This is a guest post by Abigail Schreiner. Abigail is a graduate student in the Master of Social Work program at Virginia Commonwealth University. She is an Intern at Housing Opportunities Made Equal of Va Inc.
The budget debate in D.C. has been intense lately. Some in Congress want to cut funding for foreclosure prevention programs. These folks believe that foreclosure prevention is an unnecessary government expense and that those who cannot afford their home should not be allowed to keep it. This is a gross misunderstanding of foreclosure prevention. Government funded foreclosure prevention does not negate an individual’s responsibility to pay his or her mortgage; it simply allows for modifications or additional loans that makes the home more affordable during difficult economic times.
The foreclosure crisis has hit the nation hard over the past few years. No state has escaped the increased rates of foreclosure due to the housing crisis and subsequent Great Recession. Foreclosure obviously hurts the individuals who lose their homes, but it also affects the entire economy. Increased rates of foreclosure cause housing values everywhere to decrease. The principle of supply and demand explains this concept: the abundance of homes for sale outnumber the people who can afford to buy them. Furthermore, the lack of upkeep in foreclosed homes brings down property values in the entire neighborhood.
Businesses suffer from the foreclosure crisis. Home builders and real estate companies suffer from the high rates of foreclosure. Mitigating foreclosures and preventing unnecessary foreclosures are essential to economic recovery and growth. Cutting funding to foreclosure prevention programs imperils our fragile economic recovery.
For many individuals in foreclosure, a housing counselor is the key to keeping one’s home. Housing counselors are trained to understand and assist in the loan modification process. HOME’s housing counselors work with individuals who are at risk of foreclosure by explaining their options, and helping them navigate a complex and dizzying array of industry bureaucracy to find the best option for their situation. This often includes a loan modification. Loan modifications are available to individual’s facing economic hardship and can take various forms.
Ultimately, a loan modification reduces the monthly amount owed, either temporarily or permanently, through reduction of interest rate, reduction of the principle, reduction of late fees, lengthening a loan term or a combination of all of these. Housing counselors help families, who can afford to stay in their home, navigate the confusing process of loan modification. HOME provides free housing counseling services to those at risk of foreclosure. At the Governor’s Housing Conference in 2010, HOME’s Foreclosure Prevention and Intervention Program won the best program award. Without the necessary government funding, HOME would not be able to provide this service to homeowners.
Efforts by members of Congress to eliminate foreclosure prevention services are unwise and would end up severely disrupting our fragile economic recovery and imperil future growth. Virginia’s economic recovery relies on keeping paying families in their homes and preventing unnecessary foreclosures. Foreclosure prevention programs are in place to help paying homeowners keep their homes. Foreclosure hurts everyone, but foreclosure prevention helps everyone. I hope members of Congress will reconsider their opposition to foreclosure prevention funding.