The Changing Nature of Housing Counseling

Moderator: Welcome to the Federal Reserve Bank of Atlanta's Foreclosure Response podcast series. I'm Odetta MacLeish-White with the Federal Bank of Atlanta, and today we're talking with Suzanne Boas, president of the Consumer Credit Counseling Service of Greater Atlanta. The Consumer Credit Counseling Service of Greater Atlanta has been serving consumers since 1963. CCCS has always focused on teaching the principles of sound budgeting and responsible use of credit, but in today's difficult economic times, these concepts are especially resonant with families struggling to make ends meet, pay off debt, and keep their homes. While CCCS still provides traditional in-person counseling services, the organization has adapted to new technologies and new trends to remain relevant and effective. Suzanne, thank you for joining us today.

Suzanne Boas: My pleasure.

Moderator: Most people know CCCS of Greater Atlanta as a resource for low-income households experiencing financial distress. How has the recent foreclosure crisis and recession changed the demographic makeup of the people seeking your help?

Boas: We've always served a broad spectrum of people, but in the past year, there's been a dramatic increase in the number of middle-class families seeking counseling. The main reason for this change isn't surprising. In the past two years, more than seven million Americans have lost their jobs. Unemployment, reduced wages, and uninsured medical expenses have caused people who've never needed help from a nonprofit counseling agency before to seek assistance. People have seen their incomes drop, and they've been turning to our nonprofit agency for possible solutions to avoid home foreclosure.

As recently as 2006, the average annual household income of the people coming to us for help was just a little more than $40,000. And our average client at that time was making a relatively modest mortgage payment of about $1,100 each month. The average monthly mortgage for the person receiving counseling today has jumped to $1,675.

The recession has affected people with good, solid incomes from just about every line of work. We're hearing from the salesperson who is earning 30 to 40 percent less in commissions and the blue-collar worker who is getting less overtime or who has lost a second job.

We're also seeing married couples that have lost both jobs; state government employees losing pay due to mandatory work furloughs, and salaried managers who no longer receive bonuses. We've even helped attorneys and engineers who have lost major contracts or had clients who owed them tens of thousands of dollars but then were unable to pay their bills.

We've spoken with tens of thousands of homeowners who were facing foreclosure, and we've been able to help them find options to overcome that problem. Our research shows that one year after a homeowner has received counseling from our agency, 71 percent have avoided foreclosure completely, and 80 percent are still in their homes. The important message people need to know is, Don't wait. If you call for help as soon as you know you have a financial problem, we have the best opportunity to help you find a solution.

Moderator: Suzanne, have the changes in the income levels and educational profile of your clients changed your counseling approach? A person who has historically earned a higher income may not feel comfortable receiving assistance from social service agencies.

Boas: Our basic approach doesn't change, but the counseling we deliver is tailored to each person's unique situation. In each case, we apply the same basic financial management techniques. We gather information from our clients about their income and expenses; we make recommendations on how they can reduce their spending and develop a written action plan that will help them solve their financial crisis.

But I understand what you're getting at. It's true that a lot of people with middle-class backgrounds are surprised when we refer them to social service agencies for assistance. Remember, these are the same people who've donated money to the United Way or who have dropped off clothing during the holidays at Goodwill Industries. And now they are the ones who need help.

Our job is to make sure they understand the importance of making their mortgage payments and keeping their credit in good shape. If our counselors hear a person resist suggestions such as food stamps or unemployment insurance, we remind them that they've paid taxes for their entire lives to support these programs. Now that they need the programs, they should take advantage of them.

On the topic of employment, people have some tough choices to make. In some cases, our counselors advise people with a history of high earnings to consider accepting a lower-paying job or a job that's at a lower level than their previous one. Some people resist these recommendations. They are worried, and perhaps rightfully so, about their career path and how a job with less responsibility will look on their résumé. But they may need to put their career on hold to pay the mortgage and their other essential bills. We know that's tough for a lot of people to hear and to accept, but it's our job to make sure that they understand their options and weigh the pros and cons of each one.

Moderator: A foreclosure event often has long-lasting implications for both individual and household finances. So how has the current foreclosure crisis made it more difficult for people to get credit—for necessities like a car, education, or childcare for their children—and employment?

Boas: Credit is very tight for everyone right now. Limits on credit cards and home equity lines of credit that many people had before the recession have been reduced or eliminated as lenders seek to manage their risk.

A poor credit report can have an impact on getting a job. Some employers check a person's credit report and require good credit as a prerequisite for employment. Unfortunately, we know that some people are not qualifying for jobs because of their poor credit. For example, we had a client that was hired as an administrative assistant for a large company. When she reported for work to start her new job, a company representative told her they had pulled her credit report and noticed a number of problems, and she was actually sent home.

Of course, poor credit can also affect your ability to buy a car. People who are delinquent on their mortgage payment or forced into foreclosure may only qualify to buy a used car with a high interest rate on the financing. These rates are typically offered by dealers who advertise that they don't check a buyer's credit, which attracts the consumers who can't get a car loan at reasonable interest rates.

For others, the situation is more desperate. We're seeing people seek title loans on their cars to get money needed for essential purchases.

The good news is that foreclosure can be overcome. Someone who gets back on their feet and begins repaying their bills on time can rebuild their credit score in only two to three years.

Moderator:Suzanne, have there been any broad changes or challenges in the counseling industry that have enabled you to serve more people during the foreclosure crisis?

Boas: Well, you know, when our agency was founded in 1964, all of our counseling was delivered in person in small neighborhood offices in Atlanta. That remained the case until the mid-1990s. At that time we received some very generous grants from several foundations, which allowed us to invest in sophisticated telephone systems. That meant we could give individual, comprehensive counseling sessions over the phone and also expand our operations to 24 hours a day, seven days a week. By removing the barriers of time and place, we were able to help struggling families all across the country.

More recently, we began counseling people over the Internet, which also gave homeowners the freedom to access our help when, where, and how they want it.

With these systems in place, we were well positioned to respond when the foreclosure crisis hit. We also increased our workforce significantly as the foreclosure crisis continued to grow. This year, we will provide help to approximately 90,000 homeowners seeking to avoid foreclosure.

Another significant development that emerged from the housing crisis was the creation of the Homeowner's HOPE Hotline, a nationwide toll-free phone number for people to obtain housing counseling assistance. This hotline (which can be reached by calling 1-888-995-HOPE) has become the main gateway for the Making Home Affordable program.

For homeowners, the main challenge continues to be getting help in a timely manner. That's where another innovation is helping to improve outcomes for homeowners. Through new technology, we can now transmit data about our clients in real time immediately after their counseling session to some of the nation's largest mortgage companies. In many cases, we are able to identify potential loan modification options for the client immediately, and the lender has updated, accurate information to help them expedite the workout.

Unfortunately, there are many for-profit loan modification firms charging homeowners for the same services that nonprofit agencies offer, and many people have been persuaded to pay for that help. These firms charge between $1,000 and $3,000, driving homeowners further into debt. What's even more heart-breaking is that many of these homeowners don't receive the help that was promised and that they desperately need. Homeowners call us after they have paid some of these firms, and they are so frustrated. I can't stress enough how critical it is for any homeowner to steer clear of these companies and call a reputable nonprofit counseling agency for assistance. There is no need to pay for help when you find yourself in financial distress. There are many reputable free options available.

Moderator: Suzanne, what role should local policymakers play in promoting counseling services as a tool for responding to a foreclosure event or for avoiding such an event?

Boas: We would hope that all policymakers are aware of local organizations, such as ours, as well as the Homeowner's HOPE Hotline, the national toll-free telephone number I mentioned earlier.

I would also encourage local policymakers from across the country to develop partnerships with national organizations that have the resources to help their constituents. A good example is NeighborWorks® America, which is a national nonprofit organization based in Washington. NeighborWorks® America has flyers promoting the HOPE Hotline, and those flyers can be downloaded right from their Web site, which is Any local official seeking to help his or her constituents avoid foreclosure can begin a local outreach campaign almost immediately through the use of these flyers.

In addition, NeighborWorks® America has produced public service announcements and advertising in conjunction with the National Advertising Council that can be aired on local television and radio stations or published in local newspapers.

Finally, policymakers can, and many are, working on regulations and legislation to put strict rules around the conduct of for-profit debt settlement and loan modification providers. By limiting fees that can be charged, requiring disclosures of all expenses, and requiring proof of performance in advance of payment from these organizations, we can take significant leaps to help innocent people avoid slipping further into financial crisis.

Moderator:Suzanne, how do you measure the effectiveness of CCCS's counseling techniques, and have these tools changed in light of the fiscal crisis we're experiencing today?

Boas: At CCCS we believe that good data is critical to understanding our clients—who they are, the changing state of their financial condition, and the progress they make as a result of our education and counseling. We also believe that solid research results help us prove the value of counseling.

We survey each client we counsel, which helps us assess their experience with our organization. We have a particular interest in determining if counseling has improved a person's confidence in their ability to reach their financial goals. Prior to counseling, approximately 47 percent of our clients say that they are confident in managing their way toward financial stability. After counseling, that rate jumps dramatically, with 84 percent of respondents reporting they believe they can reach their financial goals.

We also ask our clients if they would recommend our services to others, which may be the most important indicator of any organization's success. According to our surveys, 89 percent of our clients say that they would recommend our agency to others in a financial crisis. We think this is an impressive figure given the tough love we are often called on to dispense.

We also conduct research studies to measure the effectiveness of our work and continuously seek opportunities to improve the outcome for our clients.

As I mentioned earlier, at the beginning of this podcast, in a study conducted earlier this year, we examined the status of homeowners one year after they had received foreclosure prevention counseling. The results showed that 80 percent of our clients were still in their homes one year after counseling, and over 71 percent had completely avoided any type of foreclosure notice. We believe that these results demonstrate that we are fulfilling our mission, helping our clients take control of their financial lives.

Moderator: Suzanne, thank you for joining us today.

Boas: My pleasure.

Moderator: This concludes our podcast. We've been speaking with Suzanne Boas, president of the Consumer Credit Counseling Service of Greater Atlanta. For more podcasts on this topic and others, visit the Atlanta Fed's Web site at If you have comments or questions, please e-mail Thanks for listening.