Housing Counseling: Background and Federal Role

Katie Jones
Analyst in Housing Policy

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. 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. Congress continued to fund this program in FY2011.

Issues currently facing the housing counseling industry include efforts to standardize housing counseling curricula and counselor training, 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 the housing counseling industry 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 National Foreclosure Mitigation Counseling Program, and discusses current issues surrounding housing counseling.


Date of Report: June 9, 2011
Number of Pages: 39
Order Number: R41351
Price: $29.95

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