Congress Eliminates $88M in Funding for Housing Counseling

Both the House and Senate approved a budget resolution Thursday to keep the federal government running through September, the end of its 2011 fiscal year.
[IMAGE] Within the package are cuts to federal agency budgets, one of which is HUD's Housing Counseling Program. In lawmakers' efforts to trim agency expenditures, $88 million slated to fund counseling efforts on foreclosure, reverse mortgages, refinancing, and pre-purchase services has been ""zeroed out.""

A ""HUD"":http://www.hud.gov spokesperson described the curtailment as ""painful cuts"" and said they ""would not have been made in better circumstances.""

In many cases, local housing counseling agencies â€" approved and funded in part by HUD â€" are the only source of help for distressed homeowners.

The federal agency, state housing associations, and even some lawmakers themselves have touted such HUD-approved counselors as the go-to source for homeowners struggling to make their mortgage payments.

Their services are free and organizations working to educate borrowers about foreclosure relief scams position HUD-approved counselors as their strongest defense.

Approximately 2,000 of the 2,700 agencies in the housing counseling program receive grant funding either directly or indirectly. Most also receive training assistance through the program. Each housing organization in the program averages about three to four counselors per agency.

Over the past two years, HUD-approved housing counselors have helped more than 4 million families

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struggling to keep their home, according to the federal agency.

Funding through the HUD program is also used to counsel seniors on reverse mortgages. In order to obtain a reverse mortgage insured by the ""Federal Housing Administration"":http://www.fha.gov (FHA), which currently represents 95 percent of the market, federal guidelines mandate that all borrowers must first go through HUD-approved reverse mortgage counseling.

""This unique counseling helps older homeowners understand the costs, benefits, and risks associated with these loans,"" said Barbara Stucki, VP for home equity initiatives at the ""National Council on Aging"":http://www.ncoa.org/ (NCOA), one of eight intermediaries that provide this counseling service nationwide.

""Without this funding, the older Americans who can least afford it may have to pay for this critical advice out-of-pocket,"" Stucki said.

Not all lawmakers were for taking the eraser to the HUD counseling program line item. Rep. Al Green (D-Texas) introduced an amendment to the 2011 budget deal Thursday that would have returned the $88 million lost to the program, but the amendment was not passed in the final vote.

Those within the industry contend that the HUD funding provides much-needed assistance to struggling homeowners and that families across the country -- and the housing recovery -- could be severely impacted by its elimination.

According to a statement from a group of civil rights and advocacy organizations, including the ""National Council of La Raza"":http://www.nclr.org, nonprofits providing these free, HUD-approved services will be forced to lay off skilled housing counseling staff and shut down counseling centers across the nation at a time when our housing crisis is at its peak.

Commenting on the funding cut, Faith Schwartz, executive director of ""HOPE NOW"":http://www.hopenow.com, said, ""Housing counseling dollars remain critical to homeowners at risk...Housing counselors have a proven track record of success with regard to pre-purchase and foreclosure prevention counseling. Eliminating an important source of funding is concerning as industry and non-profit counselors have been working together to keep people in their homes.""