Neighborhood Reinvestment Corporation (doing business as NeighborWorks® America, [(NeighborWorks]) has a nationwide network of affiliates offering pre-purchase homebuyer counseling throughout the country. Although the network members started to provide pre-purchase counseling in 1978, the impact of these services on mortgage performance has not yet been formally evaluated. 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 to mortgage performance of borrowers who receive no such services.
The study’s findings show that NeighborWorks 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 to repeat buyers.