Measuring the Delivery Costs of Prepurchase Homeownership Education and Counseling

Abstract

In order to understand the roles that public policy and the business and consumer sectors play in paying for homeownership education and counseling, the costs, benefits and beneficiaries of the education and training must be fully accounted for. This paper estimates the total costs of delivering homeownership education and counseling and discusses proven and implied benefits to stakeholders. Based on one set of assumptions, and depending on the level of activities offered, homeownership education and counseling costs range from $500 to$1,500. Empirical and anecdotal evidence suggest that homeownership education and counseling offer important benefits to borrowers, lenders, real estate professionals and communities. Many nonprofit organizations providing such services, however, remain underfunded. Providers, financial institutions and policy makers must increase their knowledge of what works, what costs are incurred, who benefits, and what value is created by homeownership education and counseling activities in order to develop a sustainable delivery system.This paper uses information from NeighborWorks organizations that offer homeownership education and counseling programs as illustration of the cost structure of the homeownership education and counseling industry. Part 2 provides background information on the homeownership education and counseling industry. Part 3 explains the methodology and assumptions used for this analysis. Part 4 reviews cost accounting and presents a framework for the cost analysis. Part 5 discusses the value proposition for homeownership education and counseling while Part 6 offers conclusions and implications