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The state of the housing counseling world


By Aubrey Cohen

Seattle Post Intelligencer


November 17, 2008


Last year, 264,989 troubled homeowners sought help from federally certified counselors a 55-percent increase from 2006, according to a report from the U.S. Department of Housing and Urban Development.

The increase will probably be much bigger this year, HUD said in a news release.

Here are some more highlights from the report:

In the past few years, leading up to the current crisis, more than 55 percent of low-income families buying their first home did not seek out pre-purchase counseling.

There is limited evidence of the benefits of pre-purchase counseling in making homeownership more sustainable, although Congress has called on HUD to test its effectiveness.

45 percent of the approximately 136,000 families that completed delinquency counseling in 2007 were able to remain in their homes, 14 percent ultimately lost their homes through foreclosure and outcomes for the remaining 41 percent were unknown.

African-Americans and Hispanics were disproportionately represented among counseling clients, and most clients were low- or very low-income.

HUD's budget for counseling was $50 million in the 2008 fiscal year, up from $41.58 million the prior year, and Congress designated another $360 million for foreclosure prevention counseling. HUD has requested another $65 million for local housing counseling agencies next year.

Nearly three-quarters of counseling agencies receive HUD funding, but this money accounts for just 14 percent of total funding for the counseling industry. The average agency relies on 3.6 different funding sources and nearly 90 percent of them say funding is an extremely or moderately significant problem.

The typical client costs an agency $225.

Quickly building up staff and processes to handle the current crisis is a major challenge for counseling agencies.

Clients also need affordable refinance mortgages, legal services, and grants and loans for foreclosure prevention and home maintenance.

The aging of the baby boomers means agencies need to prepare for a wave of reverse mortgage counseling. The Federal Housing Administration's Home Equity Conversion Mortgage, the most popular reverse mortgage, saw demand nearly triple since 2004, to about 107,000 last year. That loan requires counseling.





November 2008 News