Housing Counseling with HUD Support

In response to the current foreclosure crisis, Congress has increased HUD's appropriation for housing counseling from $41.6 million to $50 million. NeighborWorks^® America also received two appropriations totaling $360 million to provide foreclosure mitigation counseling; $336 million of this total will pass through intermediaries to agencies that provide these services.

The Housing and Urban Development Act of 1968 authorizes HUD to provide housing counseling services directly or through private or public organizations with special competence and knowledge in counseling low- and moderate-income families. In 2007, HUD-approved agencies offered housing education or counseling sessions to approximately 1.7 million individuals and families throughout the country. Organizations applying for designation as HUD-approved agencies must provide evidence of sufficient resources to implement their proposed counseling plans. These organizations have nonprofit status and have successfully administered a housing counseling program for at least one year in their proposed service areas. HUD-approved counseling agencies gain access to competitive grant funds and training scholarships. HUD-approved agencies also meet certain standards and federal guidelines that have increasingly become benchmarks for participation in other public/private housing programs.

A recently completed study commissioned by HUD's Office of Policy Development and Research, The State of the Housing Counseling Industry: 2008 Report, found that HUD-approved agencies are meeting the legislative mandate to serve individuals with lower incomes.

In 2007, half of the counseling recipients had incomes below 50 percent of the area median income (AMI) and another 30 percent earned from 50 to 80 percent of AMI.

The organizations providing these services are mostly small nonprofits that vary substantially in their missions, range of services, and the number and types of clients counseled. Although the primary mission of one-fourth of these agencies is housing counseling, the others direct their energies primarily toward housing and neighborhood development, social services, consumer credit counseling, or legal assistance. Most have modest budgets for housing counseling and education. The average agency relies on 3.6 different funding sources. HUD is the single largest source of funding for housing counseling services, accounting for 14 percent of the total. Much of HUD's funds flow to local agencies through intermediaries and state housing finance agencies, some of which also provide counseling.

The study found that costs ranged from a low of $200 to more than $1,000 per client, with an average per capita outlay of $431. Clients who attended group sessions received 4 to 10 hours of counseling; recipients of individual counseling services averaged between 3 and 8 hours. The time required depends on the type of housing issue; for example, homebuyer education workshops took longer than home equity reverse mortgage (HECM) counseling. Housing counseling covers an array of issues, including:

• Prepurchase homebuying;
• Resolving or preventing mortgage delinquency;
• Help with home maintenance or financial management for homeowners;
• Help in locating, securing, or maintaining residence in rental housing; and
• Seeking shelter or services for people who are homeless.

A majority of housing counselors at HUD-approved agencies were college educated — 65 percent held a 2- or 4-year college degree — and have an average of 8 years of work experience. Most had some formal training in housing counseling. Yet the level of staff expertise posed a significant problem for about two-thirds of the provider agencies, frequently because of staff turnover; the costs of, and limited access to, training; and inadequate compensation.

Most counseling, intermediary, and state housing finance agencies agree that the industry needs to increase its capacity to offer foreclosure mitigation and HECM counseling services, as well as to foresee, prevent, and quickly respond to client needs. These agencies also emphasized the need for higher funding levels to ensure satisfactory continuity of service and adequately trained personnel. The agencies are engaged in an important debate over industry-wide standards that will ensure consistently high-quality services to all clients everywhere.

Researchers found that the major industry players agreed that HUD could help address the challenges confronting housing counseling providers. Their suggestions included buttressing efforts to improve funding levels for housing counseling and counselor training, helping develop national counseling standards, increasing counseling requirements for FHA loan products, and improving public awareness of the value of prepurchase counseling. Other suggestions included encouraging lenders and loan servicers to become more responsive to the requests of counselors working on foreclosure mitigation, and promoting widespread adoption of technology in the counseling industry. The State of the Housing Counseling Industry: 2008 Report is available online at www.huduser.gov/publications/affhsg/hsg_counseling.html and can be downloaded at no charge.

Accessing AHS Data HUD and the Census Bureau give high priority to making data from the American Housing Survey (AHS) available to a wide range of interested users. AHS information can be downloaded in tabular and microdata formats from www.huduser.gov/datasets/ahs.html or can be purchased on CD-ROM. The data can also be downloaded in PDF format or purchased as a complete report. Other AHS data at this site include summary statistics for the 2007 AHS; line-by-line comparisons of the 2005 estimates and the 2007 initial estimates for an array of housing and occupant characteristics; the revised codebook for the 2007 survey; and microdata for the national surveys completed in odd-numbered years from 1995 to 2007, as well as metropolitan surveys from 1995 through 2004. Additional data, including the AHS national and metropolitan reports from 1975 through 2007 in PDF; other AHS and housing reports; access to the microdata files for extracts and analyses using automated systems; and a description of relevant changes in the survey are available at www.census.gov/hhes/www/ahs.html.