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Partner with Housing Counselors and Certified Credit Counselors at HUD Agencies

Housing Counseling is independent, expert advice customized to the need of the consumer to address the consumer’s housing barriers and to help achieve their housing goals and must include the following processes: intake; financial and housing affordability analysis; an action plan, except for reverse mortgage counseling; and a reasonable effort to have follow-up communication with the client when possible.


The content and process of housing counseling must meet the standards outlined in 24 CFR part 214. Homeownership counseling and rental counseling are types of Housing Counseling.

HUD Certified Credit Counselor FAQs

  • How do I know who needs what?

    HUD housing and credit counseling  promoted for this pilot program focus on 3 main areas of client need:


    1. Credit
    2. Downpayment Assistance (DPA)
    3. Home Budget

    ​Decide on which need is the most prevalent to address first. A second and third option may also be selected.  

  • How do I explain the "Fee For Service" if it's a program?

    For this pilot program where counseling services are being provided to clients of independent loan originators and realtors, two methods of payment can be done:


    1. Client Paid Fee for Service is paid upfront by the client for services. The client pays upfront and receives credit towards mortgage closing costs for paid upfront housing/credit counseling costs. 
    2. Lender Paid Fee for Service is paid upfront by loan originator or realtor.

    ​Details about methods where housing and credit counseling fees can be paid are detailed on the Explaining Fee for Service direction page. Details were provided from the HUD Model Funding Agreements and Fee Structures manual.

  • What are the different programs and counseling?

    HUD Housing Counseling is independent, expert advice customized to the need of the consumer to address the consumer’s housing barriers and to help achieve their housing goals and must include the following processes:  intake; financial and housing affordability analysis; an action plan, except for reverse mortgage counseling; and a reasonable effort to have follow-up communication with the client when possible. The content and process of housing counseling must meet the standards outlined in 24 CFR part 214. Homeownership counseling and rental counseling are types of Housing Counseling.



    HUD Housing Counselors

    HUD HCAs are trained and approved by HUD to provide tools to current and prospective homeowners, renters so that they can make responsible choices to address their housing needs in light of their financial situations.  They can assist clients in budgeting, financial responsibility, and program availability with regard to Area Median Income.


     

    Certified Credit Counselors

    Credit counseling provides guidance and support on consumer credit, money and debt management, and budgeting. The objective is to help a client avoid bankruptcy and to provide primary financial education on managing money. Borrowers with an understanding of money management are assets for lenders as well. Many counseling services also negotiate with creditors on behalf of the borrower to reduce interest rates and late fees. 


    ​


    Credit: Short Term Help (max.1 yr)


    Credit counseling includes:

    • Correct credit issues
    • build credit
    • improve credit scores

     


    Work with a certified credit counselor to get credit issues resolved​ within 1 yr timeframe.


     


    Credit: Long Term Help (1-5 yrs)

    Credit counseling includes:

    • Correct credit issues
    • Build credit
    • Improve credit scores
    • Debt management plans
    • Debt consolidation
    • Student loan counseling/debt management
    • Bankruptcy counseling
    • Modification counseling
    • Foreclosure counseling

     


    ​Work with a certified credit counselor to get longer term credit issues resolved​ within 1-5  yrs.


     


    HUD Foreclosure Counselors

    HUD-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure.


    Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks® America. There is no need to pay a private company for these services.


    HUD Certified HCA will provide you with free foreclosure prevention services. If you are eligible for the loan modification or refinance program, the counselor will work with you to compile an intake package for your servicer.



    Certified Counselors in Downpayment Assistance

    Certified HUD Counselors can provide assistance to those looking for down payment options.  Certified Hud Counselors will lead an 8-hour instruction class. Participants will learn the fundamentals of the home buying process, and assistance programs that may be available to them.  HUD’s curriculum is held to a higher standard and education programs are taken very seriously.


    HUD Certified Counselors use National Industry Standards for Homeownership Education and Counseling which are national standards and guidelines for quality education and counseling services.


    HUD Certified Counselors will work with the client and lender and review documentation, rates and fees to ensure they have met program requirements.


    Some HUD Certified Counseling Agencies may work and process the Down Payment Assistance Program Application for the City, State or Government SHIP and HOME Programs.



Contact HUD Housing Counselors and Certified Credit Counselors In and Out of Florida

For Credit: HomebuyerCred.org, a program of National Foundation for Debt Management set up for client intake. Call 727-254-5353. Email rgraves@nfdm.org if you are a loan originator or real estate agent that would like to refer clients. More info. on this site at https://www.clients2homeowners.com/homebuyercred-org.

For full list of HUD.gov Housing Counseling Services: Pick state on dropdown list. Then, Click here to narrow your search. Insert your city and zip code and pick  Financial Management /Budget Counseling and Financial, Budgeting, and Credit Workshops to get programs closest to you. 


For Credit: short (within 1 yr resolved and long term (1-5yrs resolved) certified credit counselors and HUD Housing counselors in and out of Florida: National Foundation for Credit Counseling (NFCC) website (NFCC.org)  or call 800-388-2227. Find an agency close to you at the Agency Locator page.

For Student Loan Debt Relief, whether current or in default: Consumer Debt Counselors set up for intake. Call 1-800-820-9232. More info. on this site at https://www.clients2homeowners.com/student-loan-help.


Steps for Loan Originators to Refer Clients to Housing Counseling Agency (HCA)

  • Step 1: Assess Client For Need

    Credit: Short Term (resolved within 1 yr): 

    Credit counseling includes:

    • Correct credit issues
    • Build credit
    • Improve credit scores

    Credit: Long Term (resolved 1-5 yrs) 

    Credit counseling includes:

    • Correct credit issues
    • Build credit
    • Improve credit scores
    • Debt management plans
    • Debt consolidation
    • Student loan counseling/debt management
    • Bankruptcy counseling
    • Modification counseling
    • Foreclosure counseling

    Downpayment Assistance: NOTE; 1ST MORTGAGE AND DPA FINANCING USUALLY HAVE VARYING UNDERWRITING CRITERIA! Check income and credit scores 1st and call source to confirm funds are still available! Use the downpayment resource tab to determine what clients might be eligible for. 


    Budgeting: especially important now as the U.S. experiences the consequences of job loss and tightened income during the Coronavirus pandemic.  

  • Step 2: Determine the Referral Counselor Source

    Any housing counselor can help a client access and apply for DPA that they might be eligible for.  Some HCA’s actually administer DPA funds for their county or municipality. 


    Housing Counselor: assist clients in budgeting, financial responsibility, and program availability with regard to Area Median Income. Work with the client and lender and review documentation, rates and fees to ensure they have met program requirements.


    ​


    Certified Credit Counselor: provides guidance and support on consumer credit, money and debt management, and budgeting. Short term resolution (within 1 yr) and long term resolution *(1-5yrs) available. *Not all agencies have long term available so check.


    ​


    Certified Counselors in Downpayment Assistance provide assistance to those looking for down payment options. 


    ​


    Housing counselors throughout the country can provide advice on buying a home, renting, defaults, foreclosures, and credit issues. Use the search box at

    https://www.consumerfinance.gov/find-a-housing-counselor/  to find a counselor in your area.   

  • Step 3: Decide who pays for upfront counseling services

    HUD Housing Counseling is independent, expert advice customized to the need of the consumer to address the consumer’s housing barriers and to help achieve their housing goals and must include the following processes:  intake; financial and housing affordability analysis; an action plan, except for reverse mortgage counseling; and a reasonable effort to have follow-up communication with the client when possible. The content and process of housing counseling must meet the standards outlined in 24 CFR part 214. Homeownership counseling and rental counseling are types of Housing Counseling.



    HUD Housing Counselors

    HUD HCAs are trained and approved by HUD to provide tools to current and prospective homeowners, renters so that they can make responsible choices to address their housing needs in light of their financial situations.  They can assist clients in budgeting, financial responsibility, and program availability with regard to Area Median Income.


     

    Certified Credit Counselors

    Credit counseling provides guidance and support on consumer credit, money and debt management, and budgeting. The objective is to help a client avoid bankruptcy and to provide primary financial education on managing money. Borrowers with an understanding of money management are assets for lenders as well. Many counseling services also negotiate with creditors on behalf of the borrower to reduce interest rates and late fees. 


    ​


    Credit: Short Term Help (max.1 yr)


    Credit counseling includes:

    • Correct credit issues
    • build credit
    • improve credit scores

     


    Work with a certified credit counselor to get credit issues resolved​ within 1 yr timeframe.


     


    Credit: Long Term Help (1-5 yrs)

    Credit counseling includes:

    • Correct credit issues
    • Build credit
    • Improve credit scores
    • Debt management plans
    • Debt consolidation
    • Student loan counseling/debt management
    • Bankruptcy counseling
    • Modification counseling
    • Foreclosure counseling

     


    ​Work with a certified credit counselor to get longer term credit issues resolved​ within 1-5  yrs.


     


    HUD Foreclosure Counselors

    HUD-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure.


    Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks® America. There is no need to pay a private company for these services.


    HUD Certified HCA will provide you with free foreclosure prevention services. If you are eligible for the loan modification or refinance program, the counselor will work with you to compile an intake package for your servicer.



    Certified Counselors in Downpayment Assistance

    Certified HUD Counselors can provide assistance to those looking for down payment options.  Certified Hud Counselors will lead an 8-hour instruction class. Participants will learn the fundamentals of the home buying process, and assistance programs that may be available to them.  HUD’s curriculum is held to a higher standard and education programs are taken very seriously.


    HUD Certified Counselors use National Industry Standards for Homeownership Education and Counseling which are national standards and guidelines for quality education and counseling services.


    HUD Certified Counselors will work with the client and lender and review documentation, rates and fees to ensure they have met program requirements.


    Some HUD Certified Counseling Agencies may work and process the Down Payment Assistance Program Application for the City, State or Government SHIP and HOME Programs.



  • Step 4: Provide forms, documents to counselor

    Some housing counseling agencies require 1 or more forms to be signed by the client and loan originator upfront... others do not.


    E-signatures on forms are acceptable.


    Provide these forms and a copy of your credit report, 1003, and any supporting documentation to the housing or credit counselor upon making the referral.

  • Step 5: Communicate with counselor on client's status, the client & then update real estate agent.

    Loan originators and counselors need to determine a method to stay in touch on client progress. A once a month email or phone call to the housing/credit counselor, an updated note in your tickler system provides the loan originator with the opportunity to connect and brief the referring real estate agent of a client's status.


    ​Loan originators will want to stay in contact with clients and encourage them. And what real estate agent is going to turn down your call that lets them know of the clients progress?

  • Step 6: If client paid for counselor services upfront, provide credit towards closing costs on mortgage. Celebrate at closing, and ask for referrals!

    Your credit back to closings costs for upfront counseling costs paid by your client.... or a credit provided to your client upfront to get them "mortgage ready"... is an investment into your client's future! the goal of owning a home! Celebrate by attending the closing and don't forget to ask your client and real estate agent for referrals of others that could use your help.


    Here's the secret.... when you start this referral partnership with your housing and credit counselors, you always have an option for clients who are willing to do the work to get into a home! "Go get it fixed" is replaced with "if you are willing to do the work, we have an option!"


    And.... don't forget to thank the housing or credit counselor that assisted you in getting your client "mortgage ready"!


Explaining Fee for Service Payment

U.S. Department of Housing and Urban Development

Office of Housing Counseling | Model Funding Agreements and Fee Structures

Housing counseling agencies (HCAs) acquire funding in numerous ways, including being paid a fee for the services they provide. The fees can be paid by clients (with the exception of Foreclosure Prevention and Homeless counseling clients), non-profit partner agencies, and private sector partners. The fees provided to the HCA can vary depending on the services being provided. This guide provides information about the basic components in a funding agreement.

Subcontracting (under Foreclosure Counseling Fee Structures)

The next most common funding models are focused within the sub-contracting model of funding. This funding model involves an HCA subcontracting with a mortgage investor to complete a statement of work including provision of counseling services to the investor’s portfolio of borrowers. This funding model is based on a fee for service model, wherein the HCA receives either a payment for services rendered or payment based on a set of prescribed outcomes. In many cases a base fee for service is provided with an incentive payment for a borrower’s resumed steady payment history. This fee structure is generally designed to provide the housing counseling agency with a payment between $300 and $1,000 per client to complete work related to resolving the mortgage delinquency on behalf of the mortgage investor.

Pre-Purchase Counseling Fee Structures Lender Paid

Pre-purchase counseling provides mortgage lenders with educated and confident customers, which can make the application process proceed more smoothly, with fewer surprises and a higher chance for high performance across the life of the mortgage loan. The investment into pre-purchase housing counseling is likely to return a greater profit margin than those who choose to not promote and invest into pre-purchase counseling.

 

Homeownership Counseling

The most common form of fee for service within pre-purchase counseling is the payment of a fee by a mortgage lender to an HCA for counseling prospective borrowers about the pro and cons of homeownership. In many cases this payment is irrespective of whether the client chooses to proceed with a loan closing.

 

Pre-purchase Counseling

In other cases the mortgage lender has defined pre-purchase counseling as an underwriting requirement that must be completed prior to a loan closing. The fees paid by a mortgage lender can range from $25 for a customer’s attendance at a homeownership education workshop, to a payment of $500 for a combination of pre-purchase counseling and post-purchase education. In some cases a mortgage insurance company or other party with a financial interest in the transaction will invest in this service.

 

Down Payment Assistance Counseling

Many down payment assistance programs have a pre-purchase counseling/ education requirement. In many cases a down payment assistance program will pay for the cost of pre-purchase counseling services.

Define Strict Conflict Of Interest Statements And Disclosures

In any funding model, it is important to define strict conflict of interest statements and disclosures to avoid even the appearance of a conflict of interest. When developing a fee structure for a pre-purchase counseling program, it is very important to avoid a fee structure where an HCA’s compensation is based on the terms, conditions, or size of a mortgage loan transaction. See the HUD Housing Counseling Handbook for both conflict of interest guidance as well as steps to avoid lender steering issues. Once an HCA decides to enter into a relationship with a lender, HUD requires that the HCA enter into a Memorandum of Understanding (MOU), signed by both parties, to formalize the relationship. This MOU must state that:


  1. The client will choose between comparable products from at least three different lenders.
  2. The fee income is based on services rendered, NOT on the amount of the loan.

Client Paid

Charging a client for pre-purchase counseling is an effective manner in which to engage the client in the counseling process. By charging a fee for pre-purchase counseling a client is more invested in the process of learning. While HUD requires any client based fees to allow for a hardship waiver, it is acceptable and commonly practiced to charge clients for pre-purchase counseling.

CFPB Issues Policies to Facilitate Compliance and Promote Innovation | First No-Action Letter Issued to HUD Housing Counseling Agencies | SEP 10, 2019

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (Bureau) today issued three new policies to promote innovation and facilitate compliance: the No-Action Letter (NAL) Policy, Trial Disclosure Program (TDP) Policy, and Compliance Assistance Sandbox (CAS) Policy. The Bureau proposed the policies in 2018 and received public comments on each from a diverse array of stakeholders. 

​

Regulatory uncertainty can hinder the development of innovative products and services that benefit consumers. NALs provide increased regulatory certainty through a statement that the Bureau will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances. The new NAL Policy improves on the Bureau’s 2016 NAL Policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question. 

​

The Bureau today issued its first NAL under the new NAL Policy in response to a request by the Department of Housing and Urban Development (HUD) on behalf of more than 1,600 housing counseling agencies (HCAs) that participate in HUD’s housing counseling program. In 2018, HUD brought concerns to the Bureau about HCAs and lenders not entering into agreements that would fund counseling services due to uncertainty about the application of the Real Estate Settlement Procedures Act (RESPA). Expressing similar concerns, the Coalition of HUD Intermediaries filed a comment letter in February 2019 noting the insufficiency of the Bureau’s old NAL Policy and supporting the new NAL proposed policy. The no-action letter essentially states that the Bureau will not take supervisory or enforcement action under RESPA against HUD-certified HCAs that have entered into certain fee-for-service arrangements with lenders for pre-purchase housing counseling services. The NAL, which is an exercise of the Bureau’s supervisory and enforcement discretion, is intended to facilitate HCAs entering into such agreements with lenders and will enhance the ability of housing counseling agencies to obtain funding from additional sources. 

​

Under the new TDP Policy, entities seeking to improve consumer disclosures may conduct in-market testing of alternative disclosures for a limited time upon permission by the Bureau. The Dodd-Frank Act gives the Bureau the authority to provide certain legal protections for entities to conduct trial disclosure programs, as outlined in the TDP Policy. The new policy streamlines the application and review process. 

​

The CAS Policy enables testing of a financial product or service where there is regulatory uncertainty. After the Bureau evaluates the product or service for compliance with relevant law, an approved applicant that complies in good faith with the terms of the approval will have a “safe harbor” from liability for specified conduct during the testing period. Approvals under the CAS Policy will provide protection from liability under the Truth in Lending Act, the Electronic Fund Transfer Act, or the Equal Credit Opportunity Act. 

​

“Innovation drives competition, which can lower prices and offer consumers more and better products and services. New products and services can expand financial options, especially to unbanked and underbanked households, giving more consumers access to the benefits of the financial system. The three policies we are announcing today are common-sense policies that will foster innovation that ultimately benefits consumers.” said Consumer Financial Protection Bureau Director Kathleen L. Kraninger. 

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Navigating the World of Owner-Occupied ADUs for Loan Officers

As a loan officer, it is important to have a good understanding of owner-occupied Accessory Dwelling Units (ADUs) to properly advise and assist your clients. Here are some key points to consider:

Definition: An owner-occupied ADU is a secondary dwelling unit on a single-family residential property that is occupied by the homeowner.


Purpose: ADUs are becoming increasingly popular as a way for homeowners to generate additional income or provide housing for aging parents, adult children, or renters.


Zoning and regulations: ADUs are subject to local zoning and building regulations, so it's important to check the rules and regulations in your area to determine what is allowed and what isn't.

Financing: Depending on the specific rules and regulations of your area, it may be possible to obtain a separate loan for the construction or renovation of an ADU. In some cases, the ADU may be considered part of the primary property and included in the mortgage for the primary residence.


Rental income: If the ADU is being used as a rental property, the rental income can be used to help qualify the borrower for a loan or refinance, as long as it is stable and likely to continue.


Appraisal: The value of an ADU can affect the overall value of the property, so it's important to consider this when assessing the property for a loan or refinance.


Insurance: It's also important to consider the insurance implications of an ADU, as the homeowner may need to obtain additional insurance coverage to protect both the primary residence and the ADU.

Overall, as a loan officer, it's important to be knowledgeable about owner-occupied ADUs and the regulations surrounding them to provide the best advice and assistance to your clients. For more information, reach out to Clients2Homeowners today!

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