January 4, 2005
Contact: Becky Fleischauer, 202-220-2360; bfleischauer@nw.org

NeighborWorks CEO Declares 2005 a Year of
Unprecedented Opportunities to Empower Consumers

Washington, D.C. – As new and returning political leaders take their oaths of office this month, NeighborWorks CEO Kenneth D. Wade delivers a message of optimism for a year of unprecedented opportunities to empower more consumers and change the face of homeownership and financial independence in 2005. In a leading housing trade publication, Shelterforce, Wade stands apart in the housing advocacy crowd by declaring housing as an issue with an economic and social impact that transcends party lines. [Read full story]

“A New Twist on Housing Policy” calls on policymakers to support homeownership counseling and education so that future homebuyers will be better prepared for the responsibilities of homeownership. By focusing on demand, Wade asserts that default rates will decrease, supply and mortgage rates will be more transparent, property values will increase, employment will stabilize, and economic conditions will bloom. “We must do all we can to ensure that the biggest investment of a prospective homeowner’s life is successful by better preparing, educating and counseling citizens about the gamut of regulations, unplanned expenses, growing predatory lending practices and successful savings and homeownership incentives,” Wade said.

Currently the number of consumers who could benefit from homeownership education and counseling is growing at a pace too fast to serve, creating a ‘counseling gap.’ According to a recent study by Neighborhood Reinvestment, 15.8 million first-time buyers will go uncounseled from 2005 to 2025. Wade pledged to help fill that gap by tripling the number of counselors certified across the nation—increasing national capacity to serve more than two million individuals each year by 2007.

The NeighborWorks Center for Homeownership Education and Counseling (NCHEC) is the largest initiative of its kind to bring families of modest means into the economic mainstream by helping them achieve one of their primary goals in life: buying a home. NCHEC-certified counselors have served almost 500,000 people nationwide with pre- and post-purchase guidance and education. For those receiving high-quality education and counseling, delinquent payments at the 90-day mark are cut by a third. A recent study found that borrowers who received counseling have half the default risk as those who did not. Despite its proven advantages, only 15 percent of current first-time homebuyers receive adequate counseling and education.

Wade said the increasing array of loan products and the blurred lines between subprime and predatory lending makes high quality counseling even more important: “We want to create a seismic shift in power and information toward the consumer. An informed buyer is an empowered neighbor whose wealth and contribution to his or her community multiplies.”

Some of the other issues and NeighborWorks initiatives to watch in 2005 include:
• Redoubled efforts to close the stubborn 25 percent gap in homeownership that persists between white and non-white families.
• Continued efforts to ensure that homeowners buy and keep their homes. NeighborWorks uses a Full-Cycle Lending(SM) approach that combines pre- and post-purchase homebuyer education with flexible loan products and property services, such as inspection and rehabilitation to cover all stages of homeownership. NeighborWorks is also taking a lead role in regional forums on foreclosure prevention.
• Increased efforts to ensure that homeownership counselors have the latest information about predatory lending tactics.
• Research regarding the return on investment affordable housing yields. Studies show that for every dollar spent on affordable housing, at least $7 are returned in the form of job creation, safer neighborhoods, new businesses, and economic development.
• Innovative preservation strategies that showcase the heritage of communities and “green” housing strategies that help consumers reduce energy costs.

About NeighborWorks
The NeighborWorks network is a nationwide network of more than 235 community development organizations working in more than 2,700 urban, suburban and rural communities across America. These organizations engage in revitalization strategies that strengthen communities and transform lives. In the last five years, NeighborWorks organizations have helped more than 480,000 families of modest means purchase or improve their homes or secure safe, decent rental or mutual housing. Neighborhood Reinvestment Corporation provides financial support, technical assistance and training for the NeighborWorks network. In 2004 alone NeighborWorks organizations generated more than $2.2 billion in reinvestment to fortify communities.

 

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