I’m a data geek. I love poring over data and running analyses to see what story unfolds. On the national level, data can tell us the story of our rise as an industrial power and how that changed how people lived and worked. On a local level, it can tell the story of how the closing of a factory affects the fabric of a community and the institutions that bind it. For foreclosure mediation programs, the data can tell the story of how homeowners are affected by changes to the program. Thus, I was eager to find out how changes to the court rules in the 19th Judicial Circuit of Illinois at the beginning of this year would play out. What story would the data tell?
I’m pleased to say that the story is a happy one. I’ll go back to the beginning. Of the six Illinois Attorney General-funded foreclosure mediation programs, the 19th Circuit’s program, in Lake County, struggled the most to get homeowners to use its services. While other programs had participation rates of 16% and above in the first year, the 19th Circuit program’s was just 7%. The obvious first question was why. There were a number of possible explanations. The program had different, in some ways more stringent, requirements for entry. Latino homeowners were underrepresented, so maybe there was a cultural issue involved. Then there was the fact that housing counseling services, which were a requirement for entering the program, were not centrally located and therefore physically inaccessible to many prospective participants. Maybe it was the fact that the homeowners had to initiate the process and there was no ongoing outreach to inform homeowners newly facing foreclosure that they had an option to mediate. The low participation rate could be caused by any one of these, or a combination.
To fill out this story, we dug deeper into the data. The first question we asked was what was causing the low Latino participation rate? One hypothesis was that the low participation rate was due to a difference in culture. Latinos, perhaps, were less likely to trust a governmental program or believed that a free program was not a good one. There are a number of ways we could have tested that theory. The best would have been to survey Latino homeowners to find out if they were uncomfortable participating in the program. This was not something we had the funds to carry out, however. So, instead, we looked to the 16th Circuit’s program in neighboring Kane County. There, the difference in participation rates between Latinos and whites was insignificant. Because these two communities were demographically similar, we concluded that culture was not the cause of the low participation rate.
We then asked Woodstock Institute to develop some heat maps for us, showing where the highest rates of foreclosure were and where Latinos were most concentrated in the county. The maps showed that both were concentrated in the northwest corner in the county, while the required housing counseling services were being provided in the southern part. In a county with little public transportation, this showed that a more probable explanation for the low Latino participation rate was the inconvenience of the services.
Another issue pointing to inconvenience was that the 19th Circuit program was the only one of the programs that required homeowners to attend an evening group informational session at the courthouse and then call the housing counseling agency to set up an appointment before they were permitted entry into the program. The other programs had simpler steps to entry: complete an online application, call the program for an intake session, or simply show up for their first pre-mediation session.
While there was no direct evidence that the 19th Circuit’s entry requirement was a contributing factor to its low participation rate, we were gathering more information that supported the hypothesis that it was. First, outreach was not a large contributing factor, as other programs with much higher rates of participation were not conducting outreach; the 19th Circuit was, with no appreciable rise in participation. Second, my evaluation of the six programs demonstrated that the level of participation was tied to the mode of entry. So, based on this information, we recommended to the court that it revise the program’s rules to remove the informational session requirement and instead have homeowners contact the program coordinator. This is the model used in the 16th Circuit, which had a 23% participation rate in the first year. The court agreed, and the program’s new rules went into effect in January 2016. Now it was time for the full story to unfold.
The story is that the programmatic changes that focused on ease of entry had a significant impact. In the first six months of 2016, the participation rate for the 19th Circuit program was 16% – a more than 100% increase in participation rate from 2014 and a rate that is more in line with other programs. The broader story is that if homeowners facing foreclosure have to put a good deal of effort into getting help, they’re going to be put off. The easier it is for them, the more likely they are to give the program a try.
This same story has played out in other programs as well. In the 20th Circuit, the program ended a requirement to complete a detailed financial questionnaire in order to participate. Over the next year, participation rose from a low of 11% to 19%. The increased ease in entry is most likely not the only reason for the increase in participation, but it was a contributing factor.
It’s so important to get the story right, both for the individual program and for programs that might come later. Following a storyline that puts cultural differences at the center would have led to a very different set of changes than understanding the story as one in which homeowners were deciding whether to participate based on their assessment of whether the benefits outweigh the costs. In following that story, the court and RSI removed hurdles to entry. As the next chapter unfolds, it appears that removing the hurdles shifted the balance between the benefits and costs for many homeowners and more homeowners are now keeping their homes as a result.