust statistical techniques to isolate the impact of NFMC counseling on loan performance through December 2010. Read the full report.

The final evaluation of rounds one and two conducted by Urban Institute demonstrated positive effects for homeowners participating in the NFMC program.  Counseled homeowners were more likely to receive better loan modifications, cure a serious delinquency or foreclosure and stay current, and avoid a foreclosure completion altogether.
 
  • Counseling greatly increased the ability of homeowners to stay current once they cured a serious delinquency or foreclosure.  Counseled homeowners were at least 67 percent more likely to remain current on their mortgage nine months after receiving a loan modification cure.  A small part of this effect is attributable to the impact of counseling on the size of monthly payment reductions.  However, a significant part is attributable to other positive impacts of counseling, such as helping homeowners improve their financial management skills and assisting them in managing relationships with servicers.
  • NFMC counseling made it more likely that homeowners would receive a loan modification cure in the first place – increasing by at least 89% the relative odds of modification cures for counseled homeowners compared to non-counseled ones.   HAMP amplified this positive effect.  In the period before HAMP, 8% of homeowners receiving counseling assistance had modification cures, compared to 5 percent who did not receive counseling.  Post-HAMP, 17 percent of homeowners receiving counseling assistance had modification cures, compared to 9 percent without.
  • Counseled homeowners received loan modifications resulting in a monthly payment that was $176 less, on average, than non-counseled borrowers – a savings of close to $2,100 a year. This savings was achieved on loans modified either before or after HAMP was implemented.
Overall, the Urban Institute evaluation demonstrates that the NFMC program is having its intended effect of helping homeowners facing loss of their homes through foreclosure. The positive effects demonstrated in the final report are strong and are consistent with those found in prior analyses of rounds one and two.