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The future of housing counseling

On Tuesday, Nov. 1, I attended a Housing Counseling Federal Advisory Committee meeting, where I learned about the state of the housing counseling industry. Some key takeaways for me were:  HUD is working on a large scale demonstration of first-time homebuyer counseling, and its findings could be significant in showing the value of housing counseling; as federal funding for foreclosure prevention significantly declines in the coming year, the housing counseling industry faces the challenge of sustainability; and financial coaching and technology are both important aspects of the future of housing counseling.
 HUD’s first-time homebuyer demonstration:
  • HUD has enrolled over 5,500 first-time homebuyers with incomes below 120 percent of the local area median income into its randomized study to determine the effects of homebuyer counseling and education. These homebuyers represent 28 metro areas.
  • Households were enrolled in either in-person counseling, remote counseling or a control group which was not offered counseling.
  • HUD had to adapt its study because the take-up rate for in-person counseling was too low; families were instead offered a choice of in-person or remote counseling.
  • The scale, experimental design, elimination of selection bias, and length of follow-up will make this study’s findings significant.
  • Early findings showed improved mortgage literacy and improved underwriting qualifications of participating homebuyers.
Sustainability of housing counseling:
  • In 2010, there were 2,735 HUD approved housing counseling agencies, but only 1,960 housing counseling agencies in 2016.
  • The number of households served between 2008 and 2016 declined by 50 percent.
  • Neither the House nor Senate FY 2017 budget proposed any funding for the National Foreclosure Mitigation Counseling Grant program. Hardest Hit funds will also decline over the coming years, as will funding from mortgage settlements.
  • To survive, housing counselors need to explore other funding models, like fee for service.
  • Servicers could help pay for foreclosure prevention counseling. Lenders could help pay for homebuyer counseling, like Bank of America, Wells Fargo and Fannie Mae do. Employers could also be a source of funding for housing counseling.
  • Housing counseling needs to be integrated into the mortgage marketplace to ensure its long-term sustainability.
Financial coaching and technology:
  • There’s a deep need for financial coaching and asset building, given the wealth and homeownership gaps between white households and black households.
  • Housing counseling needs reliable technology solutions in terms of how counselors manage client data and provide counseling services to better integrate with the mortgage process.
  • While the housing crisis is over, the need for housing counseling in preparing families to purchase a home and to support homeowners facing financial challenges will remain. Recent studies from the Federal Reserve and the Urban Institute on financial coaching and housing counseling further affirm the value and importance of housing counseling and financial coaching. This challenge of sustainability is very real, and to ensure a future of housing counseling that is more universal and more robust, and there needs to be collaboration across sectors such as counselors, lenders and servicers.
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