Pre-Purchase Counseling Impacts on Mortgage Performance: Empirical Analysis of NeighborWorks America's Experience

by Kenneth Temkin; Neil Mayer

Mar 7, 2013

NeighborWorks America's (NeighborWorks) nationwide network of affiliates offers pre-purchase homebuyer counseling and education throughout the country. Using information on about 75,000 loans originated between October 2007 and September 2009, Neil Mayer and Associates together with Experian analyzed the impact of pre-purchase counseling and education, provided by NeighborWorks' network, on the performance of counseled borrowers' mortgages. It compares mortgage performance for counseled buyers over two years after the mortgages are originated, compared to mortgage performance of borrowers who receive no such services. The study's findings show that pre-purchase counseling and education works: clients receiving pre-purchase counseling and education from NeighborWorks organizations are one-third less likely to become 90+ days delinquent over the two years after receiving their loan than are borrowers who do not receiving pre-purchase counseling from NeighborWorks organizations. The finding is consistent across years of loan origin, even as the mortgage market changed in a period of financial crisis. It applies equally to first-time homebuyers and repeat buyers.