To extend homeownership opportunities for traditionally underserved households, homeownership education counseling (HEC) is usually conducted and has received wide support. In fact, some proponents of affordable housing have advocated that HEC be required for subprime borrowers trying to refinance a mortgage, many of whom are older adults. This Issue Brief discusses the history of HEC, describes types of mortgage counseling programs, and identifies the key issues to effective HEC (timing, method of delivery, and type of provider). Some of the key points are as follows:
- The ever-increasing choices in mortgage products offered by mortgage lenders and brokers bring not only opportunities for borrowers but also dangers.
- Research on the effectiveness of HEC programs has produced ambiguous results so far, and more studies are needed.
- Expanded and improved mortgage counseling services alone should not be expected to attain and maintain higher homeownership rates. Instead, policymakers should view HEC as only one component of a viable policy that comprehensively addresses homeownership opportunities.
The report was written by Sharon Hermanson and Robert Wilden of AARP's Public Policy Institute. For further information, please contact Sharon Hermanson at (202) 434-3909. (6 pages)