In general, the federal government does not provide housing counseling services directly. Rather, the federal government provides some financial support for private housing counseling agencies, primarily through the Department of Housing and Urban Development (HUD). Separate from HUD's housing counseling program, Congress has appropriated additional housing counseling funding specifically for foreclosure mitigation counseling since FY2008. Congress has appropriated this funding to NeighborWorks America, a federally chartered nonprofit agency with a nationwide network of affiliated organizations. NeighborWorks administers this funding through the National Foreclosure Mitigation Counseling Program. In addition to HUD's housing counseling program and NeighborWorks, the Department of Veterans Affairs, the Department of the Treasury, and the Department of Defense all provide some support for housing counseling, or for broader financial counseling programs that may include housing counseling, that is aimed at specific groups. Housing counseling is itself a broad term that can refer to a wide variety of activities. However, only nonprofit organizations can be certified by HUD and therefore be eligible for HUD grants. Brief Overview of the Literature on Housing Counseling Effectiveness

While some studies have been done on whether housing counseling affects housing outcomes, most of these studies have been limited in scope. Through this program, HUD certifies housing counseling agencies that meet certain criteria and provides competitive grants to some of these HUD-approved housing counseling agencies. HUD-Approved Housing Counseling Agencies

This section describes the types of housing counseling agencies that HUD certifies, the process for becoming a HUD-approved housing counseling agency, and the requirements governing counseling programs at HUD-approved housing counseling agencies. HUD certifies four different types of housing counseling agencies: local housing counseling agencies, multi-state organizations, regional intermediaries, and national intermediaries. Local housing counseling agencies (LHCAs) and multi-state organizations (MSOs) both provide counseling services directly to clients within limited geographic areas. Multi-state agencies are agencies that have one main office and one or more branch offices in two or more states. HUD Approval Process for Housing Counseling Agencies

Housing counseling agencies that are certified by HUD receive a certificate of HUD approval, are listed on HUD's website, and are eligible to apply for HUD housing counseling funds. (Congress also appropriated funding for HUD to fund a demonstration counseling program in FY1972.) National and regional intermediaries that receive HUD grants pass on the funding that they receive to their branches or affiliates. Types of Counseling Activities

In recent years, the majority of housing counseling activities carried out by HUD-approved housing counseling agencies have consisted of some type of homeownership counseling (pre-purchase counseling, mortgage delinquency counseling, or other types of post-purchase counseling). Other Federal Funding for Housing Counseling

While the federal government primarily provides financial support for housing counseling through appropriations to HUD's housing counseling program, it also provides some funding for housing counseling through other sources. NeighborWorks is a government-chartered, nonprofit corporation with a national network of affiliated organizations that engage in a variety of community revitalization activities, such as generating investment in communities and providing training and technical assistance related to affordable housing. Congress did not provide funding to this program in FY2011 or FY2012. This does not mean that individual agencies do not rely on HUD funding to a larger degree, but among all HUD-approved agencies, HUD housing counseling funding appears to be a relatively small portion of total funding. While Congress has often provided increased funding for housing counseling in recent years, both through increased appropriations to HUD's housing counseling program and funding for NeighborWorks's NFMCP, it is unclear whether the increase in funding has kept up with increased demand on housing counseling agencies to provide counseling to borrowers facing default or foreclosure.
The term "housing counseling" refers to a wide variety of educational activities geared toward homebuyers, homeowners, renters, senior citizens, or other populations with particular housing goals. Some potential topics of housing counseling include pre-purchase counseling for potential homebuyers; post-purchase counseling on subjects such as budgeting or home maintenance; foreclosure prevention counseling; counseling on helping renters find or maintain rental housing; and counseling on fair housing, predatory lending, or other topics, among other things. The federal government does not provide housing counseling directly, nor does it require housing counseling for most housing-related decisions. Rather, the federal government provides some support for private housing counseling programs, primarily through the Department of Housing and Urban Development (HUD). HUD certifies housing counseling organizations that meet certain criteria, and Congress appropriates funding to HUD each year to provide competitive grants to housing counseling agencies that have been certified by the department. Not all housing counseling agencies that are approved by HUD will receive federal housing counseling grants. Even for organizations that do receive grants from HUD, federal funding generally makes up a relatively small part of their total funding.
Housing counseling agencies that are approved by HUD can be one of two basic types. The first type consists of local housing counseling agencies or multi-state organizations, which generally provide counseling directly through only one or a few branch offices located in a limited geographic area. Local housing counseling agencies and multi-state organizations generally apply for HUD housing counseling grants on their own behalf. Alternatively, HUD-approved housing counseling agencies can be national or regional intermediaries, which provide funding and technical support for housing counseling to a network of affiliates and branch offices that operates in a much larger geographic area. National and regional intermediaries apply for HUD housing counseling grants on behalf of their affiliates and branches, and pass through funding they receive to their network of organizations.
Congressional appropriations for HUD's housing counseling program had increased significantly in recent fiscal years, until Congress opted not to fund HUD's housing counseling program in FY2011. Congress did provide funding for this program in FY2012. Since FY2008, Congress has also appropriated additional housing counseling funds specifically for counseling to help households avoid foreclosure. Rather than appropriating this foreclosure mitigation funding to HUD, Congress has appropriated it to NeighborWorks America, a government-chartered nonprofit agency that is also a HUD-certified national intermediary. NeighborWorks administers this funding through the National Foreclosure Mitigation Counseling Program (NFMCP).
Issues currently facing the housing counseling industry include efforts to standardize housing counseling curricula and counselor training, the amount of housing counseling funding, and questions regarding counseling's effectiveness. While some studies have suggested that some types of housing counseling produce positive outcomes in certain circumstances, existing research into housing counseling tends to be limited, and the overall effectiveness of housing counseling is unclear.
This report describes housing counseling in general, with a focus on HUD's processes for certifying housing counseling agencies and distributing housing counseling funding. It also provides a brief overview of other sources of federal funding for housing counseling activities, including the NFMCP, and discusses current issues surrounding housing counseling.