How much would you pay to stop foreclosure?

With the rising number of foreclosures driving down home values spurring more foreclosures everyone seems to be looking for a fix. The expense to lenders is huge, the growing difference between the original loan and what they can resell a property for, as well as all the other expenses involved in foreclosure. The Washington Post has an article regarding Mortgage Investors chipping in for Homeowners' Counseling. It will be much cheaper in the long to counsel people on how to avoid foreclosure than to foreclose on a property. Lets take a look at how it works -

Nonprofit counselors have long depended on charities and governments for funding. They see the change as a long-sought acknowledgment from the financial industry that their efforts to help distressed homeowners also help the people who lent them money.

The effort is expected to cost the industry millions of dollars over the next two years and expand the availability of services, said Tom Deutsch, deputy executive director of the American Securitization Forum, the trade group behind the change.

"It's a good investment," Deutsch said. "It is helping borrowers understand their options, and the credit counselors are very good at doing that."

Hope Now, a coalition of lenders and nonprofit groups, plans to announce today adoption of the guidelines for the payments, up to $150 for a session with a distressed homeowner. Nonprofit agencies can receive more if there is a positive outcome for the lender.

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The funds will be in addition to the $180 million in grants Congress has approved for nonprofit counseling agencies, as well as payments the industry already makes to the 450 housing counselors who staff a hotline for homeowners. That hotline, 888-995-HOPE, has reported 315,000 calls this year, compared with 245,000 for all of last year.

"If the financial services industry embraces this fee-for-service, the value that counseling brings, this could be revolutionary," said Marietta Rodriguez, director of national homeownership programs at NeighborWorks America, a nonprofit group based in the District. "Right now, counseling is really being paid philanthropically and through government sources, and given the magnitude of the problem, they are not sufficient sources."

The costs incurred in counseling will be significantly less than the cost of foreclosure - both to the homeowner and the lender. While there will always be people who will face foreclosure due to life's circumstances (death, divorce, illness) the ones who are just using bad financial judgment - or no financial judgment) will be helped by such efforts. Hopefully this succeeds in the mission.