The Urban Institute has completed a study of the financial value of foreclosure counselling, in this case provided by NeighborWorks America
The NFMC [National Foreclosure Mitigation Counseling] program recognizes three distinct levels of counseling services. In Level 1 counseling, the NFMC Grantee or Subgrantee conducts a client intake process and develops a budget and a written action plan for the client. After Level 1 counseling is completed, it is up to the client to follow through with any activities on the action plan. In Level 2 counseling, the Grantee or Subgrantee verifies the client’s budget and takes additional steps to obtain solutions outlined by the action plan. Level 3 counseling is when Level 1 and Level 2 counseling are completed in succession by the same Grantee or Subgrantee. Since an individual homeowner may receive both Level 1 and Level 2 counseling, these sessions are counted and referred to as separate unit of counseling. (at page 5)
The overall impact?
The positive program effect on foreclosure cures was about the same regardless of the level of treatment received by a client. Recipients of Level 1, Level 2 and Level 3 counseling services all had relative odds of curing a foreclosure in any given month that were 1.6 to 1.8 times greater than persons who received no counseling. The differences in the effect of Level 1 counseling, which involves only an initial session with the client but no follow-up, were smaller and statistically significant from the effect of Level 2 and 3 counseling, in which the counselor provides additional assistance in implementing the client’s proposed solution. (at page 36)
And, the more intervention, the more impact:
We also modeled the effects of different levels of counseling on payment reductions. The results from the NFMC vs. non-NFMC model showed that all three levels of counseling service provided benefits to counseled homeowners, with average additional payment reductions increasing from an average of $214 for Level 1 to $265 for Level 2 and $335 for Level 3 counseling, when compared to non-NFMC modifications. These findings suggest that more extensive counseling (Level 2 or Level 3) resulted in loan modifications with larger payment reductions when compared to clients who received Level 1 counseling. The results based on the percentage of the monthly payment also showed a larger effect for counseling Level 3, indicating that the result was not solely a function of the pre-modification monthly payment size for persons who received higher levels of counseling. (at page 39).
This three level analysis is particularly helpful as a model, because in access to justice we often now also have systems that provide assistance of different levels. It makes sense that the greater the intervention, the greater the impact, but the more complex question is when is that the right overall choice. If foreclosure cures are more or less the same, regardless of level of intervention, and if there is limited money for this work (not very unlikely!!), then the best social policy decision (to avoid homelessness) may be to provide lower levels of help to more people. Alternatively people could “buy up” to get level two assistance, possibly only to be paid if they reap a benefit.
This may be kind of choice we may come to face in access to justice.
What do folks think?