Friday, November 7, 2008

Homeschooled homeowners surviving crisis

Low-income homeowners who take the time to learn how to own a home are much more likely, than unschooled owners, to hold onto the American Dream -- even during an economic crisis.

by Broderick Perkins
© 2008 DeadlineNews.Com
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Deadline Newsroom - If the experts have said it once, they've said it a thousand times, but they can't say it enough.

Home ownership doesn't come with a manual.

It's up to you to learn what you are getting into before you embark on what's likely the most valuable acquisition you'll ever complete.

It's no surprise new mortgage modification programs, foreclosure assistance and bankruptcy laws come with mandated home ownership counseling.

When you get schooled on the issues of home ownership, you have much greater chance to continue as a homeowner -- even when the economy crashes down around you.

The foreclosure rate for low-income homeowners who attended home ownership education programs had a foreclosure rate that was 20 times less severe than that for subprime borrowers and three times better than that found in the prime mortgage market during the second quarter of 2008, according to data from NeighborWorks America, a staunch non-profit advocate for healthy communities.

"The facts tell the real story," says Kenneth D. Wade, CEO of NeighborWorks.

"The vast majority of mortgages facilitated by NeighborWorks organizations are to buyers with low and moderate incomes and less than perfect credit scores, yet by obtaining quality mortgage advice these homeowners have been able to sustain home ownership during the most severe housing crisis since the Great Depression," Wade added.

Long before home ownership counseling was de rigueur, South County Housing, a chartered NeighborWorks member in Gilroy, CA was doling out a heavy curriculum of home ownership studies along with sweat-equity programs and loans that look a lot like subprime mortgages.

However, thanks to smarts the group gave its largely Latino buyers, South County's portfolio foreclosure rates today hover around zero, belying rates in the rest of foreclosure-hammered California.

There's more.

When NeighborWorks compared its total loan portfolio's foreclosure start rate of
0.21 percent in the second quarter of 2008, it found the overall nationwide homeowner market had a foreclosure rate more than five times as much, 1.08 percent.

Nationwide, the foreclosure start rate for only conventional conforming loans was 0.61 percent, compared to NeighborWorks' portfolio rate of 0.21 percent.

Buying a home today without learning what it takes to keep it, is like a trip to a Vegas -- for insights on both the money-losing potential in the casinos and the kind of widespread home ownership devastation that comes with ignorance.

Learned homeowners consistently out perform those without the lessons.

Says Wade, "The idea that some observers now are pointing to low-income people as the cause of the financial crisis we're facing today is just wrong. NeighborWorks organizations have a track record of providing one-on-one mortgage advice, encouraging home buyers to avoid loans that they can not afford for the long term."

The message is brutally simple. Seek accredited home ownership counseling now and prepare in advance for your own home. Even if you already own your home, enroll in a counseling session.

There's plenty of counseling available. In October, the U.S. Department of Housing and Urban Development (HUD) doled out, to more than 2,300 local housing counseling agencies, $50 million in housing counseling training and housing counseling grants for first-time home buyers.

It's your tax money. Use it. Get home schooled.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's news that really hits home!

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