Housing Counseling Agencies forced to eliminate Jobs and assist fewer homeowners in foreclosure due to elimination of federal funding

(From Housing Action Illinois)

 

Federally-funded housing counseling agencies in Illinois are reeling from the fiscal year 2011 budget deal that reduced funding for their work from $88 million to zero.  In response, they are figuring out how to cope with cuts at a time when demand for their services already generally exceeds their resources.  Supported by Housing Action Illinois, agencies are also joining nationwide efforts to restore funding for their work in the fiscal year 2012 budget.

Based on a survey of HUD-certified housing counseling agencies conducted by Housing Action Illinois after the cuts became public on April 12, of the 27 responding agencies, 24 indicated that the cuts would force them to lay off staff and/or see fewer clients.  Two agencies anticipated that they would be forced to shut down and two agencies were uncertain of the impact. 

Counseling agencies work with troubled homeowners to determine the best possible options for keeping borrowers in their homes, and foreclosure counseling sessions often provide homeowners with their best chance at preventing foreclosure through a loan modification or graceful exit.

“We have been concerned that funding would be eliminated due to the perception among some members of Congress that efforts to assist homeowners facing foreclosure haven’t worked, but the data actually shows that housing counseling adds significant value,” said Bob Palmer, the Policy Director at Housing Action Illinois, citing a November 2009 Urban Institute released a study that found that homeowners who received foreclosure counseling were 60% more likely to keep their homes versus homeowners who did not receive counseling.

Housing Action maintains that the main reason why even more homeowners in foreclosures haven’t been able to successfully work with their lender to get a positive outcome is that the federal government hasn’t held loan servicers and lenders accountable for implementing programs such as the Home Affordable Modification Program (HAMP). 

According to RealtyTrac, there were 151,304 foreclosure filings in Illinois in 2010 and recent projections suggest that there will be an increase in foreclosures in 2011 as families and communities continue to struggle to find relief. 

The elimination of the housing counseling line item is compounded by a 22% cut to the Community Development Block Grant program, which provides additional funding for many counseling agencies through their local government.

The only remaining federal funding for housing counseling agencies is the National Foreclosure Mitigation Counseling (NFMC) Program, which provides a small performance-based fee to a counseling agency for each homeowner in foreclosure they assist.  The program was created in 2007 to supplement existing resources and generally provides far less revenue to agencies than the funding that was just eliminated.  It also does not cover the costs of other services provided by counseling agencies, such as pre-purchase and reverse mortgage counseling. Illinois agencies impacted by the budget cuts include, but are not limited to:

• Access Living, Chicago
• Brighton Park Neighborhood Council, Chicago 
• C.E.F.S. Economic Opportunity Corporation, Effingham
• Chicago Urban League
• Community And Economic Development Association Of Cook County
• Community Investment Corporation Of Decatur
• Du Page Homeownership Center, Wheaton
• Greater Southwest Development Corporation, Chicago
• Housing Opportunity Development Corporation, Techny
• Interfaith Housing Center Of The Northern Suburbs, Winnetka
• Latin United Community Housing Association (LUCHA), Chicago
• METEC, Peoria
• Neighborhood Housing Services of Chicago
• Northwest Side Housing Center, Chicago
• Rockford Area Affordable Housing Coalition
• Rogers Park Community Development Corporation, Chicago
• South Suburban Housing Center, Homewood 
• Spanish Coalition for Housing, Chicago
• The Resurrection Project, Chicago
• TSP-Hope, Springfield
• Will County Center For Community Concerns, Joliet

Housing Action Illinois has already contacted key members of the Illinois Congressional delegation to seek their support for restoration of the funding, including Senator Richard Durbin, Assistant Majority Leader, and Representative Judy Biggert (R-Hinsdale), Chair of the Financial Services Committee Subcommittee Insurance, Housing and Community Opportunity.

Housing Action Illinois provides advocacy support and technical assistance to HUD-certified housing counseling agencies.