Consumer credit counseling is gaining attention in the mortgage industry as insurers and lenders consider ways to hold down delinquency rates while reaching out to nontraditional markets.

But before counseling can have any significant impact, the mortgage industry must consolidate its efforts to query and advise customers. A lot of time is spent reviewing, approving, and implementing individual counseling programs, said Juliette Madison, vice president for community outreach at PMI Mortgage Insurance Corp. "I'm looking for the point where all entities can sit around the table and say, 'This is what we need, this is what we can spend,'" she said. If the industry could agree across the board how credit counseling should be implemented and paid for, results would be more significant, she said.

Some lenders and insurers are choosing in-house networks for credit counseling, while others turn to a third party. Outside organizations such as the National Foundation for Consumer Credit, Silver Spring, Md., are gaining recognition. The not-for-profit agency has more than 1,100 offices nationwide where consumers can receive advice about how to juggle their finances.

Since Fannie Mae's decision to require prepayment counseling for borrowers with down payments of just 3%, insurers have turned to the foundation for assistance. Both PMI Mortgage Insurance Corp. and Republic Mortgage Insurance Co. are using the foundation to help keep delinquencies low.

"It's quite successful," said Cora Fulmore, national housing director for the foundation. "We are negotiators by trade, and we found that early delinquency intervention is very important in reducing the number of mortgages that go into foreclosure."

The organization's commitment to housing counseling included creation of Ms. Fulmore's job about two years ago.

The credit counselors are provided with monthly lists of late payees. Counselors call consumers to check the problem, then schedule a sit-down appointment in a nearby office if the problem cannot be resolved over the phone.

If the foundation catches a home-loan problem in its early stages, it can prevent a foreclosure 80 to 85% of the time, Ms. Fulmore said. "We're dealing with customers on the retail end," she said. "They are more apt to disclose more information to outside sources then someone that will benefit from their making a payment."

Some situations, such as a death in the family or a large reduction in income through job loss, are not easily resolved, she added. "Through our debt management program, we have been able to assist thousands from going into foreclosure."

In 1994, the foundation advised more than 709,000 consumers on their credit problems. Although the organization does not break down counseling sessions by type of complication, Ms. Fulmore said that mortgage-related sessions have increased since Fannie Mae required counseling on the low- down-payment loans in March 1994.

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