Housing counseling industry responding to mortgage crisis: New HUD report shows increase in foreclosure counselingMortgagePress.comHUD, housing counseling agencies, The State of the Housing Counseling Industry, Steve Preston,
Housing counseling agencies all across the country are
experiencing surging demand for their services, especially among
families hoping to avoid losing their homes through foreclosure.
According to a new report from the U.S. Department of Housing and
Urban Development, beginning in 2005, individuals and families
increasingly sought counseling to address mortgage delinquencies.
Secretary Steve Preston announced the report at a HUD-sponsored
roundtable discussion with more than two dozen housing counseling
agencies from across the country.
HUD's report, The
State of the Housing Counseling Industry shows that between
2006 and 2007 there was a 55 percent increase in the number of
clients receiving foreclosure prevention counseling. This growth is
expected to be much higher in 2008.
"Individual homeowners that are being foreclosed upon or at risk
of foreclosure should seek out housing counseling" said Preston.
"This report shows that there are more than 1,800 HUD-approved
housing counseling agencies on the ground helping homeowners review
their financial situation and negotiate with their lenders in order
to find the best solution for them."
Preston held the roundtable session to hear how agencies are
using federal funding to address capacity issues and meet the
demands of borrowers facing foreclosure or trying purchasing a home
for the first time. Counselors discussed challenges they face in
helping homeowners and shared best practices to improve
communications with struggling borrowers and strengthen financial
literacy efforts.
HUD support had been growing for housing counseling agencies,
from $20 million in 2001 to $50 million in 2008. In addition,
federal support has now grown exponentially with $360 million in
additional funds in 2008 specifically for foreclosure prevention
counseling. HUD has requested another $65 million to support local
housing counseling agencies in FY 2009. This report documents the
characteristics of the HUD-approved counseling agencies and how
they provide their counseling services. It also shows how these
agencies are dramatically retooling their workforce to meet the
increased demand for foreclosure mitigation counseling.
Households with a wide variety of housing counseling needs are
served by these agencies. HUD-approved housing counselors provided
counseling to more than 1.7 million individuals and households in
2007, including pre-purchase, foreclosure prevention, reverse
mortgages, rental, and homeless assistance.
The study noted a 55 percent increase in the number of clients
receiving foreclosure prevention counseling between 2006 and 2007.
Of the approximately 136,000 families that completed this
counseling during 2007, 45 percent were able to remain in their
homes while 14 percent ultimately lost their home through
foreclosure. Outcomes for the remaining 41 percent of clients are
not known.
This report also finds that in the years leading up to the
current crisis, more than 55 percent of low-income families seeking
to buy their first home did not seek out pre-purchase counseling.
This lack of counseling likely left them unprepared to make one of
the biggest financial commitments of their lives and may have
contributed to some of today's high rates of default and
foreclosure.
The housing counseling industry has grown in capacity and
sophistication in response to the increase in demand for
pre-purchase counseling since the 1990s. In response to the
mortgage crisis, housing counseling agencies are retraining and
hiring new staff to meet demand for default counseling. In recent
years there have been important efforts to promote industry
standards for prepurchase and default counseling and provide
increased training opportunities for staff of housing counseling
agencies.
Compared to the U.S. population as a whole, counseling clients
are substantially more likely to be minority. Of the 1.7 million
individuals that received counseling services from a HUD-approved
agency in 2007, 54 percent were white, 36 percent were
African-American and approximately 20 percent were Hispanic. Most
clients that received counseling from a HUD-approved agency are
very low- or low-income. The following is a breakdown of the
services clients received in 2007:
• 308,389 sought pre-purchase counseling
• 264,989 sought help to resolve or prevent mortgage
delinquency
• 202,795 clients received mortgage refinance and reverse
mortgage counseling
• 380,006 persons received rental counseling
• 48,593 clients sought counseling on shelter or other
homeless assistance programs
For more information, visit www.hud.gov.
