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

owners with home maintenance or financial management concerns. As a result, this study does not
provide details on these types of workshops.
Development of the Housing Counseling Industry
Initial Years
The modern housing counseling industry is about 40 years old, with roots in the urban renewal
initiatives of the 1960s. 6 The 1968 Housing and Urban Development Act, which established HUD as
a cabinet level agency, included a “housing counseling” program as part of HUD’s original mission.
As evidenced in the authorizing language used and the focus of initial funding efforts, Congressional
support for housing counseling was rooted in the goal of helping low- and moderate-income families
succeed as homeowners. The initial authorization language specifically focused on efforts to counsel
borrowers in the Section 235 and 237 programs that sought to extend mortgage financing to riskier
low-income individuals. 7 HUD’s mandate to support counseling was further extended in 1970 when
Congress broadened the authorizing language to include counseling for low- and moderate-income
families receiving assistance more generally under the National Housing Act that established the
Federal Housing Administration (FHA) with the goal of “improving their living conditions and
housing opportunities, and in meeting the responsibilities of homeownership.” 8 The early focus of
counseling on efforts to help low-income borrowers succeed as homeowners was further evidenced
by a Congressional appropriation of $3.2 million in 1972 to fund a demonstration on delinquency and
default counseling. In fact, it was not until 1974 that Congress increased the scope of the Housing
and Urban Development Act to include tenants in rental housing as recipients of housing counseling
efforts.
While HUD’s initial authorization called for it to “provide or contract with public or private
organizations” to provide housing counseling, for most of the first decade of HUD’s existence
Congress did not appropriate any funding to support these activities. Instead, Congress intended for
HUD to “recruit, train, and certify non-profit organizations who would provide counseling services
voluntarily to families seeking to purchase homes.” 9 In keeping with this mandate, HUD began to
approve counseling agencies in 1969. However, during the mid 1970s rising concern about high
claim rates among low- and moderate-income families in FHA’s programs led to Congressional
support for housing counseling funding through HUD. Congress first authorized the use of funds for
counseling in 1974, but it was not until 1977, in the wake of hearings on high claim rates in the
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This section draws heavily upon two thorough discussions of the history and development of the housing
counseling industry: “Report to Congress on Housing Counseling,” U.S. Department of Housing and Urban
Development, 1983; and “Bridging the Gap Between Supply and Demand: The Evolution of the
Homeownership, Education, and Counseling Industry,” by George W. McCarthy and Roberto G. Quercia,
The Research Institute for Housing America, Institute Report No. 00-01, May 2000.
The Section 235 program provided an interest rate subsidy to low- and moderate-income homeowners. The
Section 237 program is a mortgage insurance program for low- and moderate-income families who are
unable to meet the normal underwriting standards of FHA's other single family programs.
Public Law 91-609, 84 Stat. 1770, 1970.
HUD, 1983.
Chapter 2. Overview of the Housing Counseling Industry 9