NeighborWorks America Report Shows African American Homeowners Hardest Hit by Foreclosure

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Washington, DC - Today NeighborWorks® America, the administrator of the Congressionally authorized National Foreclosure Mitigation Counseling (NFMC) program, announced that of the more than 363,000 homeowners who received foreclosure prevention counseling as a result of NFMC funding through March 31, 2009, 28% were African American homeowners, more than twice their representation in the overall public, and more than three times their representation of total homeowners.  In all, fifty-three percent of NFMC Program clients were minority homeowners, or more than twice the overall percent of minority homeowners.

The data reported today are part of the third NFMC report distributed to Congress in June 2009, and are based on client information provided from more than 1,700 HUD-approved housing counseling intermediaries, state housing finance agencies, and nonprofit housing counseling agencies that received NFMC funding through March 31, 2009.  As of June 30, 2009, more than 540,000 homeowners have received foreclosure prevention counseling as a result of NFMC funding.

Nationwide, African American homeowners make up only 9% of the nation's homeowners.  Twenty-four percent of the nation's homeowners are racial/ethnic minorities, with Hispanic homeowners accounting for 11%, and Asian/Pacific Islanders accounting for 4%.

Also according to the NeighborWorks America NFMC report, which analyzed client data through March 31, 2009, of all NFMC Program clients that held mortgages with interest rates above 8%, 35% are African American homeowners.  Yet African American homeowners only account for 19% of the nation's subprime mortgages.  In addition, African American clients who sought foreclosure prevention counseling were more likely to hold fixed rate mortgages than adjustable rate mortgages (ARMs) -- 51% of clients held fixed rate mortgages, and 38% held ARMs, compared to Hispanic clients, who were more likely to hold ARMs (47%) than fixed rate mortgages (41%).  Like African American clients, White clients were more likely to hold fixed rate mortgages (59%) than ARMs (31%).  

The report also noted that lower-income homeowners are likely to have a greater rate of foreclosure starts than higher-income homeowners.  Fifty-eight percent (58%) of African American NFMC clients reported earning 80% or below their Area Median Income.  

"The foreclosure crisis is disproportionately affecting African American homeowners who are more likely to have high cost mortgage loans," said Ken Wade, CEO of NeighborWorks® America. "We are encouraged that the data demonstrate the NFMC program is assisting the homeowners who have been hardest hit by this foreclosure crisis. Thanks to the expertise of housing counseling agencies and certified counselors throughout the nation, more than a half a million families have received the foreclosure intervention counseling they need, and are better informed about their options to avoid home foreclosure."

The NFMC program is positively affecting the lives of real people like Etta of Preston, Maryland.  In January 2008, 62-year-old Etta was faced with a difficult choice: pay the monthly mortgage on the house she has lived in since 1972 or the rising electric bills that kept her house out of the dark.

Etta, who lives on Social Security and her late husband's pension, chose to pay electric bills that often rose to more than $1,000 a month. In addition to high utilities, Etta has a high co-pay for several prescription drugs.

Since 2006, when she refinanced to make needed repairs on the house, Etta has paid $930.25 per month. She made timely payments until January 2008, when her utilities spiked in price. She was two months behind on her mortgage when she decided to seek help.

"There's no need having electricity if you don't have a roof over your head," Etta said.

She saw an ad on television about the Homeowner's HOPE hotline for the Homeownership Preservation Foundation, an NFMC Program Grantee, and called the number. A counselor there referred her to Salisbury Neighborhood Housing Services, Inc., another NFMC Program Grantee and a local NeighborWorks organization.

"I went there and talked to Amy who told me what I needed to do. I gave her all my information - taxes, homeowner's insurance, medical bills - and she wrote a letter for hardship. I was able to keep my house," said Etta.

Etta now has a fixed rate of 5.5%, down from 8.5%. The past-due amount has been rolled at the end of her loan. Her monthly mortgage payments are now $787.02.

Now that her house is safe, Etta is "cutting corners" on other expenses. She no longer has a cell phone or cable, and she tries not to spend more than $30 a week on food. She also gets free drug samples when she visits her doctor.

Etta said there will not be a choice this winter between paying the utilities and paying the mortgage. This time, she vows, she won't miss a house payment.

For more information about the National Foreclosure Mitigation Counseling program, visit www.nw.org/nfmc.

**Homeowners can locate a NFMC-funded counseling agency by visiting www.findaforeclosurecounselor.org.**

About NeighborWorks® America
NeighborWorks® America creates opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. Since 1991, we have assisted nearly 1.2 million low- to moderate-income families with their housing needs. Much of our success is achieved through our support of the NeighborWorks network - more than 230 community development organizations working in more than 4,400 urban, suburban and rural communities in all 50 states, the District of Columbia and Puerto Rico. In the last five years, NeighborWorks organizations have generated more than $15 billion in reinvestment in these communities. NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.

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