Want to avoid foreclosure? Go see a counselor

Life after foreclosure

After losing their homes, these 4 families thought they'd never recover. They've found it difficult to rent and their credit is wrecked, but life is looking up.

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NEW YORK (CNNMoney.com) -- Housing counselors, who've received more than $400 million in federal funds to help mitigate the mortgage crisis, are helping troubled homeowners avoid foreclosure and lower their monthly payments, a study released Wednesday has found.

Borrowers facing foreclosure are 60% more likely to hold onto their homes if they receive counseling, according to the Urban Institute's findings. Also, these borrowers received loan modifications with average monthly payments $454 lower than those who did not see counselors.

The study looked at the effectiveness of the National Foreclosure Mitigation Counseling program, which was launched in 2007 to help stem the mortgage meltdown. Housing counseling agencies nationwide have received $410 million in federal funding to help delinquent borrowers work with their loan servicers to secure more affordable mortgages.

To date, more than 750,000 people have received counseling through the program, which is administered by NeighborWorks America. The study examined counseling services provided through the end of 2008.

Housing counselors review troubled borrowers' income and expenses to determine whether they can afford to remain in their homes. The counselors also work with loan servicers to help borrowers apply and gather the needed documents for loan modification programs.

Counselors, who are approved by the federal Department of Housing and Urban Development, do not charge for their services.