Requests Boost in Funding for Housing Counselors Program to Keep Up with Need
Currently, Only Two Full-time HUD-Certified Housing Counselors Serving Hard-Hit Western Slope Region
Washington, DC—In his continued effort to help struggling families stay in their homes, U.S. Senator Michael Bennet, is leading an effort to ensure there are more qualified housing counselors for homeowners facing foreclosure in Colorado and across the country. A funding shortfall has lead to a shortage of counselors.
In a letter sent today to Senate Appropriations leaders, Bennet along with U. S. Sens. Kristen Gillibrand (D. -N. Y.), Chuck Schumer (D-N. Y.), Carl Levin (D-Mich.), Debbie Stabenow (D-Mich.), Sherrod Brown (D-Ohio) and Jeff Merkley (D-Ore.) requested $180 million for the National Foreclosure Mitigation Counseling Program (NFMC) and $100 million for the Housing Counseling Assistance Program as the subcommittee considers funding levels for the coming fiscal year. The request is especially important for families on Colorado’s Western Slope, where two of the four HUD-certified counselors serving the hard-hit region work only quarter-time because of lack of funding. In Mesa County, the number of foreclosure filings in the first quarter of 2010 increased by 127 percent over the same period in 2009 and 234 percent over the same period in 2008.
“Although we have recently seen signs of recovery, the housing crisis has affected millions of families across the U. S. Many families struggling to stay current on their mortgage face strict refinancing standards and limited access to credit, ” the letter states. “In addition to direct foreclosure intervention, there is a growing need for housing counselors to help provide assistance to homebuyers, homeowners, and renters. ”
“Housing counselors offer a great service for Colorado families struggling to make ends meet, but resources have not kept up with demand, ” Bennet said. “Without proper funding, counselors can’t do the important work of making sure families avoid foreclosure and stay in their homes. ”
“Western Colorado has proven that we are not immune from the foreclosure plague that our fellow Coloradans on the Eastern Slope have been battling for some time. It is unfortunate that the level of HUD approved foreclosure prevention counseling capacity needed to meet the demand for service is not in place to assist local homeowners, ” said Lori Rosendahl, Director of Operations for the Grand Junction Housing Authority.
As noted in the letter, an Urban Institute analysis concluded that the NFMC program was effective in helping homeowners stave off foreclosure and reducing the likelihood that counseled homeowners would end up in foreclosure. On average, NFMC clients were able to reduce their monthly payments by $336 more than they would have without the program’s counseling.
Bennet’s letter comes on the heels of several efforts he has undertaken to provide assistance to struggling homeowners. Earlier this month, Bennet sent a letter encouraging the U. S. Treasury Department to make common-sense improvements to its mortgage loan modification program that would help keep Coloradans from losing their homes to foreclosure.
In February, Bennet sent a letter urging the Treasury Department to forbid mortgage providers from initiating or continuing the foreclosure process until they determine whether a homeowner is eligible for mortgage loan assistance through HAMP. Bennet was successful in getting the Treasury Department to incorporate that change into its guidelines.
The full text follows:
April 19, 2010
The Honorable Patty Murray, Chairman The Honorable Kit Bond Subcommittee on Transportation, Housing and Urban Development, and Related Agencies Committee on Appropriations S-128 The Capitol Washington, DC 20150
Dear Chairman Murray and Ranking Member Bond:
In light of the ongoing housing crisis affecting millions of American families, we respectfully request that the Subcommittee fund the National Foreclosure Mitigation Counseling Program (NFMC) at $180 million and the Department of Housing and Urban Development (HUD) Housing Counseling Assistance Program at $100 million. These programs provide critical resources in helping families stay in their homes and, ultimately, keeping our economy on solid footing.
Although we have recently seen signs of recovery, the housing crisis has affected millions of families across the U. S. Many families struggling to staycurrent on their mortgage face strict refinancing standards and limited access to credit. While the number of foreclosures dropped by 2.3 percent in February, the rate is still 6 percent higher than the same time last year. In February alone, 308,524 new families received a foreclosure notice in the mail. It is also important to note that many families have had trouble accessing the Obama Administration’s Home Affordable Modification Program (HAMP). To date, only 170,000 homeowners have completed the process out of a total 1.1 million who applied. Of the $75 billion available for the program in lender incentive payments, only $58 million was disbursed by February 2010.
That is why we must promote the pivotal and proven role housing counselors play in helping families avoid foreclosures. An Urban Institute analysis concluded that the NFMC program was effective in both helping homeowners stave off foreclosure and reducing the likelihood that counseled homeowners would end up in foreclosure. The study found that on average, NFMC clients were able to reduce their monthly payments by $336 more than they would have without the Program counseling. However, the resources have not kept up with demand. In FY 2008, the NFMC was funded at $180 million. In last year’s Consolidated Appropriations Act, the program received $65 million. At the same time, the demand has been increasing.
In addition to direct foreclosure intervention, there is a growing need for housing counselors to help provide assistance to homebuyers, homeowners, and renters. The HUD Housing Counseling Assistance Program provides HUD-approved counseling agencies with flexibility to meet a wide range of needs. In 2008-2009, approximately 261,000 prospective homeowners were able to receive pre-purchase counseling. In addition, nearly 1.9 million lower income families received counseling to help meet the responsibilities of homeownership and prevent delinquency. This kind of upfront education and ongoing support will help prevent future housing crises.
As the Subcommittee begins to consider appropriations for FY 2011, we strongly encourage you to acknowledge and support the proven work of these two housing counseling programs. Millions of American families who are working to stay in their homes are depending on it. Thank you for your consideration.