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

Reaching Clients at the Right Time
A final major challenge facing the housing counseling industry is the need to reach clients at the time
that counseling can be of most assistance. In pre-purchase and mortgage refinance counseling, for
example, the industry has long struggled with how to provide individuals with counseling before they
take out unaffordable or otherwise inappropriate loans. This is not a new issue but it has been
highlighted by the current subprime and foreclosure crisis. In particular, providers of housing
counseling services are frustrated that they are not a more effective counterweight to predatory
lenders and to subprime lenders offering highly risky mortgage products to people with limited
savings and poor credit. Although the housing crisis has reduced the availability of credit in the
short-term, this is not an issue that is likely to go away:
“The counseling industry is losing out to predatory lenders who give potential homebuyers
easy answers. The challenge is: how do we market housing counseling as the alternative to
easy answers and quality instead?” (SHFA)
“It used to be ‘can I get a mortgage?’ Now, it is ‘which mortgage will I get?’ The industry is
struggling with ways to get the consumer to go to the counselor as a first step in the process.”
(Intermediary)
One issue that the fluctuations in market conditions since the 1990s highlights is that the counseling
industry does need to keep on top of changing market conditions and adapt their approaches to
reaching and serving clients accordingly. Part of the challenge in attracting clients has been that
counseling takes time—8 hours on average and often more for pre-purchase clients—and requires the
client to come to a certain place, which in rural or less populous states may be far from home, at
certain times. Most loan products targeted at low- and moderate-income borrowers, for example, do
not require housing counseling; as a result, the borrower has to be self-motivated to attend counseling
and follow through on the counselor’s recommendations. This may be difficult if the agency is far
away, does not offer services at convenient times, or if the client does not feel the counseling is
meeting his/her needs but has no other local alternative.
Although few counseling agencies currently employ new technology such as online counseling, many
intermediaries and SHFAs see the need for the industry to embrace this technology more than they
have in the past. As several of those interviewed put it, we are living in an online society and need to
grapple with the fact that people increasingly learn through the Internet. There is an expectation from
clients that counseling services should be offered online; in addition, hotlines, other forms of
telephone counseling, and online tutorials offer ways for the industry to expand its reach in a
constrained funding environment. Both telephone and online counseling allow clients to receive
information in their homes (even from agencies located at a great distance away) and at times that are
convenient for them—this is very significant for foreclosure mitigation counseling, where clients may
feel under unusual time pressure, and HECM counseling, where clients may be less willing or able to
travel to an agency for services.
But while there are several good reasons for the industry to adopt new technologies, there are also
pitfalls. Interviews with intermediaries and SHFAs provided a variety of feedback on the limitations
of telephone counseling. The general argument is that face-to-face contact supports much better
Chapter 9. Policy Considerations 153