Why Do People Need Housing Counseling?

May 4, 2017 Edward Seiler, Ph.D.

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When times are good and delinquency rates are low, it's easy to ignore the tools at our disposal to help keep borrowers current on their mortgages and in their homes. 

Purchasing a home is a rare event in a borrower’s life. It is also a major commitment, and it’s to everyones' advantage if they're able to manage their finances. As such, pre-purchase counseling remains an important resource for borrowers.

The other two emerging needs for counseling that we addressed examine the aging population and the option for borrowers to age in place, and the Home Equity Lines of Credit (HELOC) and Adjustible Rate Mortgage (ARM) resets as interest rates go up. 

The US population is aging at a considerable rate. It's projected that by 2035 one in three houses sold will be headed by someone 65 years or older. It's crucial that policy makers consider the housing needs of the aging population. As people retire or get older their financial picture changes rapidly. At the same time, they're one of the most vulnerable populations from a financial point of view. Financial counseling and flexible mortgage products (like reverse mortgages,) can help improve the quality of life for the growing population. 

Three million HELOCs are expected to reset between 2016 and 2018 with substantial increases in payments. This could drive up defaults and loses in the housing market. To address these issues, housing counseling agencies should effectively and strategically launch a borrower-awareness campaign targeting borrowers subject to interest rate resets. 

My newest white paper, in partnership with Dr. George Cave and SP Group, dives deep into the housing counseling industry. You can download the paper below. 

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