A consumer who receives housing counseling before buying a home is less likely to fall seriously delinquent on a mortgage later on, NeighborWorks said in a new study Thursday.

The organization, which finances community development around the country, studied 75,000 mortgages originated from Oct. 2007 through Sept. 2009 and discovered homeowners were one-third less likely to fall seriously delinquent on a mortgage if they received pre-purchase counseling and education from NeighborWorks.

A mortgage payment that is 90 days or more days past due is generally considered seriously delinquent.

The survey could save the mortgage industry and local governments millions of dollars in aid by focusing on pre-purchase counseling to prevent defaults and personal distress later on in the process.

In 2009, first-time homebuyers with counseling had a 2% chance of becoming seriously delinquent within the first 24 months of the loan’s lifecycle. Those without counseling had a 2.9% chance of falling behind for 90 days or more.

“NeighborWorks America has long known anecdotally that pre-purchase housing counseling and education, provided by certified professionals in our network helps create homeowners who are less likely to become seriously delinquent on their mortgages,” said NeighborWorks America CEO Eileen Fitzgerald.

She added, “Using data from the NeighborWorks network and its customers who received this important advice and guidance, and comparing it to homebuyers who didn’t receive similar housing counseling and education, we now know the empirical value that NeighborWorks housing counseling and education provide.”

Moreover, the date stays consistent with repeat homebuyers. Similarly in 2009, repeat borrowers with no counseling showed 2.6% probability of becoming 90-plus days delinquent, compared to 3.9% of people with no counseling.

“More analysis of the data is required to determine the factors for the repeat homebuyer results,” said Fitzgerald. “But one thing is clear from the data: NeighborWorks pre-purchase housing counseling and education is effective, even if you’ve been a homeowner before.”



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