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Right at Home : Counselors Assist Buyers in the Purchasing Process


Lori Gay's job is to make sure the dream of home ownership doesn't turn into a nightmare.

Gay, who is president of Los Angeles Neighborhood Housing Services Inc., and her counselors advise and educate thousands of potential home buyers each year about the many unfamiliar and costly responsibilities they will be assuming with the keys to a new house.

For example, don't call the mortgage company to come over and fix your leaky roof, as a few buyers have done, Gay said.

"We end up counseling some people for three years, and they are not ready," said Gay, whose nonprofit group provides counseling as well as develops affordable housing. "Some of them should be renters for life."

Home-buying counseling programs have grown nationwide as mortgage lenders and government housing officials try to reduce the risk of default on popular affordable home loans, which often require a down payment of 5% or less. Last year, the federal government said it would reduce the cost of mortgage insurance to first-time home buyers--if they receive counseling.

On a quarterly basis, about 150,000 people received housing counseling late last year from groups approved by the U.S. Department of Housing and Urban Development. Potential buyers receive information and advice on a wide variety of topics, including how much money they will need for a down payment, explanation of escrow terms and how to shop for homeowners insurance.

As counseling programs have taken on greater importance, mortgage lenders and government agencies have pushed for nationwide counseling standards as well as solid evidence that such programs--some of which have existed for nearly two decades--significantly reduce mortgage defaults and delinquencies.

The benefits of housing counseling "has sort of been a gut feeling," said Imelda Johnson, deputy assistant secretary for single-family housing at HUD, which will spend about $13 million in the current fiscal year on grants for home-buyer counseling programs. More than 700 groups--mostly nonprofit organizations--have met HUD's counseling standards, which specify the topics and issues to be covered.

Some private lenders have set up their own in-house counseling programs. For example, Pasadena-based Countrywide Home Loan Inc. has six counselors who are available free of charge to work with customers who have been turned down for a home loan.

Despite the strong desire to buy a home, many people are clearly not ready. Out of the 6,800 people Gay's group has counseled in the last two years, only 16% successfully completed the extensive program--which requires at least 22 hours of counseling--and purchased a house.

But Gay would rather screen out or keep training those who are not prepared rather than let them ruin their credit and lose their house. The problems caused by a foreclosure also spill over into the neighborhood by lowering property values and creating blight in the form of abandoned houses, she said.

Playa Vista Progress

With the stalled Playa Vista project finally showing signs of moving forward as financing is being worked out, executives at DreamWorks SKG are now starting to actively court environmentalists who have been critical of the massive studio, commercial and residential project.

Environmental groups have been concerned about the project's potential impact on the nearby Ballona Wetlands.

Andy Spahn--who heads DreamWorks corporate affairs and who formerly headed the entertainment industry's Environmental Media Assn.--has been meeting with local environmental groups.

No date has been set for the talks.

Times staff writer Jesus Sanchez can be reached at Staff writer James Bates contributed to this column.

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