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

Some of the ways that HUD could support the industry have already been mentioned, such as:
supporting efforts to enhance funding for housing counseling services and for counselor training;
playing a leading role in the development of national counseling standards; increasing counseling
requirements for FHA loan products; and improving public awareness of the value of pre-purchase
counseling. Two other roles for HUD that were frequently mentioned in the interviews and in
comments on the counseling agency survey were: (1) encouraging lenders and servicers to be more
responsive to the requests of counselors working on foreclosure mitigation and (2) playing a leading
role in promoting the greater use of technology in the counseling industry.
With respect to the first role, one of the keys to providing effective foreclosure mitigation counseling
is the ability for the counselor to intervene with the lender or mortgage servicer on the client’s behalf.
In their comments on the survey, many agencies complained that working with lenders and servicers
was very difficult and proposed that HUD should try to encourage higher standards of responsiveness.
As they put it:
“The thing I would most like someone to do something about is to force the servicers to
engage with us when we are trying to assist clients who are in default. They consistently pull
stunts like put you on hold for a half an hour and then hang up on you and when you call back
they do the same thing all over again. In the meantime other clients go unserved. I realize
that HUD doesn't have sway over all lenders and servicers, but I sure wish you could make
their lives a little more miserable when they are making no good faith effort.” (Community
development agency in MD)
“While a very large percentage of our clients cannot make mortgage payments, there are still
families with incomes that could benefit from a loan modification. Unfortunately, loan
servicing is very difficult to navigate and the industry continues to be non responsive to
current realities. Therefore, our biggest challenge is getting lenders/servicers to respond to
our requests and approve appropriate modifications. That is where HUD should set national
standards, which ensure responsiveness similar to the FHA standard for loss mitigation.”
(Housing stabilization agency in MA)
Several intermediaries and SHFAs suggested that HUD should play a leading role in seeking out and
investigating new technologies for providing housing counseling to a wider audience and in a way
that better fits their backgrounds, learning styles, and need for convenience. Having investigated
different technology options, HUD should then disseminate information on best practices to the
industry. In addition, program guidance that specifically addresses telephone and online counseling
would help to mitigate widespread concern about their quality and effectiveness.
Industry Outlook
The evolution of the housing counseling industry over the next 5 to 10 years is likely to be strongly
affected by several trends evident today. Among the most prominent of these trends is the surging
demand for foreclosure prevention counseling, which prompted the Federal government to provide
$360 million in 2008 to support this counseling channeled through NeighborWorks® America. This
unprecedented level of funding, combined with likely increases in HUD’s funding for housing
counseling in FY 2009, will likely result in new agencies entering the counseling field and existing
160
Chapter 9. Policy Considerations