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Should 'mortgage ed' classes be required?

Freeport: Marianne Garvin, President of the CDC with

Freeport: Marianne Garvin, President of the CDC with Freeport Mayor Andrew Hardwick speak of how Freeport will soon see $1 million of federal aid to help reclaim foreclosed homes on Thursday, June 11, 2009 in Freeport, New York. (Photo by Howard Schnapp) Credit: Newsday/Photo by Howard Schnapp

For a forum on lending, it was a juicy, process question: Why don't lenders make home buying classes part of qualifying for a mortgage?

"The banks haven't stepped up to say, 'We're going to require people to have counseling,'" said Deborah Post, director of housing finance for the Community Housing Innovations, an affordable housing nonprofit in Patchogue. "That's really important in not having another foreclosure crisis occur."

Her comments came Tuesday at the event organized by the Community Development Corp. of Long Island, a nonprofit housing counselor. For a second, her words prompted held-back smiles and gleams in the eyes of various housing counselors as they looked around the room for lenders to speak up.

Some programs, such as those from the State of New York Mortgage Agency, require first-time buyers to take such classes, while the Federal Housing Administration does not, answered Marie Pedraza, a vice president of HSBC bank and senior regional community development manager.

"It does start at the top," she said.

Tying classes to the mortgage process is an idea that more nonprofits and lenders are mulling.

After the forum, Pedraza said mandated classes were good ideas, because they can help people figure the consequences of refinancing and more.

But it’s not a new idea. There has been talk between nonprofits, lenders and federal policy makers over the years, but nonprofits were practically the sole voice in backing the concept classes before and during the house buying boom.

"You couldn't close fast enough and there wasn't time to do everything and here you want to add something else?" Pedraza said in recalling the view during the bygone lending rush.

What's buttressing talks nowadays are the crisis and studies showing lower foreclosure rates among borrowers who took classes.

But it's not a slam-dunk proposal. First, there's disagreement on who should take such classes, said Marianne Garvin (see above), chief executive of the Community Development Corp. of Long Island. Should it be first-time buyers only, borrowers getting certain types of loans, or everyone? she said.

Garvin said federal housing official have another concern: "Is the counseling industry large enough to handle the demand?"

The nonprofit, which runs home buying classes, has been exploring how to reach bigger audiences. This includes webinars, with access to counselors if needed; YouTube videos; outreach through Facebook and more.

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