Housing Counseling Reforms

Summary#

This bill changes Section 106 of the Housing and Urban Development Act of 1968. It adds rules for how HUD awards and oversees housing counseling grants. The bill requires recipients to be geographically diverse and include organizations that serve urban or rural areas. It allows the Secretary to do on-site reviews and requires performance reviews of participating agencies, including reviews of counselor performance for certain mortgage loans. The bill defines "covered mortgage loans" to include 1–4 family residential loans insured by the FHA or guaranteed under section 184 or 184A. The Secretary may compare an individual counselor's results to default rates of counseled borrowers in similar markets. If a counselor is found to lack competence, the Secretary may require education, probation, retesting, and, after at least two failed retests, permanent suspension of the individual certification if doing so will not create a large loss of counseling capacity.

The bill also allows the Secretary to deny renewal of covered assistance to an organization that is not in compliance, based on the performance reviews. Organizations must get at least 60 days written notice before a denial of renewal and may request an informal conference with the Deputy Assistant Secretary of Housing Counseling to explain factors outside their control.

The bill adds a new subsection on offering foreclosure mitigation counseling. It expands the definition of covered mortgage loans for this purpose to include FHA-insured loans, loans guaranteed or insured by the Department of Veterans Affairs and the Department of Agriculture, certain cooperative ownership interests, and loans under sections 184/184A. Borrowers who are 30 days or more delinquent on a covered mortgage loan must be given an opportunity to participate in available housing counseling. For delinquent borrowers of FHA-insured loans, the fair market cost of counseling may be paid by the Mutual Mortgage Insurance Fund if certain statutory requirements are met.

What it means for you#

• If you are a borrower who is 30 days or more behind on certain covered loans, you must be offered the chance to get housing counseling.
• If you are a housing counselor, your performance may be compared to local default rates. You could be required to take more training, be retested, put on probation, or have your certification suspended if you do not show competence after retesting.
• If you run a counseling organization that gets HUD assistance, your organization could lose renewal of that assistance for noncompliance after a performance review. You would get at least 60 days notice and can ask for an informal conference to explain problems that were outside your control.

Expenses#

• The bill says that, for delinquent borrowers of FHA-insured loans, the fair market rate cost of counseling may be paid by the Mutual Mortgage Insurance Fund if the conditions in sections 202(a)(3) and 205(f) of the National Housing Act are met and as authorized under section 203(r)(4).
• No publicly available information on overall budgetary effects or cost estimates beyond the payment provision in the bill text.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.