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The Role of Housing Counseling in Reducing Mortgage Delinquency and Foreclosure - page 2 / 2





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6. Additional research is needed to better understand the impact of homeownership education and counseling. Researchers have employed a variety of methods to examine the effects of homeownership education and counseling but to date have not conducted an experimental trial. Research comparing outcomes for households randomly selected to receive pre-purchase homeownership counseling against control groups of households that do not receive counseling would make a significant contribution to the field.



Laura Williams is a Research Associate with the Center for Housing Policy.

2 A number of recent literature reviews explore the research base in greater depth. See generally: University of Wisconsin-Madison. 2010. “Weighing the Evidence of the Effectiveness of Counseling and Education for Home Owners.” CFS Issue Brief, 2010-7.1; Collins, Michael J. and Collin O’Rourke. 2011. Homeownership Education and Counseling: Do we know what works? Research Institute for Housing America Special Report. Mortgage Bankers Association.

3 Mayer, Neil et al. 2010. National Foreclosure Mitigation Counseling Program Evaluation: Preliminary Analysis of Program Effects. Washington, DC: The Urban Institute; Ding, Lei, Robert G. Quercia, and Janneke Ratcliffe. 2007. “Post-purchase Counseling and Default Resolutions among Low- and Moderate-Income Borrowers.” Journal of Real Estate Research, 30(3): 315-344.

4 Quercia, Roberto and Spencer M. Cowan. 2008 “The Impacts of Community-based Foreclosure Prevention Programs.” Housing Studies, 23(3): 461-483.

5 Collins, J. Michael and Maximilian Schmeiser. 2010. Estimating the Effects of Foreclosure Counseling for Troubled Borrowers. Federal Deposit Insurance Corporation Center for Financial Research Working Paper; Mayer et al. 2010.


Mayer et al. 2010.

7 In contrast to the several studies that have found a correlation between pre-purchase counseling and lower delinquency rates, Quercia and Spader (2008) found no evidence of an impact on default rates. One possible explanation for this finding is that interest rates were very low during the study period, while housing values were increasing, allowing borrowers who ran into trouble to refinance into a new loan and avoid default. The study did find evidence that classroom education improved homeowners’ ability to make good judgments about refinance options an important benefit given the recent history of predatory lending in the refinance sector.

8 Hirad, Abdighani and Peter M. Zorn. 2001. “A Little Knowledge is a Good Thing: Empirical Evidence of the Effectiveness of Pre-Purchase Homeownership Counseling.” In Low-income Homeownership: Examining the Unexamined Goal, Nicolas Retsinas and Eric Belsky (eds.), 146-174. Cambridge, MA; Washington, DC: Joint Center for Housing Studies; Brookings Institution Press; Brown, Thalia. 2002. Homeownership Counseling: Effectiveness, Trends and Research. Neighborhood Reinvestment Corporation; Agarwal, Sumit et al. 2009. Do Financial Counseling Mandates Improve Mortgage Choice and Performance? Evidence from a Legislative Experiment.” Working Paper No. 2009-04, Federal Deposit Insurance Corporation Center for Financial Research.

9 Reid, Carolina. 2006. “Preventing Foreclosure: Initiatives to Sustain Homeownership.” Community Investments. Federal Reserve Bank of San Francisco.


Ding, Quercia, and Ratcliffe. 2007.

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