National Foreclosure Mitigation Counseling Program Congressional Update March 24, (data as of July 31, 2016, except as otherwise noted)

Transcription

1 National Foreclosure Mitigation Counseling Program Congressional Update March 24, 2017 (data as of July 31, 2016, except as otherwise noted)

2 Table of Contents Executive Summary... 2 Introduction... 5 Funding Summary... 5 Counseling Services Grants... 7 Counselor Training and Information Sharing... 8 Alignment of the NFMC Program and the Making Home Affordable Program Urban Institute Evaluation of Program Effectiveness Foreclosure Counseling by Geographic Area and by Homeowner and Loan Characteristics Counseling Successes and Challenges Legal Assistance Grants Quality Control and Compliance Conclusion Appendix Contents Page 1 March 24, 2017

3 Executive Summary The National Foreclosure Mitigation Counseling (NFMC) Program was launched in December 2007 with funds appropriated by the United States Congress to address the nationwide foreclosure crisis by dramatically increasing the availability of housing counseling for families at risk of foreclosure. In nearly nine years, the NFMC Program has served more than two million homeowners at risk of foreclosure and helped build the nation s foreclosure counseling capacity. NeighborWorks America (as authorized by the Neighborhood Reinvestment Corporation Act, 42 U.S.C ) was appointed to administer the NFMC Program and submits this report to Congress to provide an update on its status and achievements to date. Funding Summary Congress has appropriated $853.1 million for the NFMC Program over 10 program rounds since As of July 31, 2016, NeighborWorks has awarded more than $802 million in grants to 204 HUD-approved housing counseling intermediaries, state housing finance agencies and NeighborWorks organizations to fund foreclosure counseling and legal assistance to at-risk homeowners. Grant awards include the following: More than $777 million for foreclosure mitigation counseling services $25.1 million for legal assistance to homeowners NeighborWorks has also utilized more than $34.3 million that Congress has allocated for foreclosure counselor training and other related capacity-building activities. Administrative expenses comprise the remainder of the appropriated funds from Congress. Highlights of the NFMC Program The most recent grant awards took place on May 26, 2016 after the NFMC Program received its 10 th appropriation in December Round 9 grants introduced the concept of Areas of Extraordinary Need, subsets of areas of greatest need where counseling production was prioritized. Based on program data as of July 31, 2016 (which does not include data from Round 10), the following items highlight NFMC Program achievements. The NFMC Program has served a total of 2,044,553 homeowners in all 50 states, the District of Columbia and the U.S. territories. The NFMC Program has delivered counseling to the areas hardest hit by the foreclosure crisis, including 89 percent of counseling in Areas of Greatest Need, and 63 percent in Areas of Extraordinary Need. The NFMC Program has provided 15,488 scholarships for classroom training to housing counselors and other eligible staff from qualified nonprofit 501(c)(3) organizations. In addition, 11,467 certificates of completion have been earned for three foreclosure counseling-related online courses developed with NFMC Program funds, of which 7,402 were funded through NFMC Program scholarships. The NFMC Program strengthened housing counseling organizations and enhanced their capacity through grant funds that helped them create improved methods of foreclosure counseling, communicate more effectively with mortgage servicers, make process improvements that include streamlining the counseling intake process to better manage the demand for services, and develop creative strategies to better reach homeowners in need. In September 2014, the Urban Institute evaluated Rounds 3 through 5 of the NFMC Program covering clients served from July 2009 to June 2012, with outcomes observed through June The Urban Institute employed robust statistical techniques to isolate the impact of NFMC Program counseling and found the following: NFMC Program clients are nearly three times as likely to receive a loan modification cure compared to noncounseled homeowners. NFMC Program-counseled homeowners were 70 percent more likely to remain current on their mortgage after receiving a loan modification cure. NFMC Program-counseled homeowners who received a modification achieved an average reduction in payment of $4,980 per year. Page 2 March 24, 2017

4 2008-Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 Annual savings resulting from loan modifications for NFMC Program clients was approximately $518 million. The Urban Institute evaluation concluded that the NFMC Program has helped homeowners facing loss of their homes through foreclosure. The positive effects demonstrated in the final report are consistent with those found in the Urban Institute s prior analysis of Rounds 1 and 2 of the NFMC Program. Program Trends The largest share of foreclosure mitigation counseling provided by the NFMC Program has assisted homeowners in California, Florida, Ohio, Illinois, and Pennsylvania, which are among the states hardest hit by delinquencies and the foreclosure crisis. Racial minority and low-income homeowners and neighborhoods, which have been disproportionately impacted by the foreclosure crisis, are well served by the NFMC Program. Nearly 67 percent of NFMC Program clients are classified as low-income and nearly 36 percent are classified as racial and ethnic minority homeowners. Figure 9 in the report shows more details. The percentage of clients that reported having fixed-rate mortgages with interest rates below 8 percent increased from 30 percent in October 2008 to almost 64 percent in July Figure 15 shows more details. In 2007, an 8 percent interest rate was considered the prevailing rate and was therefore used as the benchmark to determine whether NFMC Program clients were obtaining more sustainable mortgages. Nine years later, the average mortgage interest rate has dropped to approximately four percent 1. The primary challenges of clients facing foreclosure, as reported by NFMC Program counselors, are reduction in or loss of income. This challenge accounted for the majority of responses from the fourth quarter of 2008 through the fourth quarter of Reduction in or loss of income peaked at 69 percent of responses in the third and fourth quarters of The challenge only began a meaningful decline after the third quarter of 2011 to 45 percent of responses by the second quarter of To a lesser extent, clients still face affordability challenges even without a loss of income. Medical issues, divorce or separation, poor budget management, and an increase in mortgage loan payment are all contributing factors for borrower default, as shown in Figure 1. Figure 1: Top Four Primary Reasons for Default Over Time 80% 70% 60% 50% 40% 30% 20% 10% 0% Reduction in or Loss of Income Increase in Loan Payment Medical Issues Poor Budget Management Source: NFMC Program reported data (as of 7/31/2016). Note: Since the chart displays top four reasons only, the percentages depicted by calendar quarter do not total to 100 percent. 1 National average 30-year fixed rate, according to Bankrate, accessed January 11, Page 3 March 24, 2017

5 When NFMC Program clients enter counseling, greater than 38 percent are spending 50 percent or more of their income or more on their monthly mortgage payments for principal, interest, taxes and insurance (PITI), as shown in Figure 2. These percentages continue to raise concerns given that a qualified mortgage is commonly defined as having the accepted underwriting standard of 43 percent of a mortgagee s income being applied toward PITI. The elevated percentages of NFMC Program clients have remained fairly consistent since Figure 2: Clients Percentage of Income Paid to Principal, Interest, Taxes and Insurance 23.4% 5.7% 9.1% 13.6% 31.8% 16.4% 30% or Less 31%-39% 40%-49% 50%-59% 60%-69% 70% or More Source: NFMC Program reported data (as of 7/31/2016). Counseling Successes and Challenges Quarterly reports from NFMC Program grantees provide insight into common successes and challenges of foreclosure mitigation counseling. Grantees continue to achieve the most success helping clients when their counseling processes become more efficient, as they improve methods of foreclosure counseling and communications with servicers. Counselors continue to report that the lack of adequate homeowner resources (financial and in terms of personal organization and motivation) remains a persistent challenge. Communicating with servicers remains another significant challenge, albeit one mentioned less frequently since mid Grantees indicate that unemployment and, more recently, continued underemployment are significant factors in borrower morale and in determining their ability to qualify for a loan modification and afford modified loans. Counselors consider rescue funds, various settlement funds and Hardest Hit Funds to be critical tools to assist borrowers at risk of foreclosure. Finally, tools such as Hope LoanPort help to streamline the loan modification submission process with servicers. Conclusion While foreclosure rates continue to decline, some local housing markets continue to experience high rates of delinquency and foreclosure. The NFMC Program plays a critical role in helping distressed homeowners identify the best loss mitigation option. Clients of the NFMC Program are more likely to accomplish the following: cure a serious delinquency or foreclosure with a modification or other type of cure, stay current after obtaining a cure and, for NFMC Program clients who cured a serious delinquency, avoid foreclosure altogether. Overall, more than two million at-risk homeowners have been assisted by the NFMC Program, including services provided to racial and ethnic minorities and low-income homeowners in the states with the highest percentage of the nation s serious delinquencies and foreclosures. Counselors across the country continue to provide foreclosure mitigation assistance to homeowners with these funds. 2 A qualified mortgage, according to the Consumer Financial Protection Bureau (CFPB), is a loan that has more stable features that help make it more likely that a borrower can afford the home loan. If a lender offers a qualified mortgage, this means that the lender met certain CFPB requirements and followed the CFPB ability-to-repay rule. Page 4 March 24, 2017

6 Introduction The United States Congress created the National Foreclosure Mitigation Counseling (NFMC) Program to address the mortgage foreclosure crisis by increasing the availability of foreclosure counseling and strengthening the capacity of the nation s counseling agencies. The NFMC Program was created by the Consolidated Appropriations Act of 2008 (P.L ) in December 2007, which named NeighborWorks America (as authorized by the Neighborhood Reinvestment Corporation Act, 42 U.S.C ) as administrator of the program. NeighborWorks submits this report to Congress to update its members on the foreclosure challenges and successes faced by NFMC Program counselors. This report covers activity from Rounds 1 through 9 of the NFMC Program as of July 31, 2016, except as otherwise indicated. From February 26, 2008 through July 31, 2016, the NFMC Program achieved the following: Provided foreclosure prevention counseling to 2,044,553 homeowners in all 50 states, the District of Columbia, and the U.S. territories. Delivered counseling to the areas hardest hit by the foreclosure crisis, including 89 percent of counseling in Areas of Greatest Need (AGNs), and 63 percent in Areas of Extraordinary Need (AENs). Awarded more than $802 million in grants to 204 HUD-approved housing counseling intermediaries (Intermediaries), state housing finance agencies (HFAs), and NeighborWorks organizations to fund foreclosure counseling and legal assistance to homeowners at risk of foreclosure. Provided 15,488 scholarships for classroom training to housing counselors and other eligible staff from qualified nonprofit 501(c)(3) organizations. In addition, 11,467 certificates of completion have been earned for three foreclosure counseling-related online courses created using NFMC Program funds of which 7,402 certificates were funded through NFMC Program scholarships. Strengthened housing counseling organizations and enhanced their capacity through grant funds that helped them create improved methods of foreclosure counseling, communicate more effectively with mortgage servicers, make process improvements that include streamlining the counseling intake process to better manage the demand for services and develop creative strategies to better reach homeowners in need. In September 2014, The Urban Institute completed a four-year evaluation of Rounds 3 through 5 of the NFMC Program covering clients served from July 2009 to June The outcomes for these clients were observed through June The Urban Institute report found that counseled homeowners were more likely to cure a serious delinquency or foreclosure with a modification or other type of cure (such as short sale or deed-in-lieu) and stay current after obtaining a cure. NFMC Program-counseled homeowners who cured a serious delinquency were also more likely to avoid foreclosure altogether. This report provides details on how NFMC Program funding has been used for counseling services, training and legal assistance. It also presents the results of the Urban Institute s most recent evaluation report, which provides insight into the program s outcomes, discusses the successes and challenges reported by grantees, and highlights several client stories that illustrate how the NFMC Program has successfully assisted at-risk homeowners. Additional information and more detailed data analysis can be found in the separate Appendix document, which is described at the end of this report and available on NeighborWorks website at Funding Summary As of December 18, 2015, there have been 10 Congressional appropriations to fund the NFMC Program, with 10 corresponding funding rounds administered by NeighborWorks. Page 5 March 24, 2017

7 Millions Round 1: The original legislation that created the NFMC Program appropriated $180 million to the effort. NeighborWorks awarded over $130.4 million of these funds to 143 applicants on February 24, 2008, and held the balance to be awarded once performance and need were assessed. Round 2: On July 30, 2008, the Housing and Economic Recovery Act of 2008 (P.L ) appropriated $180 million to the NFMC Program, including $30 million for legal assistance. On December 3, 2008, $177.5 million of these funds, including carryover from Round 1, were awarded to 135 applicants for counseling efforts, and $25.1 million in legal assistance funds were awarded to 54 applicants. Round 3: On March 11, 2009, the Omnibus Appropriations Act of 2009 (P.L ) allocated $50 million to the program. With this appropriation and funds recaptured or de-obligated from Round 1, NeighborWorks awarded nearly $48.2 million to 124 applicants on October 1, Round 4: On December 16, 2009, the Consolidated Appropriations Act of 2010 (P.L ) provided an additional $65 million to the program. With this appropriation and funds recaptured or de-obligated, NeighborWorks awarded $59.5 million to 135 applicants on April 16, Round 5: Effective April 15, 2011, the Department of Defense and Full Year Continuing Appropriations Act, 2011 (P.L ) appropriated $64.87 million to the NFMC Program (funded at the FY 2010 level less 0.2 percent). With this appropriation and funds recaptured or de-obligated, NeighborWorks awarded nearly $69.5 million to 144 applicants. Round 6: On November 18, 2011, the Consolidated and Further Continuing Appropriations Act of 2012 (P. L ) appropriated $80 million to the program. With this appropriation and funds recaptured or deobligated, NeighborWorks awarded $73.87 million to 138 applicants on March 19, Round 7: On March 26, 2013, the Department of Defense, Military Construction and Veterans Affairs and Full-Year Continuing Appropriations Act of 2013 (P.L ) appropriated more than $75.81 million to the program. This amount included a 5 percent cut from the prior year as part of the sequestration. With this appropriation and funds recaptured or de-obligated, NeighborWorks awarded more than $70.1 million to 121 applicants on April 15, Round 8: On January 17, 2014, the 2014 Omnibus Appropriations bill (P.L ) appropriated $67.5 million to the program. With this appropriation and funds recaptured or de-obligated, NeighborWorks awarded $63.1 million to 117 applicants on March 18, Round 9: On December 14, 2014, the Consolidated and Further Continuing Appropriations Act of 2015 (P.L ) appropriated $50 million to the program. With this appropriation and funds recaptured or deobligated, NeighborWorks awarded $44.8 million to 111 applicants on March 13, Round 10: On December 18, 2015, the Consolidated Appropriations Act, 2016 (P.L ) appropriated $40 million to the program. With this appropriation and funds recaptured or de-obligated, NeighborWorks awarded $39.9 million to 100 applicants on May 26, Figure 3 shows NFMC Program appropriations from Congress by fiscal year. Figure 3: NFMC Program Appropriations by Fiscal Year $400 $360.0 $300 $200 $100 $0 $50.0 $65.0 $64.9 $80.0 $75.8 $67.5 $50.0 $40.0 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Note: Appropriation amounts are rounded in fiscal years 2011, 2013, and The actual amounts are $64,870,000, $75,820,000, and $67,500,000 respectively. Page 6 March 24, 2017

8 Through 10 funding rounds, 204 Intermediaries, HFAs and NeighborWorks organizations continue to provide foreclosure counseling and legal assistance to the nation s homeowners. Some grantees allocate their funding to subgrantees, which are subject to the same compliance and reporting requirements as the primary grantee. In total, more than 1,700 national, statewide and local organizations have provided counseling through this program. The following sections provide robust information about the use of NFMC Program funds in Rounds 1 through 9, and in some limited cases, Round 10. This report describes counseling delivered through July 31, 2016 only. Round 10 awards were announced on May 26, 2016, and between the award date and time required for grantees to sign grant agreements, no Round 10 counseling was reported as of July 31, Round 10 award information, however, is included here because awards were announced earlier in The Round 10 performance period runs through June 30, Additional details are available in the Appendix. Counseling Services Grants The details of counseling awards to grantees by organization type are shown in Table 1. Table 1: Counseling Services Grant Requests and Awards in Funding Rounds 1 Through 10 Number Funded Amount Requested Amount Awarded HUD-Approved Housing Counseling Intermediaries 26 $1,025,357, $452,493, State Housing Finance Agencies 40 $474,302, $249,278, NeighborWorks organizations 138 $151,798, $75,277, Total 204 $1,651,458,039.18* $777,049, Source: NFMC Program reported data (as of 7/31/2016). *Notes: Starting in Round 2, NeighborWorks imposed caps on the amounts requested. The request amounts shown above do not accurately reflect demand. Also, request and award amounts shown above include counseling services only, and do not include legal assistance grants. Counseling services provided by NFMC Program funds are categorized by level depending on both of the counseling activities involved. For example, a basic-level counseling session (referred to as Level One) includes helping the client develop a budget and action plan to avoid foreclosure, with the client then executing the plan. Advanced-level counseling (referred to as Level Two) generally provides hands-on assistance to help the client meet the goals defined in the action plan. Because individual NFMC Program clients may receive one or both levels of counseling services, and to account for cost differences in providing different service levels, they are tracked separately and referred to as units of produced or delivered counseling. To facilitate compliance with the Making Home Affordable (MHA) Program s Home Affordable Modification Program (HAMP), a separate level designation (Level 4) was established for NFMC Program counseling related to homeowners that have received HAMP trial modifications but have high debt-toincome ratios. The NFMC Program has awarded grantees 2,915,349 units of foreclosure counseling through 10 funding rounds. Grantees have delivered 2,661,637 counseling units in total, as of July 31, Table 2 shows the counseling units awarded and delivered by funding round. It is projected that 166,579 counseling units will be delivered in Round 10. Units Delivered, as shown in this table, reflect the actual performance of active grantees participating in each Page 7 March 24, 2017

9 program round. Funding for units not delivered by grantees during each grant round was de-obligated and/or recaptured and made available in subsequent funding rounds. Table 2: Total NFMC Program Counseling Units Awarded and Delivered in Rounds 1 Through 10 to Date Funding Round Units Awarded Units Delivered Round 1 458, ,695 Round 2 587, ,126 Round 3 192, ,562 Round 4 234, ,232 Round 5 274, ,040 Round 6 294, ,997 Round 7 283, ,760 Round 8 245, ,047 Round 9 176, ,178 Round ,579 0 Total 2,915,349 2,661,637 Source: NFMC Program reported data (as of July 31, 2016). The total number of counseling units provided throughout the course of the program is larger than the specific number of individual clients/homeowners served because many clients received more than one level of counseling. The 2,044,553 homeowners who received foreclosure mitigation counseling through the NFMC Program as of July 31, 2016 received 2,661,637 units of counseling. This includes counseling associated with the Home Affordable Modification Program (HAMP). Additional information on the delivery of counseling units is provided in the Appendix. Counselor Training and Information Sharing Over the course of the NFMC Program, more than $34.3 million has been dedicated to helping counselors and counseling agencies build their capacity to assist homeowners through training and information sharing efforts. These efforts are primarily foreclosure counseling-related trainings which are supplemented by online informationsharing and peer learning tools. The improved capacity of counseling agencies to provide effective foreclosure counseling will be an important legacy that outlasts the NFMC Program. Training Thousands of nonprofit professionals and counselors look to NeighborWorks every year for training in homeownership, financial education, community lending and post-purchase counseling. The NFMC Program s training funds are utilized to expand NeighborWorks foreclosure counseling-related training opportunities for housing counseling agency staff. These opportunities include offering additional regional and local training courses, increasing the number of courses available at the national NeighborWorks Training Institutes (NTIs), providing scholarships to housing counselors and other housing counseling agency staff members to attend training events, and developing online courses that counselors and staff can complete at their convenience. As of July 31, 2016, 15,488 scholarships have been provided for classroom training. In addition, 11,467 certificates of completion have been earned for three foreclosure counseling-related online courses developed using NFMC Program funds, and 7,402 of these certificates were funded through NFMC Program scholarships. Training is Page 8 March 24, 2017

10 available to housing counselors of qualified nonprofit 501(c)(3) organizations, nonprofit board members and staff. Additionally, municipal, state, federal, and Congressional staff have access to training. The scholarship eligibility requirements for NFMC Programfunded training activities are as follows: Participants must be staff members of a qualified nonprofit 501(c)(3) organization. This includes HUD-approved housing counseling agencies (including affiliates of Intermediaries or HFAs and locally approved housing counseling agencies) and others who may not be approved by HUD. Board members of a qualified 501(c)(3) may submit scholarship applications on a limited basis. Lists of eligible organizations are pre-populated and consistently updated in NeighborWorks America s scholarship system. When employment is in question, NeighborWorks requests employment verification from the organization. Every new organization that applies for a scholarship is researched in at least two IRS-qualified nonprofit verification websites to confirm that the organization is registered as a 501(c)(3). Organizations and staff must be providers of foreclosure prevention or mitigation counseling activities and/or working toward providing foreclosure counseling activities. When in question, NeighborWorks requests verification from the organization regarding its counseling activities. Training is also made available to staff of state and local municipalities, some offering direct services, as well as federal and Congressional staff. Effort is made to distribute scholarships to multiple organizations so that many different communities benefit. Other parties wishing to take a course at a NTI (for example, employees of private financial institutions) may enroll and pay market rate for their tuition and all other expenses. This is not an option at Place-Based Training events. From the NFMC Program s commencement through July 31, 2016, training funds have enabled NeighborWorks to provide housing counselors with scholarships to support Elizabeth Rowe Winthrop, Maine Earning less than half the income of her ex-husband, Elizabeth Rowe could no longer afford her mortgage, let alone unexpected expenses, during her divorce. Eager to keep her home, Rowe contacted her bank, which explained she would need to first be delinquent before she could quality for their mortgage assistance programs. Reluctantly, Rowe stopped making payments in order to be eligible. However, after Rowe missed three payments she notified that she was in foreclosure. A sheriff came to my door, served me a foreclosure notice and said, I suspect you knew this was coming. Instead, Rowe says, she was completely caught off guard. Rowe spent months trying to remedy her delinquency directly with her bank, including making attempts to pay the money she d saved up after she was told to stop making payments. But her servicer said she was too far behind. Determined to keep her home, Rowe turned to her state s Attorney s General Office where she learned about the Kennebec Valley Community Action Program (KVCAP). Finally, a frantic Rowe was able to breathe a sigh of relief. My counselor knew her way around the system. I didn t. Rowe explains. She helped me navigate the process with the bank and she was very good at it - and she was very nice. With her counselor s assistance, Rowe s was approved for a trial modification, which reduced her monthly mortgage payment from $1,006 to $805 for three months. Rowe also received a forbearance agreement to cover her months in arrears, and she was able to secure a subordinate mortgage through her bank to cover more than $19,000 in missed payments and late fees. Because the new loan amount would have exceeded her original loan balance, Rowe had to pay $8,000 along with her first trial payment to bring her mortgage current. After successfully making two additional modified payments, Rowe s trial modification became permanent. Rowe says the entire process took around 7 months and involved a lot of back and forth, but admits it was worth it. KVCAP did what they could to help me and I m still in my home, so that s the bottom line. After trying for a time to address her situation alone, Rowe admits that foreclosure counseling is the wisest approach, I don t know how anyone makes it without foreclosure assistance. My bills are paid. A roof is over my head I probably wouldn t be in my house today if it wasn t for my counselor. 34 national NTIs. 43 Regional Multicourse Place-Based Trainings. 102 Place-Based Trainings conducted in partnership with Intermediaries and/or HFAs. These training opportunities have occurred in 39 states, with attendees from all 50 states, the District of Columbia and Puerto Rico. Page 9 March 24, 2017

11 The three e-learning courses that were created with NFMC Program funding have also helped counselors and counseling agencies meet the demands of their jobs. The courses Foreclosure Basics, Understanding and Applying Foreclosure Intervention and Loss Mitigation Tools, and Using Effective Practices to Improve Your Foreclosure Counseling Program are available free of charge to staff of NeighborWorks organizations, Intermediaries and their sub-grantees, HFAs and their sub-grantees, HUD-Approved Housing Counseling Agencies, staff of states or municipalities, Congressional staff, staff of other federal officials, and staff and board members of qualified nonprofit 501(c)(3) organizations. These participants must pass an exam at the end of the online course to receive a certificate of completion. Information on previous training events, locations, and scholarships, as well as counselor feedback on the NFMC Program training activities, can be found in the Appendix. Information Peer-Sharing Tools NeighborWorks provides a private website for the NFMC Program ( that allows counselors to share information, receive updates on foreclosure-related matters, and provide feedback to NFMC Program staff about servicer programs and other items. A key component of the site is a message board that allows counselors to discuss issues with their peers. Conversations typically pertain to servicer communication, counseling delivery methods, potential workout options and assistance for clients that have been denied loan modifications or have fallen prey to loan scams. The NFMC Program members website highlights NFMC Program counseling agencies in a featured member section on a monthly basis and lists best practices on topics such as working with servicers. A periodic newsletter is sent to grantees via the site to ensure critical updates reach them directly. The members website also serves as a valuable resource for counselors by providing tools such as compliance templates, reporting documents, webinars and servicer contact information. The site is an efficient way to reach NFMC Program counselors and to tap into their knowledge about homeowner concerns and national and regional trends. For example, in recent months, the website s listserv has been used to achieve the following: Provide updates on Consumer Financial Protection Bureau mortgage resources and timing of mortgage disclosure rule development; Share blog posts on topics of interest, such as the impact of the foreclosure crisis on renters and housing cost burdens of senior citizens; and Notify counselors of training opportunities for U.S. Department of Housing and Urban Development housing counseling programs. As of July 31, 2016, the NFMC Program website had 14,594 active users. The message board has hosted 1,102 conversations with 6,675 comments posted since January The NFMC Program also provides webinars to share information, clarify program policies and procedures, and facilitate peer learning. There are two webinar series that take place periodically. One is a program webinar series that provides announcements, industry news and information relevant to foreclosure counseling. Some of these sessions include presentations by third-party experts in government and industry. Other sessions may include peerlearning presentations by NFMC Program grantees with specific expertise or best practices to share. The second recurring webinar series addresses quality control and compliance issues of counseling production, grant disbursements, and compliance reviews. Additional webinars are held on occasion as timely topics are identified. Page 10 March 24, 2017

12 The NFMC Program has provided 197 webinars between January 2012 and July These webinars included 49 monthly program presentations, 40 quality control and compliance sessions, 54 technical training events, and 54 peer-sharing and other webinars. Lastly, the NFMC Program publishes a periodic newsletter on the NFMC Program members site to announce events such as webinars and training opportunities, provide reminders on program policies and procedures, and share important industry news. Providing information in multiple formats helps to disseminate information to grantees as broadly and quickly as possible. Alignment of the NFMC Program and the Making Home Affordable Program NeighborWorks has worked closely with the U.S. Department of the Treasury to leverage NFMC Program counseling services in support of the HAMP component of the MHA program. A separate level designation (Level 4) was established for NFMC Program clients who have high debt-to-income ratios to facilitate compliance with the MHA program s counseling requirements. NFMC Program grantees may use up to 30 percent of their funding to support Level 4 activities. As a requirement of Level 1 counseling, all homeowners must be screened to determine eligibility for MHA. The NFMC Program created an MHA checklist to help facilitate this process. Grantees are required to employ this checklist to screen new counseling clients for MHA program eligibility through December 30, 2016 (the end of the MHA application period). In light of Treasury s Supplemental Directive related to the MHA Program s Borrower Post-Modification Counseling and Servicer Incentives, homeowners who receive a trial loan modification and have either a government-sponsored enterprise (Fannie Mae or Freddie Mac) loan, or a loan owned or guaranteed by the Veterans Administration, the Department of Agriculture s Rural Housing Service, or the Federal Housing Administration are eligible to obtain Level 4 post-modification counseling from an organization participating in the NFMC Program. Grantees participating as referral agencies receiving compensation for providing post-modification counseling for Fannie Mae or Freddie Mac cannot report those same clients as NFMC Program Level 4 clients. For full payment, Level 4 counseling requires at least two contacts with the borrower. NFMC Program grantees report these clients at two separate times. After the first session, the client can be reported at Level 4a. Once a follow-up appointment has been completed, the client can be reported at Level 4b. Because individual NFMC Program clients may receive one or both levels of counseling services, and to account for cost differences in providing different service levels, they are tracked separately and referred to as units of produced counseling. As of July 31, 2016, 13,941 homeowners with trial modifications had received 18,246 units of Level 4 counseling to help them reduce their debt ratios. Counselors typically work with these borrowers to create an action plan that includes steps to make timely payments on trial loan modifications and a timeline to eliminate unnecessary debt, minimize expenses, increase income and create savings. Figure 4 shows the top states for the number of NFMC Program clients by state who received Level 4 counseling. The largest share of Level 4 clients lived in California, 2,202 homeowners or nearly 16 percent of all Level 4 clients. Florida had the second largest share at 1,621 clients (greater than 11 percent). Pennsylvania, Arizona, and Illinois round out the top five states with 1,554, 1,244, and 915 clients respectively. Page 11 March 24, 2017

13 Homeowner Clients Served Figure 4: NFMC Program Level 4 Counseling Clients, Top States for Clients Served 2,500 2,202 2,000 1,500 1,621 1,554 1,244 1, California Florida Pennsylvania Arizona Illinois Source: NFMC Program reported data (as of 7/31/2016). Additional information on the counseling provided to HAMP participants through NFMC Program funding is provided in the Appendix. Urban Institute Evaluation of Program Effectiveness NeighborWorks competitively awarded a contract to the Urban Institute to conduct a four-year evaluation of the NFMC Program and the impact of foreclosure intervention counseling. All of the Urban Institute s reports were provided to Congress separately and the previous two were provided as appendices to earlier NFMC Program Congressional reports. In its most recent report on NFMC Program Rounds 3 through 5 (analyzing borrowers who received counseling from July 2009 to June 2012), the Urban Institute updated its analyses and models of program outcomes through June The analysis is based on a representative NFMC Program sample of 137,000 loans and a comparison non-nfmc Program sample of 103,000 mortgage loans. The report evaluates NFMC Program performance through June 2013 with respect to helping counseled homeowners achieve the following three goals: (1) curing an existing foreclosure or serious delinquency, (2) obtaining loan modifications with lower monthly payments than are obtainable without counseling and (3) achieving sustainable loan modifications that avoid re-default and foreclosure. Page 12 March 24, 2017

14 This evaluation confirms that the NFMC Program counseling has made a difference in the following areas: NFMC Program-counseled homeowners are nearly three times as likely to receive a loan modification cure compared to non-counseled homeowners. Loan modifications received by NFMC Program clients resulted in lower monthly mortgage payments than would have been received without the help of the program. On average, the Urban Institute estimated that NFMC Program clients who received loan modifications had their annual payment reduced by $4,980. The Urban Institute estimated the annual savings resulting from loan modifications for NFMC Program clients at approximately $518 million. Homeowners who received NFMC Program counseling were less likely to re-enter a troubled status after receiving a loan modification cure than homeowners who did not receive NFMC Program counseling. Once cured, NFMC Program-counseled homeowners are less likely to have their loans redefault. This effect is largely attributable to services provided by counselors, such as counseling in budgeting and financial management skills and developing an appropriate solution given the homeowner s financial conditions. Counselors help homeowners find alternatives to foreclosure when saving the home is not an option, and those homeowners who were not able to stay in their homes were more likely to obtain a short sale than non-counseled homeowners. Overall, the Urban Institute evaluation demonstrates that the NFMC Program is having its intended effect of helping homeowners facing foreclosure. This report can be found at Finances/Foreclosure/Foreclosure-Counseling- Janice Scott North Highlands, California With retirement on the horizon, Janice Scott believed homeownership would be more stable and affordable than renting. Scott purchased her home at age 64, but by age 68, she was in full retirement, on a fixed income and facing an unaffordable mortgage payment due to increased property taxes. Scott was able to make ends meet by refinancing her mortgage and reducing her living expenses. This plan worked well for a time. Yet Scott s new mortgage was a 10- year, interest-only loan that would later prove disastrous for her financial stability. When her mortgage adjusted to include her principle loan, Scott s monthly payment again rivaled her fixed monthly income. She also had to cash in her certificate of deposit and spend down her savings to meet her monthly living expenses. I was a senior when I bought my home, and I was a senior when I refinanced. I didn t understand all of the details of an interest-only loan, Scott admits. [My mortgage] payment took my entire retirement check! Scott eventually fell two months behind and received a foreclosure notice, which referred her to seek foreclosure counseling assistance. Scott took this guidance to heart and immediately sought help from every counseling agency she contacted. I had four agencies working with me before I realized I could only work with one, Scott recalls with a laugh. She chose to work with NFMC Program grantee NeighborWorks Homeownership Center Sacramento Region. I found them to be the most responsive and reliable. Scott s counselor secured a trial loan modification which reduced her monthly payment by $650. After successfully making three payments of $1346 per month, Scott was recently notified that her modification is now permanent and her interest rate has been lowered from 6 percent to 2 percent. Scott hasn t yet been able to rebuild her personal savings, but she says avoiding foreclosure was what mattered the most. I had no money left to even meet first and last month s rent if I had to move. I would have been an 80-year old homeless person on the street, Scott says. I m so happy with the people at NeighborWorks. They saved my entire life. (NFMC)/Urban-Institute-Evaluation. The positive effects demonstrated in the final report are strong and are consistent with those found in prior analyses of NFMC Program Rounds 1 and 2. Foreclosure Counseling by Geographic Area and by Homeowner and Loan Characteristics The NFMC Program data reported by grantees provide insights into geographic areas where clients are counseled, homeowner and loan characteristics, and reasons for default. Counseling Demographics Provided by Geographic Areas The NFMC Program has provided foreclosure mitigation counseling to homeowners in all 50 states, the District of Columbia and the U.S. territories. Among all NFMC Program-counseled homeowners, the largest numbers and percentages of counseling units were provided to at-risk homeowners in California and Florida. These two states Page 13 March 24, 2017

15 have seen slight decreases in percentage of national foreclosures due to changing patterns in foreclosure, taking into account one year s worth of additional data since the 12th NFMC Program Congressional report (released May 2016, with data as of July 31, 2015). Table 3 provides the number of units delivered by state and territories, ranked by volume and share of NFMC counseling units delivered. The table also includes, for reference, each state and territory s share of national serious delinquencies and foreclosures. Florida and New York remain the two states with the highest percentages of foreclosures and serious delinquencies (90 days or more delinquent) nationwide. Counseling provided to Florida homeowners through the NFMC Program continues to be somewhat lower in proportion to the state s share of national foreclosures, in part because many of Florida s delinquencies and foreclosures involve investment properties. By statute, only owner-occupants are eligible for NFMC Program counseling. The program thus did not address the state s many investment-owned foreclosures. According to the National Association of Realtors 2016 Investment and Vacation Home Buyers Survey, 37 percent of investment properties sold in 2015 were located in the South. New York remains one of the top 10 states for number of counseling units delivered. New Jersey and New York, respectively, hold the two largest state backlogs of foreclosures in the United States, according to CoreLogic s July 2016 National Foreclosure Report. Florida, which held the largest state backlog in recent years, is no longer among the top five states for New York and New Jersey hold the two largest shares of national foreclosures since June 2012, with shares of national foreclosures up approximately 5 percentage points for both states. This increase reflects the legacy of destruction and damage caused by Super Storm Sandy as well as both states large backlog of foreclosure cases in their judicial systems. According to CoreLogic s July 2016 National Foreclosure Report, New York has the second highest volume of judicial foreclosure cases in the United States second to New Jersey. Both states have benefited from numerous programs designed to assist distressed homeowners in the aftermath of Super Storm Sandy. Homeowners in both states have options other than the NFMC Program for foreclosure mitigation. These alternative avenues for support may be a reason why New York and New Jersey have not received greater shares than they have of NFMC Program counseling. California and Florida s share of national serious delinquencies and foreclosures has declined significantly since the December 2012 Congressional report. Percentage share of national serious delinquencies have decreased four percentage points since December 2012 in the case of California, and five points for Florida. California s percentage share of national foreclosures has declined by three points since December Florida s share of foreclosures has declined by 11 percent since December 2012, including by two percent since the May 2016 Congressional report (12 months of additional data). Table 3 shows the details. The national rate for all mortgages in serious delinquency was 2.9 percent in July 2016, according to the CoreLogic July 2016 National Foreclosure Report. The national rate for all mortgages in foreclosure was 0.9 percent, according to the same CoreLogic report. Table 3: States and Territories Ranked by Percentage of NFMC Program Counseling Delivered and Total Units Delivered, Along with Percentages of National Delinquencies and Foreclosures State or Territory Number of Units Delivered Percentage of Total Units Delivered Percentage of National Serious Delinquencies Percentage of National Foreclosures California 398, % 6.6% 5.2% Florida 199, % 10.0% 11.5% Ohio 159, % 3.8% 3.9% Illinois 155, % 4.6% 4.7% Page 14 March 24, 2017

16 State or Territory Number of Units Delivered Percentage of Total Units Delivered Percentage of National Serious Delinquencies Percentage of National Foreclosures Pennsylvania 144, % 4.4% 4.3% Georgia 111, % 3.3% 2.3% North Carolina 111, % 2.7% 2.1% Michigan 100, % 1.8% 1.2% New York 100, % 9.7% 12.6% Maryland 91, % 3.2% 3.0% Texas 82, % 5.3% 3.4% Arizona 79, % 1.2% 0.9% Minnesota 74, % 0.9% 0.7% New Jersey 73, % 8.1% 10.9% Indiana 63, % 2.0% 2.0% Massachusetts 58, % 2.2% 2.2% Tennessee 50, % 1.7% 1.0% Colorado 47, % 0.8% 0.6% Virginia 48, % 2.1% 1.4% South Carolina 44, % 1.6% 1.6% Missouri 42, % 1.4% 1.0% Nevada 38, % 1.4% 1.5% Wisconsin 34, % 1.1% 1.1% Washington 30, % 1.9% 2.1% Kentucky 29, % 1.1% 1.1% Connecticut 28, % 1.7% 1.9% Oregon 25, % 1.1% 1.4% Iowa 24, % 0.5% 0.6% Rhode Island 20, % 0.4% 0.4% Alabama 21, % 1.4% 0.9% Mississippi 18, % 0.7% 0.5% Puerto Rico 16, % 2.7% 3.4% Louisiana 15, % 1.5% 1.2% Delaware 15, % 0.6% 0.6% Oklahoma 9, % 1.0% 1.1% Utah 8, % 0.5% 0.4% New Mexico 8, % 0.8% 1.0% Idaho 8, % 0.3% 0.3% Montana 7, % 0.1% 0.1% Kansas 7, % 0.5% 0.5% New Hampshire 7, % 0.3% 0.2% Page 15 March 24, 2017

17 State or Territory Number of Units Delivered Percentage of Total Units Delivered Percentage of National Serious Delinquencies Percentage of National Foreclosures Arkansas 6, % 0.7% 0.5% Maine 6, % 0.5% 0.6% South Dakota 5, % 0.1% 0.1% Hawaii 5, % 0.6% 0.8% District of Columbia 5, % 0.3% 0.4% Nebraska 5, % 0.3% 0.2% West Virginia 3, % 0.3% 0.2% Vermont 2, % 0.2% 0.2% Alaska 1, % 0.1% 0.1% Wyoming 1, % 0.1% 0.1% North Dakota % 0.1% 0.1% US Virgin Islands % Not Available Not Available Guam % Not Available Not Available American Samoa 1 0.0% Not Available Not Available Northern Mariana Islands 1 0.0% Not Available Not Available Total 2,661, % 100% 100% Sources: Mortgage Bankers Association National Delinquency Survey Q (as of 6/30/2016) and NFMC Program reported data (as of 7/31/2016). The Appendix provides additional analysis of NFMC Program penetration into states based on foreclosure and delinquency rates. The Appendix also includes state rankings based on other data points, such as race and Hispanic origin, primary reason for default, loan status and loan type. Areas of Need The statutory authority for the NFMC Program mandates that the majority of the awarded funds be prioritized for use in Areas of Greatest Need. NeighborWorks addressed this priority by identifying metropolitan and rural areas of states that have been hardest hit by the foreclosure crisis and remain Areas of Greatest Need for additional foreclosure counseling resources. These are defined as areas experiencing a high rate of defaults and/or foreclosures. The NFMC Program determines these Areas of Greatest Need through an analysis of MSAs and rural areas using 13 indicators of mortgage loan status. The indicators employ data obtained from industry data sources (e.g. Black Knight Financial Services). Beginning in Round 9, the NFMC Program designated certain MSAs and rural areas as Areas of Extraordinary Need localities with the most severe rates of default and/or foreclosure using the same 13 indicators. NFMC Program prioritizes grantee use of at least 51 percent of grant funds toward providing mortgage foreclosure intervention and loss mitigation counseling assistance in the defined Areas of Greatest Need (AGN) and Areas of Extraordinary Need (AEN). The remaining share of grant funds may be utilized outside these areas. Of the total 2,661,833 units of counseling delivered through the NFMC Program, 2,376,335 units (89 percent of units delivered) have been delivered in AGNs. Of these units, 1,690,273 were also delivered in AENs (greater than 63 percent of all units and 71 percent of units delivered in areas of need). Outside of areas of need, the NFMC Program delivered 285,498 units (greater than 10 percent of all units). Page 16 March 24, 2017