On Wednesday, May 8, the Financial Services Committee held a hearing entitled A Review of the State of and Barriers to Minority Homeownership. You can watch the archived telecast here: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=403649#Wbcast03222017. NHRC provided comments to the Financial Services Committee staff to engage them in a conversation about the importance of housing counseling in any effort to increase homeownership rates for minority households. We offered four primary solutions: Recognizing housing counseling as a vehicle for increasing homeownership Incentivizing mortgage applicants to use housing counseling services Providing sustainable funding for housing counseling programs nationwide and Expanding the Section 8 Voucher Program The committee is already moving to include housing counseling as a policy priority this Congress. Representative Beatty (D-OH) and Representative Stivers (R-OH) has introduced H.R. 2162, the Housing Financial Security Act of 2019, which would require HUD to discount FHA single-family mortgage insurance premium payments for first-time homebuyers who complete a financial literacy housing counseling program. We commend Representative Beatty for focusing on homebuyer education and its role in the housing market and community development and economic security of households. We hope to work with Representative Beatty's office to ensure that the legislation is specifically targeting HUD-approved housing counseling agencies. You can view the entire comment letter here: NHRC Letter of Record - 5-8-19 Financial Services -Minority Homeownership
In the recent FY 2019 budget, HUD housing counseling received $50 million, a painful $5 million reduction from FY 2018. Word from House and Senate staff was that this was not a reflection on housing counseling, but a problem in the way the House and Senate reconciled their differences in their budgets, which worked against housing counseling. But this reflects a continuing erosion in housing counseling funding. In FY 2010, HUD Housing Counseling Assistance was $87.5 million and now in FY 2019 we are down to $50 million. The last year of the highly successful NFMC foreclosure mitigation program funding was $40 million for FY 2016 and there are now no funds specifically targeting delinquency and foreclosure work. The result? In FY 2014, there were 2,367 HUD approved housing counseling agencies; but by February 2019, there were 1,820, a loss of 547 agencies, with more anticipated. In FY 2010, there were 3,026,137 counseling sessions. By FY 2017, counseling sessions were down to 1,121,957, a decline of 63%. This sharp decline in funding and worrisome erosion of capacity is in contrast to the extensive research which shows the value of housing counseling in the home purchase process[i] and in foreclosure mitigation[ii]. Plus mortgage lenders recognize the value of housing counseling in properly preparing homebuyers and homeowners and in providing access to underserved borrowers. What is the National Housing Resource Center (NHRC) doing to reverse this course? NHRC is working with hundreds of housing counseling groups, networks, and Intermediaries across the country to raise the HUD Housing Counseling Assistance to $65 million in the FY 2020 budget. A letter to Congress with 363 housing groups signed-on, calling for $65 million for FY 2020 housing counseling funding. A housing [...]
On March 2nd, six agencies in Phoenix Arizona hosted the fifth homebuyer event sponsored by Deutsche Bank. The goal of these events is to highlight the work of HUD Approved Housing Counseling Agencies and reach consumers that haven’t previously heard about the benefits of working with a certified Homeownership Advisor. 85% of the registrants for the Phoenix event had not yet worked with a Housing Counseling Agency so this event certainly achieved its goal! At each of these events, we learn something about what works for outreach. We came away with two big lessons from this event: Handing out flyers and making face to face contact with consumers still matters when it comes to outreach, and it’s all about location. Social media continues to be the way most people hear about these events but 12% of those that actually attended heard about it because someone gave them a flyer. As for location, we held the event at a conference center and while the setting was spacious and convenient for planning purposes, it was not located in a neighborhood considered accessible to the consumers we hoped to attract. One aspect of this event that was most successful- 46% of those that attended identified as Hispanic, our best result yet. This, and all of our success in Phoenix, would not have been possible without the hard work done by the participating agencies. They did all the work on the ground and gave up their Saturday to make sure the event went off without a hitch. Special thanks to them: Administration of Resources and Choices Arizona Housing Coalition Chicanos Por La Causa Greater Phoenix Urban League Newtown CDC Trellis
Despite its well-documented value for housing consumers, funding for housing counseling has been a roller coaster. In FY 2010, Congress appropriated $87.5 million in support of HUD Housing Counseling programs. In FY 2011, $0 were appropriated followed by $45 million in FY 2012. Since 2012, appropriations for the program have hovered between $45 and $55 million dollars. In FY 2016, the final round of National Foreclosure Mitigation Counseling (NFMC) funds were granted with $40 million and now there is no more direct funding for the important foreclosure mitigation counseling work. Why were housing counseling funds zeroed out in 2011? Lawmakers were unfamiliar with the HUD Housing Counseling program, and did not understand the importance of the funding. Since then, despite all the research showing that prepurchase counseling reduces mortgage delinquencies substantially and that foreclosure mitigation counseling improves loan workouts and reduces redefaults, the funding for this important work remains low. So what can you do to reverse this trend? You can educate your local, state, and federal lawmakers no matter their party affiliation. You can ensure that they are aware of the work you do on behalf of their constituents, every day in their district. When someone new is elected to an office representing your district, you can reach out immediately to let them know about your services. Make certain they know you can help solve problems for their constituents. Building advocacy with, and education of, your representatives is equally as important as providing day to day services to your clients. When your representatives know your work and how it benefits their constituents, they are better equipped, not to mention more likely, to fight for the funding needed to continue your work. But finding the [...]
Parts of the federal government has now been shut down for 18 days, the second longest federal government shutdown in history. The matter regarding the funding for a southern border wall continues as Congress started their new session on January 3rd. Immediately following the Democrats taking control of the House, the chamber passed, by a vote of 241-190, a spending package that includes, six of the seven remaining Fiscal Year 2019 spending bills, including funding for HUD. HUD issued a contingency plan in December 2018 outlining the status of its programs during the shutdown and which operations would continue or be on hold, including for Housing Counseling Assistance. Housing Counseling Operations during Federal Government Shutdown • The Office of Housing Counseling (OHC) will not have staff on board and will not process requests to draw down grant funds from the Line of Credit Control System (LOCCS). • The Housing Counseling system (HCS) will be operational on a limited basis; however, actions that require intervention by OHC personnel will be either delayed or suspended. • The housing counselor examination (housingcounselors.com) will be operational on a limited basis; however, actions that require intervention by OHC personnel will be either delayed or suspended. The housing counselor certification process relies on FHA systems and will be operational on a limited basis; however, actions that require intervention by OHC or HUD personnel will be either delayed or suspended. The plan also provides answers to very pressing questions that would affect housing counseling agencies. The Housing Counseling System (HCS) will not be available. Consequently, counseling agencies will be unable to update agency profile information, submit activity data, or otherwise utilize the functionality in HCS. Once HCS back online, FHA will require all counseling agencies to submit activity data for the shutdown period retroactively. [...]
The nomination of Brian Montgomery for FHA Commissioner was stuck for more than eight months in the Senate. The Realtors, the Mortgage Bankers Association, and the National Housing Conference had circulated sign-on letters and lobbied to get the nomination moving but no progress to a final vote. So NHRC mobilized the housing counseling community. NHRC collected a sign-on letter with 184 national and local groups to demonstrate broad industry and nonprofit support and broad support in Senator’s home districts. We convened meetings with local South Carolina groups and Senator Tim Scott’s office, Massachusetts groups and Senator Elizabeth Warren’s office, New York groups and Senator Chuck Schumer’s office, and Kentucky groups and Senator Mitch McConnell’s office. Finally, just hours after the McConnell meeting, one of the Kentucky groups got a call from his office to say a deal had been reached to bring the Brian Montgomery nomination to the floor for a vote. Brian’s nomination passed easily in the Senate and he is in office today. Why did NHRC put such a big effort into this one nomination? Because Brian Montgomery is an ideal candidate for the job. He is highly experienced (he was FHA Commissioner under President George W. Bush), deeply committed to housing and the mission of HUD, and willing to tackle the multiple challenges FHA is currently facing. And Brian is willing to roll up his sleeves and work with us. He already has had his first meeting with a team of NHRC housing counseling leaders two weeks ago and spent an hour and a half in a deep dive on disaster recovery, prepurchase, delinquency, and reverse mortgage housing counseling issues. Plus, we sent in a letter calling for the issuance of the [...]
After many months, the Federal Housing Administration (FHA) should soon have a Commissioner in place, which would allow the agency to better meet the needs of the many housing counseling clients who depend on FHA lending. This breakthrough came after months of advocacy by housing counseling agencies, advocates, and industry groups, that resulted in a deal being reached by Senate Republicans and Democrats that will allow the previously-stalled nomination of Brian Montgomery for Federal Housing Administration (FHA) Commissioner. The exact date for the vote is still being determined, but is likely to come after Congress’ Memorial Day recess. NHRC had taken a lead in pushing Mr. Montgomery’s nomination and worked closely with Senate offices on both sides of the aisle to encourage a compromise to break the impasse on having a vote. Mr. Montgomery is widely expected to be confirmed once a vote is taken. NHRC circulated a sign-on letter urging Senate leadership from both parties to bring the nomination up for a vote as soon as possible. That letter was signed by 184 supporters, including 51 national organizations, trade groups, and HUD Intermediaries, and 133 statewide and local counseling agencies and other supporters. NHRC also organized calls with constituents and a number of key Senate offices, including Majority Leader McConnell’s (R-KY) office and Minority Leader Schumer’s (D-NY) office. Senator Scott (R-SC), the chair of the Senate Banking subcommittee that oversees housing, was critical to reaching the agreement that will allow for a vote. FHA is facing a number of key challenges, including a badly outdated technology platform and a general need for experienced senior leadership. Mr. Montgomery, who previously served as FHA Commissioner under the George W. Bush administration, has precisely the experience and [...]
In the recently passed FY 2018 federal budget, HUD Housing Counseling Assistance funding was restored to $55 million, up from the proposed $50 million in the House and $47 million in the Senate. This puts us back to the level we were funded in FY 2017. For FY 2019, NHRC has submitted a sign on letter, calling for an increase in $65 million to meet the surging demand in prepurchase counseling and the end of National Foreclosure Mitigation Counseling funding. Over 400 groups signed the letter and it was circulated in both the House and the Senate. One of our key champions is Rep. Charlie Dent, an influential Republican on the THUD Appropriations Subcommittee; and, as has been widely reported in the news, he is retiring. We have been in discussions with Congressman Dent about who can be our next housing counseling champion on the Republican side in the House. He suggested Rep. David Young from Iowa who is on the THUD Subcommittee. At an upbeat meeting in Mr. Young's office, Congressman Dent passed the housing counseling torch to Congressman Young (despite a snowstorm, the cancellation of all Amtrak trains, and the critical votes on the budget that day). Pamela Carmichael, Executive Director of HOME in Des Moines, Iowa, flew in for the meeting. Alan Jennings, Executive Director of the Community Action Council of Lehigh Valley, with a strong partnership with Charlie Dent and a model for close working relationships attended. And of course Bruce and I were there representing NHRC and our broader housing counseling community. Here is a photo from the meeting. Congressman Dent had to run to the House floor to give a speech on the omnibus spending bill. Note the Iowa [...]
For people who are not fluent in English, the mortgage application and mortgage servicing processes have been plagued by misunderstanding and in some cases by intentional fraud. As part of the campaign to prevent these problems, housing and civil rights advocates scored a major victory as the Federal Housing Finance Administration (FHFA) has decided to include language preference on the redesigned Uniform Residential Loan Application (URLA). Lenders cannot communicate with customers in the appropriate language unless they know what that preferred language is. By capturing the information in the mortgage application, lenders will know in the beginning what the customer’s language preference is. The redesigned URLA will start being used in July, 2019 and will be mandatory for all loans being sold to Fannie Mae and Freddie Mac in January, 2020. (In practice, this will mean that the redesigned URLA will be used almost universally by that time.) The language preference question will be included on the first page of the URLA in the “personal information” section. The question will be accompanied by disclaimers, including one saying that the loan transaction is likely to be conducted in English. This is a huge win for the large number of advocates who fought for this against significant industry opposition. NHRC worked closely with a broad coalition of advocates including Americans for Financial Reform, UnidosUS, National CAPACD, National Low-Income Housing Coalition, and National Consumer Law Center to push FHFA to take this important step towards ensuring full and fair access to the mortgage origination and servicing processes. It was a three year long effort that at times seemed unlikely to succeed. Congratulations to all those who worked to win this victory!
Eighty housing leaders and supporters crowded into the Realtors top-floor meeting room with a spectacular view of the Capitol building on July 26th and 27th for our national Leaders in Housing Counseling Meeting. Some of the highlights you should know about: We had an encouraging discussion with Adolfo Marzol, Special Assistant to the Secretary at HUD. We proposed discussions with HUD over the next year on how to increase homeownership opportunities and strengthen the FHA mortgage insurance fund by: Increasing public awareness of housing counseling with the help of HUD; Providing incentives to borrowers such as discounting the mortgage insurance premiums for people who complete counseling; Exploring greater availability of downpayment assistance; Referring declined FHA borrowers to counseling agencies; Referring delinquent borrowers to counseling; Exploring payments to counseling agencies for pre-purchase and delinquency counseling work, which improves the performance of the fund. Rep. Charlie Dent and Sen. Bob Menendez received this year’s Champions of Housing Counseling awards for their work with us. Charlie Dent, a senior Appropriations member, promised to push for restoring HUD Housing Counseling back to $55 million in the final budget. On the need to improve marketing and messaging of housing counseling, we had a deep discussion with the Creative Marketing Resources (CMR) people about the high value of housing counseling but low public recognition. They conducted mystery shopping on agencies, which found high levels of expertise and commitment, but entry into programs not always as easy as it should be. More CMR insights: financial incentives to join counseling were highly valued by consumers, call it “anything but counseling,” HUD has value as a good housekeeping seal of approval, and counseling agencies need to do more to appeal to Millennials. After much [...]
NHRC recently conducted a survey of our network of HUD-approved housing counseling agencies to learn more about what mortgage servicing issues counselors are seeing in the field. We aren’t planning to do a formal, but have circulated the responses to give a snapshot. (If you would like to see the responses, please send a request by email to firstname.lastname@example.org.) Fifty-five counselors participated and their responses were thoughtful and specific. Lost documents and repeated submissions were frequent complaints. Difficulty reaching single point of contacts was also a common concern. Transfers continue to be a problem. Successors-in-interest was also a problem. A number of counselors were concerned about the affordability of modifications or an inability to get a modification. Requiring actual late payment rather than imminent default came up repeatedly. On improving the system, counselors would like to work more smoothly with servicers and are baffled why so many servicers do not treat counselors like the helpful professionals they are. There is also ongoing frustration that many servicers do not provide funding for the delinquency work, and with the end of NFMC funding, more agencies will leave the field without a viable funding model.
Fannie Mae, Freddie Mac, and FHFA have created a streamlined mortgage modification, called Flex Mod, to replace HAMP for people who are having difficulty making their mortgage payment. HAMP modifications and many of the non-HAMP alternative modifications were based on the homeowner's income. The Flex Mod streamlined modification is based on amortizing the unpaid loan balances and extending the loan term out for 40 years along with some added features including forbearance. A detailed Flex Mod description is available here. Flex Mod has the advantage of little or no documentation requirements for the homeowner and, at 90 days delinquency, the modification offer is sent automatically to the homeowner. The question we had was "Will a Flex Mod modification that relies primarily on term extension produce a modification that is affordable for the homeowner?" Last November, National Council of La Raza, Empire Justice Center, and NHRC conducted a study comparing 89 actual income based modifications obtained by housing counseling agencies with what the homeowners would have gotten if they received an early version of the streamlined modification. Now, we have the same set of cases and they have run through the actual Flex Mod program, so that we are able to evaluate how affordable the Flex Mod modifications are. In summary, a majority of the cases (57%) received the same or an even more affordable modification than the mod they received originally. Another 9% of the cases were affordable but off by smaller amounts, such as $9 and $15 a month. However, 34% of the cases under Flex Mod required a payment of at least $50 a month extra and 28% of the cases would have a payment of $100 a month or more, which is [...]
Facing declining funding and continuing demand, housing counseling programs need to find and develop new lines of business, which meet the needs of consumers and which can help pay the bills. With that in mind, NHRC has launched a series of Webinars to educate housing counseling managers on innovative programs, which generate income. Here is the list of programs so far. There are many exciting opportunities, which can help strengthen the housing counseling work and benefit consumers. Opportunities created by Certification Rule 3/16/17 Sarah Gerecke, HUD Karin L. Nigol, Housing Education Resource Center, Inc. Marcus Purnell, HomeFree USA Walda Yon, Latino Economic Development Center Andrew J. Loubert, Community Reinvestment Solutions, Inc. Helping Returning Homebuyers with Past Short Sales 4/13/17 Pam Marron, Innovative Mortgage Services Ellie Pepper, Empire Justice Center Pay Day Loan Alternative Loans, CDC of Brownsville 4/20/17 Matt Hull, Texas Association of CDC’s Nick Mitchell-Bennett, CDC of Brownsville Nationwide Mortgage Collaborative 5/4/17 Gabe Del Rio, Springboard CDFI Real Estate Shared Income Partnership, Urban Edge 5/18/17 Bob Credle, Urban Edge Linda Champion, Urban Edge Heat Squad Conservation Program, NeighborWorks of Western Vermont, 6/8/17 Melanie Paskevich, NWWV Profit and Loss Analysis and Fee for Service Pricing, 6/15/17 Bob Credle, Urban Edge Jeff Tellier, Urban Edge Special thanks to NeighborWorks America for their help in identifying many of these models from their network.
The Trump Administration has released its first budget proposal, which would increase defense spending while dramatically reducing non-defense domestic spending, including a reduction of more than $6 billion for the Department of Housing and Urban Development. The proposed cut to HUD would eliminate critical programs, including the Community Development Block Grant (CDBG), the Home Investment Partnerships Program, Choice Neighborhoods, and the Self-help Homeownership Opportunity Program. If carried out, these cut will have a devastating impact on low and moderate income communities. The proposed budget is only an overview of the administration’s budget priorities and does not include funding levels for all programs, including the Housing Counseling Assistance program. The administration is expected to release its full budget sometime around May. In addition to the proposed cuts to HUD, the administration’s proposed budget would eliminate several other program that are important to the housing counseling community and our clients, with NeighborWorks America (the Neighborhood Reinvestment Corporation) and the Legal Services Corporation, being defunded under the proposed plan. NHRC is working with congressional allies to ensure the highest possible funding level for Housing Counseling Assistance. A letter asking members of Congress to support an increase in housing counseling funding, which was signed by 350 counseling agencies, was submitted to congressional offices last week. Additionally, a number of agencies corresponded directly with their congressional offices.
The Home Affordable Modification Program (HAMP) will end at the end of December 2016. The Mortgage Bankers Association (MBA) has proposed a product that would target reducing the household's monthly mortgage payment, by extending the loan term to forty years. Significantly, unlike HAMP, the MBA model would not be based on household income. This is an important reversal from HAMP, because in households where there has been a significant loss of income, the targeted reduction in the monthly mortgage payment may not produce an affordable payment. Additionally, the forty year term extension makes it difficult for the homeowner to rebuild their equity in their home. The Empire Justice Center (EJC), National Council of La Raza (NCLR), and the National Housing Resource Center (NHRC) collected loan information from households who had received HAMP modifications. EJC then analyzed the loan information to compare the modification that was received under HAMP with the modification that would be available under the MBA proposal. You can read the summary of the analysis here, but here are some of the key findings: Targeting the modification to a reduction of the monthly mortgage payment is most beneficial to higher-income households, who are most likely so see a reduction of 20 percent of more, while moderate-income households are more likely to see a reduction of less than 20 percent; Including interest rate reduction as an element of any modification package is critical to ensuring affordable payments, particularly for lower-income homeowners—but this will not be a modification tool available under the MBA proposal; More flexible alternatives to the 480-month term extension are needed for homeowners with significant equity in their homes.