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The mortgage crisis was a wake-up call for everyone, including the US Department of Housing and Urban Development (HUD). In 2012, at the behest of Congress, HUD turned its decades-old housing counseling program into the beefier Office of Housing Counseling and took a close look at what it could do better. The result? It’s getting easier for you to find homebuying advice you can trust.
And that’s great news, because, as HUD’s Sarah Gerecke puts it, “Real estate and mortgage fraud is a really popular line of work.”
Gerecke is deputy assistant secretary for the Office of Housing Counseling, which makes free or low-cost advice possible at 2,400 housing counseling agencies throughout the country. We recently talked with her about the reassuringly “fussy” HUD stamp of approval and the new housing counselor look-up app that basically destroys any excuse you’ve been making for not getting advice ASAP.
Advice was good in 1968, but it’s critical in 2015
First off, let it be known that HUD has been involved in housing counseling since 1968. (Yes, 1968 . . . color TV was just taking off.) Homebuyer advice has always been a good idea. Then came the mortgage meltdown, and suddenly it seemed like a really, really good idea.
“Congress recognized the importance of housing counseling for consumers,” said Gerecke. “The program was previously administered in all different places within HUD. The  legislation let HUD elevate the program within the department. HUD embraced this mandate and took the opportunity to rethink its approach to reporting and regulating. We’re still working through a lot of that, but we’ve really tried to reinvent HUD’s relationship with housing counseling providers.”
“HUD approved”: It’s all about quality
The goal of this reinvention? Foremost, high and consistent quality. Are housing counseling agencies meeting certain standards? Are they trustworthy and independent? If they’re getting federal grants, are they good stewards of our tax dollars?
“We take the HUD approval very, very seriously,” said Gerecke. “There’s a whole set of requirements by statute and regulation that we look for, and standards to adhere to, that address conflicts of interest, training, expertise, and protection of the client in different ways. When you find a HUD-approved housing counseling agency, you can be sure that HUD and the federal government are standing behind it.”
Last year, Gerecke said, her office okayed only about half of the counseling agencies that applied to become HUD-approved.
“Many applicants don’t meet our standards,” she said. “They’re not funded enough, they don’t have whatever. We try to help them get there, but we’re fussy in that way. It’s very important to consumers.”
Fraud: It’s still a jungle out there
“There are reports every week about fraud,” she said. “In particular, people promising that they can modify a loan or improve credit scores, debt. Fraud isn't going down. I think it’s going up. We do believe fraud, like discrimination, is underreported. It speaks to the quality of our network that it’s extremely rare for a HUD-approved counseling agency to have allegations of fraud, much less verified allegations.”
And her office does seek out complaints, she said. “To us, the value of the brand is in people knowing they can rely on our counseling network. There is a place on our website to report complaints or compliments. We welcome them.”
One of the most common complaints her office does get is that the agencies can’t meet demand, said Gerecke. “Funding is always a problem. The agencies are very busy and overworked and can’t see the client as frequently as the client would like.”
And they are getting busier, she said. “We’ve seen a real increase in the number of people interested in pre-purchase education and counseling. We think that folks are getting ready to reengage in the mortgage market.”
Which is to say, get yourself in there sooner rather than later.
Need a counselor? There’s an app for that
Where are all these HUD-approved counselors? The Office of Housing Counseling has also been working on access. Not that access is horrible. Last year, said Gerecke, HUD-approved counseling agencies helped 1.3 million families to buy their first home, save for a security deposit, recognize a scam, prevent homelessness, and more. But still, we all want counseling to be as easy as possible to find. Thus HUD’s new housing counselor lookup app, available at the iTunes store lets you locate HUD-approved agencies near you with your smartphone or tablet.
You might not have expected HUD and app to appear in the same sentence, but there you have it. Federal agencies like HUD are modernizing in ways that make their services more convenient.
“We do see more agencies delivering education online, or providing some services through Skype,” said Gerecke. “There’s one agency I can think of that actually communicates and does follow-up by text, which has been very successful. They set reminders for appointments, and I think there’s a few that use a social networking vehicle for some classroom work and peer work.”
We also talked with Gerecke about how homeownership counseling helps not only individual homebuyers, but also the entire country. Watch for our next blog post.