Nonprofit housing counseling organizations across the nation are gearing up for the effects of Congress slashing the Department of Housing and Urban Development’s (HUD) $88 million in housing counseling funds from the FY 2011 budget, while simultaneously pushing to reverse the cuts. Strong support and interest in restoring funding was evidenced last week by more than 160 individuals from congressional staff, industry experts, government officials, and private industries showing up to a standing-room-only Hill briefing on the Research and Impact of Housing Counseling Programs.
Many of these organizations belong to the Coalition of HUD Housing Counseling Intermediaries, which Barbara Stucki, Vice President of Home Equity Initiatives for the National Council on Aging, says is working very hard to make sure the FY 2012 budget continues to include funds for housing counseling.
“We’re being very practical right now, making sure there’s Congressional support, and doing everything we can to ensure that housing counseling is included in the budget,” says Stucki.
Stucki says the turnout at the briefing is a positive indication as far as counseling organizations’ efforts to pass legislation ensuring funding is included in next year’s budget.
Meanwhile, Candace Mason, Senior Director of Housing and National Grants of the National Foundation for Credit Counseling (NFCC), says her organization is exploring a couple of different avenues to seek funding. The NFCC is a member of the coalition of HUD intermediaries, and Mason says they’re making some noise on Capitol Hill to educate politicians regarding the necessity of housing counseling funds, including submitting a letter signed by 24 senators that requested a restoration of funds.
Mason says part of the reason HUD’s budget was cut is because of a misconception that the National Foreclosure Mitigation Counseling Program (NFMCP) and HUD grants were duplicative in nature, which would seem to signify an excess of funding. However, she says, the NFMCP funding only goes toward foreclosure counseling, whereas HUD’s funding is used for multiple types of housing counseling, including counseling for reverse mortgages.
In light of the the funding cuts, Mason says the NFCC, which has agencies located in all 50 states as well as Puerto Rico, has been encouraging its agencies to diversify funding, and preparing them for the gap between when FY 2010 funds run out, and HUD’s funding for FY 2012 is possibly reinstated.
“We have some agencies that are going to have to reduce staff, some that are planning to and have already had to let counselors go,” she says. “It’s unfortunate because there are so many seniors in need of help. The counseling component for reverse mortgages is a requirement, but the funding has gone away.”
While HUD’s funding has allowed many organizations to offer consumers free reverse mortgage counseling in the past, that will likely have to end, says Mason. However, she continues, NFCC’s agencies don’t want to charge those seeking reverse mortgages, and are highly unlikely to charge the full amount, because they know it’s often the case that seniors who are trying to get a reverse mortgage may lack their own funds.
HUD put the average cost for reverse mortgage counseling at $125, but Mason says the costs for her organization are much higher; it’s a worry for her that counseling agencies, in order to stay competitive, will not provide proper levels of support and information to consumers seeking counseling so they can cut costs.
Meanwhile, some counseling organizations, like Cambridge Credit Counseling Corp., have not been receiving any funds from HUD, and for them, business will continue as usual. Everyone else will have to shift gears, says Miguel Rivera, the organization’s housing director, but Cambridge Credit won’t feel an impact and will continue charging their consumers $125 for reverse mortgage counseling.
Scott Scredon from CredAbility says HUD’s budget cut primarily affects his organization’s reverse mortgage counseling, as it’s mostly been HUD-sponsored. He says they haven’t yet determined which course of action they will take to get reimbursed for offering reverse mortgage counseling, but “it’s most likely that we will have to go back to a business model where the consumer will have to pay for the counseling.”
Overall, though, Mason says she is hopeful that counseling organizations’ efforts to restore counseling will prove fruitful.
“I’m optimistic. I think that the nation is still in the midst of a very serious housing crisis,” she says. “We still have so many consumers who are unemployed or underemployed, it makes a very sound case for reinstating housing funding, because there’s still such a growing need for it. Particularly for reverse mortgages, we have a lot of older baby boomers reaching that stage, and that will become a more attractive mortgage product for consumers.”
She says the senators’ endorsement of the letter requesting funding is very strong indication that Congress is not opposed to the idea of funding, but that they just want to ensure that funds are being used and not being wasted. Congress is currently working on the FY 2012 budget, and Mason says that until it is passed, a continuing resolution may be adopted, which would mean funding will stay at its previous levels.
Stucki says she participated in a meeting between HUD’s Secretary Shaun Donovan and housing counseling intermediaries where he said HUD may issue a Notice of Funds Available (NOFA), in which case he would expedite the grant process so that FY 2012 funds could be utilized faster than usual in 2012. Additionally, she says HUD may allow agencies who have not used up all their funding to retain those funds for the next fiscal year.
Written by Alyssa Gerace