NeighborWorks America CEO Wade Stresses Role of Pre-Purchase Education
in Preventing Foreclosures and Greater Scrutiny in Choosing Home Loans

Remarks by
Kenneth D. Wade
CEO of NeighborWorks America
Beyond the Mortgage Meltdown — Saving for Sustainable Homeownership
Congressional Savings and Ownership Caucus and The New America Foundation
September 20, 2007

"The best defense against delinquency and foreclosure is objective education and advice before the borrower begins shopping for a home and selecting a mortgage product,” said Kenneth D. Wade, NeighborWorks America CEO, speaking at a panel discussion sponsored by The New America Foundation, in association with the Congressional Savings and Ownership Caucus.  “And the best home buyer counseling is provided through objective, well-trained non-profit agencies (including local NeighborWorks organizations and other HUD-approved nonprofit housing counseling agencies) that put the consumers’ and the communities’ interest first.  We also know that homeowners’ odds of success are increased even further when they have access to post-purchase counseling and homeowner education.”

Homebuyers typically hire a property inspector to check the structural integrity
of the property. Why not receive similar objective advice for the loan choice?” Wade asked. He suggested greater scrutiny of the loan could help prevent foreclosures that result from purchasers not fully understanding their loans.

Wade said that NeighborWorks America has been closely tracking the loan performance of the many low-income families assisted by NeighborWorks organizations over the years, particularly with the overall rise in foreclosures in the broader marketplace.  “These loans continue to perform significantly better than subprime loans.  We have not seen any significant up-tick in defaults or foreclosures among NeighborWorks-assisted families.”  

In fact, a comparison of the loan performance of borrowers counseled by NeighborWorks organizations (in the first quarter of 2007) indicates that their loans are:

• 10 times less likely to go into foreclosure than subprime borrowers;
• Nearly 4 times less likely to go into foreclosure than FHA borrowers; and
• Slightly less likely to go into foreclosure than prime borrowers.

Wade concluded, “There are certainly challenges throughout the process, not the least of which is working with the individuals to convince them of the need for information and counseling so they know what to look for and how to compare not only homes, but loan products.  Too many times over the past few years, there have been people promising a homebuyer a quick 'yes' on a loan product that might not be the best alternative for that family.  It may take more than 20 minutes to get a 'yes' from a NeighborWorks organization — in fact it may take months of counseling, budgeting and saving. But our record shows that the result of that effort pays off in the long term — in the form of affordable and sustainable homeownership.” 

Read complete prepared remarks [PDF, 36 KB]

Participants

• The Hon. Jim Cooper (D-TN)
  U.S. House of Representatives
  
• The Hon. Phil English (R-PA)
  U.S. House of Representatives
  
• Conrad Egan
  President and CEO
  National Housing Conference
  
• Karen Murrell
  Senior Research Fellow, Asset Building Program
  New America Foundation
  
• Josh Nassar
  Vice President for Federal Affairs
  Center for Responsible Lending
  
• Ellen Seidman
  Director, Financial Services and Education Project, Asset Building Program
  New America Foundation
  
• Ken Wade
  CEO
  NeighborWorks America

Resources

NeighborWorks Center for Foreclosure Solutions

Congressional Savings and Ownership Caucus