HUD Approved Housing Counselors: How They Help
Purchasing a home for the first time can be a process fraught with challenges and confusing information. Luckily, there are housing counselors across the country who can help make this process smoother. Housing counselors can help first-time or repeat homebuyers with everything from foreclosure and renting problems to mortgage defaults and credit issues.
There are specific housing counselors across the country who are approved by the U.S. Department of Housing and Urban Development (HUD) and can help consumers with any home purchasing or renting issue they might face.
If you’re looking for assistance with any part of the homebuying process, a HUD-approved housing counselor might be right for you.
What is the purpose of HUD?
Housing counseling agencies must meet a specific set of criteria established by HUD to receive approval. These agencies must hold nonprofit status; have at least one year of experience administering housing counseling; have had a presence in the community for at least one year; and have the resources necessary to implement counseling services.
“Housing counseling agencies were created to provide people with education,” said Wanda Lopez, a housing counselor with Access Living, a HUD-approved housing counseling agency in Chicago that works with people with disabilities.
Reasons you might want to get housing counseling
It’s your first time purchasing a house. Sharleen Kilgore, the housing counseling director for Project Sentinel — a housing counseling agency in California’s Bay Area — said there are myriad reasons why someone might want to consult a housing counselor. For example, people purchasing a home for the first time might want to take a first-time homebuyer education class through a HUD-approved agency. These classes can help them figure out whether they’re ready to buy. If they’re not ready, the classes can help them learn how they can become more prepared to buy.
People looking for help with overall credit issues, like creating a budget or improving their credit score, can also consult housing counselors.
You’re on the brink of foreclosure. Kilgore said people often consult housing counselors to prevent foreclosure. “A homeowner who is maybe struggling to make their mortgage payment would come to a HUD counselor to find out what options might be available,” she said. HUD-approved housing counselors can often intervene and help the borrower put together a loan modification package. Loan modification packages are done through the Home Affordable Modification Program (HAMP) and allow borrowers to avoid foreclosure by renegotiating the terms of their mortgage with their lender.
In fact, HUD conducted a study in 2015 that found homeowners who received counseling through a HUD-approved counselor were nearly three times as likely to get a loan modification than people who attempted to do it on their own. Unfortunately, Kilgore said, people often consult HUD-approved housing counselors too late.
“When something happens to take someone off track to be able to make their mortgage payment, whether it’s an illness, a layoff from work, or an accident, their mortgage payment doesn’t go away,” she said. “And people don’t know what to do. Oftentimes, they don’t realize until things progress to a foreclosure point that there may be alternatives through various workout options that their lender may offer, or other programs that may be out there.”
The HUD study also found that people who used a HUD-approved counselor were 30 percent less likely to experience foreclosure — in 2015 alone, HUD helped prevent 92,000 foreclosures.
You’re seeking a reverse mortgage. People also must consult HUD-approved agencies for reverse mortgage counseling. Any senior citizen contemplating applying for a reverse mortgage is mandated to get counseling from a HUD-approved counselor specifically trained in reverse mortgages.
You’re experiencing housing discrimination. Counselors help people with overall financial literacy as well. Access Living, the agency Lopez works for, helps people with disabilities or families in which one person has a disability with overall financial literacy related to rental situations. Because her clients aren’t purchasing homes but renting, not everything is tracked.
“A lot of times, they don’t even know the rights they have in order to report when they’re having issues, when they’re having things done to them or when they’re having their rights violated as far as discrimination,” Lopez said. Her agency provides clients with the fair housing education they need to ensure they’re not being taken advantage of.
Your lender requires it. Homebuyer education classes are often required for people purchasing homes through certain loan programs. Some high-interest loans will require one-on-one pre-purchase housing counseling to ensure the borrower completely understands the ramifications of taking out a high-interest loan, Kilgore said.
In addition, some banks and mortgage companies have programs for first-time homebuyers where they’ll offer lower interest rates or lower down payments. “Many of those programs are also going to require that the borrower or potential homeowner has attended a homebuyer education class and received a HUD certificate,” Kilgore said.
Benefits of using HUD-approved housing counselors
Lopez said that one of the most important elements of housing counseling is showing people that they have a choice when buying or renting.
“What we’ve noticed throughout the years is that individuals seek out housing counseling because they’re certain they know what they want,” Lopez said, adding that people often change their mind once they meet with counselors. “And that’s OK, because it’s about letting them know what their different choices are.”
According to Kilgore, one major advantage of HUD-approved housing counselors is their wealth of experience, particularly when it comes to loan modification and foreclosure. “When this happens to an individual, they’re dealing with all of this for the first time,” she said. “We’ve done hundreds, if not thousands, of workout packages with the lenders. … We’re familiar with the options, we know the processes. So we can help that person get through the process a lot quicker.”
Where to get started
If you’re interested in working with a HUD-approved housing counselor, you can search for one using the national database. You can also search specifically for HUD-approved agencies that help with reverse mortgages and foreclosure avoidance.