The government finds itself in the throes of a major housing crisis and asks, “What works? What doesn’t work?” Recent studies provehomebuyers working with housing counseling agencies are less likely to suffer foreclosure than buyers who go it alone. Homeowners working with housing counseling agencies are more likely to win a loan modification than borrowers making other choices.
The government responds with a 22% increase over last year’s federal funding to housing counseling agencies in 2011. The U.S. Dept. of Housing and Urban Development announced a record $73 million grants yesterday to 500 organizations throughout the country. The funds will help hundreds of thousands of households find homes or keep the homes they have, according to HUD.
“These organizations are on the front lines of helping families who are desperate to remain in their homes,” said HUD Secretary Shaun Donovan. “Now, more than ever, it’s crucial that we support these agencies that are working with struggling families on a one-to-one basis to manage their money, navigate the homebuying process, and secure their financial futures.”
Housing counseling grants will assist families in becoming first-time homeowners and remaining homeowners after their purchase. HUD-approved counseling agencies not only provide homeownership counseling, but also offer financial literacy training to renters and homeless individuals and families.
Donovan added, “This critical funding will help counseling organizations continue to assist families in making more informed choices before they purchase a home and counsel families facing foreclosure.”
Funding for the new grants is on a parallel course with Neighborhood Stabilization (NSP) projects nationwide. Government agencies and nonprofits are investing hundreds of millions of dollars in stimulus funds to buy and rehab foreclosed, vacant, and blighted homes. Some of those homes are offered for rent, and many are offered for sale. Sale terms and down payment assistance in most NSP projects are tied to buyer counseling with HUD approved home counselors.
In many areas of the country, Realtor associations are working with housing counseling agencies and government, sharing best practices across nonprofit and profit sectors.
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(Frances Flynn Thorsen is a regular contributor to Real Estate Economy Watch. The article is reprinted with permission.)