Association for Public Policy Analysis & Management

The existing literature on homebuyer education and counseling (HEC) consists almost exclusively of evaluations of specific programs, generally using mortgage loan performance as the metric of success. This paper contributes to the literature in two ways. First, it provides evidence on the benefits of HEC to mortgage borrowers in aspects other than mortgage performance. Second, the paper evaluates HEC in general, not just one specific program. It does so by drawing from a nationally representative sample of all first-time homebuyers in the United States who took out a mortgage between 2013 and 2016. The paper data comes from the National Survey of Mortgage Originations, a new survey co-sponsored by the Federal Housing Finance Agency and the Consumer Financial Protection Bureau. The paper finds that 17 percent of a nationally representative sample of first-time homebuyers reported receiving some form of HEC. Using propensity score matching, the paper shows that first-time homebuyers who reported receiving HEC also reported better mortgage knowledge, more confidence in their ability to explain the mortgage process, and higher level of satisfaction with mortgage they received.