Housing Counseling Process Evaluation and Design of ... - HUD User

NeighborWorks® foreclosure mitigation grants are expected to be expended by the end of 2009).
The agency survey and intermediary and SHFA interviews were conducted prior to the announcement
of the NeighborWorks® grants, but provide insight into the organizational challenges associated with
building capacity in this area.
One of the main challenges is hiring and training staff. Many staff whose training and experience is
in pre-purchase counseling are having to move into foreclosure mitigation counseling and the
knowledge required is quite different. In particular, foreclosure mitigation counseling requires a
much more extensive knowledge of the foreclosure process and options for resolving delinquency
than pre-purchase counseling. As one intermediary put it: “These loans are complicated, and require
a counselor with expertise to guide the consumer. The counselor must be prepared to walk through
loan defaults and unravel troubled clients’ payment histories.” Effective foreclosure mitigation
counseling also requires communicating and working with servicers. Several agencies commented in
the survey about how difficult and frustrating this can be and suggested that HUD should try to
influence the servicing industry to be more responsive to counselors.
Comments in the survey also suggest that local agencies are struggling with how to work effectively
with the large national call centers (e.g., the HOPE hotline operated by the Homeownership
Preservation Foundation) that are often the first point of contact for clients in delinquency or default.
There appears to be confusion as to whether the role of such call centers is to provide counseling or
referrals or both, and local agencies appear to be unsure about how they fit into the process. As one
survey respondent put it:
“Significant increases have been experienced in the foreclosure counseling arena and the
demand exceeds the service available throughout [our state]… There aren't enough
counselors in the area to handle the workload and customers are being counseled by
telephone by agencies out of the area. There are problems with customer full disclosure and
the customer becomes hostile with local counselors or funders because they aren't receiving
funding to save their homes after being approved by the out of area agencies serving the 800
Help Line. A better explanation for the local counselors and customers of the assistance and
services provided [by out of area phone counseling] would improve the counseling process
for customers and reduce counseling time for the foreclosure customer thus possibly avoiding
an unfavorable outcome to the customer's dilemma.” (Community action agency in OH)
A final challenge for agencies providing foreclosure mitigation counseling is that counseling alone
may not be able to meet all the needs of clients who are delinquent or in default on their mortgages.
Several agencies commented in the survey on the need for more affordable refinance products,
foreclosure prevention grants and loans, home maintenance grants and loans, and legal services to
help their clients:
“Client financial assistance and counseling for home repairs is a critical need in our
community and a major part of our housing program. HUD seems to have an inadequate
grasp of that issue.” (Human services organization in PA)
“One of the things that we would like to see happen is [to] have money to be able to assist
some of the clients that have fallen behind a couple of months due to lay offs, sickness, etc.
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Chapter 9. Policy Considerations