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

part, this comes back to the challenge of demonstrating the value of housing counseling by collecting
and disseminating good information on counseling outcomes and impacts. However, there is also a
challenge of translating this information in a way that is attractive to potential clients and does not
stigmatize counseling as something that is only necessary for low-income people or people who are in
financial trouble.
“The most important thing is to increase awareness about the importance of homebuyer
education. The issues with foreclosure and predatory lending need to be addressed and
homebuyers should be encouraged to come to a housing counseling agency first before
buying a home. A campaign is needed to increase awareness about education opportunities
and its importance so buyers make good choices.” (SHFA)
To this end, several intermediaries and SHFAs interviewed suggested that HUD should work with the
industry to provide more effective public awareness of the value of counseling particularly as a way
to avoid predatory lending and inappropriate mortgage products. In addition, a large number of
intermediaries, SHFAs, and agencies said that HUD should require pre-purchase housing counseling
for all FHA products and encourage the GSEs to reinstate counseling requirements for their
affordable loan products. A smaller number of organizations went further, suggesting that prepurchase
counseling should be required of a much broader segment of the population, because
predatory and unaffordable subprime lending affect higher income people as well and because more
people would be likely to participate in counseling if it were viewed as more “mainstream:”
“HUD also needs to aggressively promote housing counseling and education as the first step
for all potential homebuyers to take. HUD needs to push for this; it is so important and
should not be underestimated. Counseling and education should not be just for customers at
social service agencies. It needs to be mainstreamed, like driver education.” (SHFA)
To the extent that there is support for requiring counseling for certain classes of loans, instituting
these requirements for FHA loans may be an appropriate way to introduce these requirements to the
market. However, as the market returns to more normal conditions, it may not be wise to hamstring
FHA with requirements that are not imposed on other lenders, as this would place FHA at a
competitive disadvantage. Also, at present there is limited evidence of the benefits of counseling in
making homeownership more sustainable. However, the Housing and Economic Recovery Act of
2008 does include a provision requiring HUD to undertake a limited demonstration to test the
effectiveness of pre-purchase counseling.
It is also important not to view mandatory or expanded pre-purchase counseling as a substitute for
post-purchase assistance. In many respects, these services are complimentary – pre-purchase
counseling provides an opportunity to teach clients about the value of staying in touch after buying a
home and seeking assistance early if they are concerned about their mortgage payments. There will
also always be a need for post-purchase assistance for homeowners who encounter financial
difficulties, whether they received pre-purchase counseling or not.
Chapter 9. Policy Considerations 155