Four lessons on federal crisis response from ten years of foreclosure counseling
Toward the end of 2007, the number of US homeowners at risk of losing their homes had doubled from just a year earlier. We clearly had a foreclosure crisis on our hands, and it was getting worse.
To respond, in December 2007 Congress launched the National Foreclosure Mitigation Counseling (NFMC) program, which ultimately helped 2.14 million homeowners. Through 2018 the NFMC program paid counselors to help homeowners in vulnerable communities by walking homeowners through the foreclosure process and exploring solutions like renegotiating with their lender or exiting a home they could not afford.
The NFMC program was designed and implemented by NeighborWorks America, a Congressionally chartered nonprofit organization. Based on our analysis of the NFMC program and its implementation, we identified four lessons that national policymakers can use as guide posts when responding to the next national crisis:
1. Collaborate and reach consensus.
Reach consensus on what the crisis is, how best to respond to it, and set shared goals. Then, leverage existing systems and expertise to mobilize quickly.
NeighborWorks convened experts from the field, government agencies, and practitioners on the ground to design a national program that would work in practice. They relied on tried and true partners for approving counseling agencies and designing data tracking systems, helping them meet the challenge of awarding $130 million in 60 days, more than 2.5 times their mandated target.
2. Be transparent and responsive.
Document everything, and make key decisions public, especially when using government funds. Be attentive to problems that emerge, listen to feedback, and tweak.
NeighborWorks emphasized transparency, collaboration, and flexibility. They created a transparent process to ensure applicants understood why they did or did not receive their funding. They also communicated program requirements clearly, and created feedback loops to hear concerns and adjust the program to best meet grantee needs. In response to feedback, NeighborWorks implemented changes, including raising the amount they paid counselors for more intensive counseling work.
3. Set standards and equip for success.
Develop clear processes and performance targets, and build the skills across the field to implement them.
The NFMC program set high performance standards and helped grantees meet them. NeighborWorks standardized foreclosure counseling practices and paid for thousands of counselors to attend trainings.
They provided all grantees with data tracking software and disseminated best practices for negotiating with mortgage servicers. Professionalization and standardization left the industry better prepared to respond to a housing crisis in the future.
4. Monitor regularly and evaluate impact.
Design robust systems for reporting data. Track program impacts over time to show value and evaluate results.
The NFMC program required grantees to report on client outcomes. The strong reporting structure and culture enabled NeighborWorks to communicate how funds were used to help homeowners. Keeping close track of the demographics of the population served demonstrated the value and impact of counseling early on in the program. This helped NFMC secure an additional nine rounds of funding from Congress.
By its end, the NFMC program served 2.14 million homeowners, reducing foreclosures, and helping homeowners catch up on mortgage payments and stay on top of them. It acted quickly and expertly, standardizing industry practices through strategic partnerships and rigorous testing, training, and knowledge-dissemination.
National crises affecting millions of people happen regularly but unpredictably—natural disasters, economic recession, and others. And the better prepared we are to react, respond, and chart a course toward recovery, the more we can minimize the damage on society’s most vulnerable people and places. When crisis strikes next, those called on to respond could learn a lot from the success of the NFMC program.
Illustration via GettyImages.