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

Ideally, intermediaries, SHFAs, and agencies would like to see more sustained and dependable
sources of funding that would allow agencies to build substantial capacity in each of the counseling
specializations over time. As a result, there is much interest in the industry in finding new sources of
funding for counseling services that can support the industry and increase the role of the private
sector. However, there is as yet no consensus on how big a role the private sector should play in
funding housing counseling nor how to access other sources of funding.
One area of agreement, however, is that in order to increase funding for housing counseling from
either the public or the private sector, the industry needs to do more to demonstrate and publicize its
value. As part of their reporting requirements to HUD and to other funders, agencies collect quite a
lot of information about the clients they serve and the services they provide, but it is generally not
adequate for demonstrating outcomes associated with different types of counseling or for evaluating
the impact of counseling on clients. But, as mentioned above, collecting the kind of outcome data
needed to show the value of housing counseling is itself a substantial challenge.
HUD’s Role in the Industry
Representatives of intermediaries and SHFAs interviewed for this study as well as counseling
agencies responding to the study’s survey suggest that HUD has an important role to play in helping
the counseling industry address the challenges discussed above. Some of the suggestions for ways
that HUD could support the industry include: 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. Other suggested roles for HUD include
encouraging lenders and servicers to be more responsive to the requests of counselors working on
foreclosure mitigation and playing a leading role in promoting the greater use of technology in the
counseling industry.
With respect to the issue of implementing counseling requirements for FHA loan products, 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.
With respect to promoting the greater use of technology, study respondents suggest that HUD should
seek out and investigate 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 concern about the quality and effectiveness of these options.
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Executive Summary