Comparing Foreclosure Counseling Policies in the US and UK

This article reviews recent developments in the US and UK in response to rising foreclosures, with an emphasis on the provision of advice or counseling to borrowers in mortgage default. Both nations have increased support for counseling programs despite the lack of evidence that counseling is effective. Based on a quantitative study in the US and a qualitative study in the UK, this article provides preliminary evidence that counseling strategies may be justified. However, the findings from both studies should be approached conservatively. This article also highlights the need for a range of outcome measures for assessing the impact of debt counseling. These studies shed greater light on the ways in which counseling might be beneficial beyond loan cures. Contextual differences between the two countries are identified, and common themes in their policy responses are noted. This article suggests that further insights may be developed through stronger comparative approaches in the analysis of foreclosure prevention policies. Acknowledgement We would like to thank the three anonymous reviewers for their very helpful comments. Notes 1. That levels of foreclosure are higher in the US than the UK is itself notable and it would make for an interesting empirical investigation to determine whether, and how, factors discussed in this article contribute to that difference. 2. The US research was funded by the Homeownership Preservation Foundation. The UK research is funded by the Friends Provident Foundation. 3. State laws were compiled from public sources, including RealtyTrac, Pence (Citation2006), and Pew Charitable Trusts (Citation2008). The data are summarized in a table which the authors are happy to provide upon request. 4. An additional point to make is how quantitative and qualitative methods can be combined to provide powerful insights, but further consideration of methodological issues goes beyond the scope of this paper. Additional informationNotes on contributorsJ. Michael Collins Dr. Collins studies financial literacy and consumer financial decisions. He is the director of the Center for Financial Security and an Assistant Professor at the University of Wisconsin Madison. Michael Orton Dr. Orton is a Senior Research Fellow at the Institute for Employment Research, University of Warwick. His current research is based around three substantive interests: personal debt, economic inequality, and labor market activation policy.