[Federal Register: December 23, 2004 (Volume 69, Number 226)]
[Proposed Rules]
[Page 77117-77125]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23de04-29]
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Part V
Department of Housing and Urban Development
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24 CFR Part 214
Housing Counseling Program; Proposed Rule
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 214
[Docket No. FR-4798-P-01; HUD-2004-0020]
RIN 2502-AH99
Housing Counseling Program
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would establish regulations for the
Department's housing counseling program, as authorized by the Housing
and Urban Development Act of 1968, and for which, the past several
years, notices of funding availability have been issued on an annual
basis. Codification of these requirements would reflect the permanence
of this program. This proposed rule would adopt and augment the housing
counseling program requirements with which grantees and housing
counseling agencies are already familiar.
DATES: Comments Due Date: February 22, 2005.
ADDRESSES: Interested persons are invited to submit comments regarding
this rule to the Regulations Division, Office of General Counsel, Room
10276, Department of Housing and Urban Development, 451 Seventh Street,
SW., Washington, DC 20410-0500. Interested persons may also submit
comments electronically through either:
The Federal electronic rulemaking portal at: http://www.regulations.gov
; or
The HUD electronic rulemaking website at: http://www.epa.gov/feddocket.
Follow the link entitled ``View Open HUD
Dockets.'' Commenters should follow the instructions provided on that
site to submit comments electronically.
Facsimile (FAX) comments are not acceptable. In all cases,
communications must refer to the docket number and title. All comments
and communications submitted will be available, without revision, for
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the
above address. Copies are also available for inspection and downloading
at http://www.epa.gov/feddocket.
FOR FURTHER INFORMATION CONTACT: Loyd LaMois, Office of Housing, Single
Family Program Support Division, Department of Housing and Urban
Development, Room 9274, 451 Seventh Street, SW., Washington, DC 20410-
8000, telephone, (202) 708-0317. (This is not a toll-free number.)
Individuals with hearing or speech impairments may access this number
through TTY by calling the toll-free Federal Information Relay Service
at (800) 877-8339.
SUPPLEMENTARY INFORMATION
I. Background
HUD's housing counseling program, authorized under section 106 of
the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x),
endeavors to provide housing counseling services, including outreach to
potential homebuyers, homeowners, renters, and the homeless. Housing
counseling services may include but are not limited to: assisting
eligible homebuyers to seek out and purchase homes; helping renters
locate and qualify for assisted rental units; helping eligible
homebuyers obtain affordable housing; assisting homeowners to avoid
foreclosures; assisting renters to avoid evictions; helping the
homeless to find temporary or permanent shelter; reporting fair housing
or discrimination complaints or both; and addressing housing problems.
Section 106(a) defines housing counseling services as ``counseling
and advice to tenants and homeowners with respect to property
maintenance, financial management and such other matters as may be
appropriate to assist them in improving their housing conditions and in
meeting the responsibilities of homeownership.'' Under section 106, HUD
may provide counseling directly, or may enter into contracts with, or
make grants to, and provide other types of assistance to eligible
private or public organizations (including grassroots faith-based and
other community-based organizations) with special competence and
knowledge in providing housing counseling to low- and moderate-income
families for the purposes of providing counseling and advice to tenants
and homeowners.
II. This Proposed Rule
This proposed rule would establish regulations for HUD's housing
counseling program, as authorized by the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x). To date, the program has been
administered through notices of funding availability and related
guidance. Establishment of regulations would reflect the permanency of
this program. This proposed rule would adopt and augment the housing
counseling program requirements with which grantees and housing
counseling agencies are already familiar.
This proposed rule is divided into five major subparts under a new
part 214.
Subpart A of this proposed rule describes the statutory and program
purposes as well as defines major terms used in the housing counseling
program. Specifically, this proposed rule would define essential
housing counseling terms that are used throughout the program
including: ``clients,'' ``housing counseling work plan,''
``intermediary,'' and ``local housing counseling agency.''
The process by which housing counseling agencies acquire and
maintain HUD-approved status is explained in subpart B. In particular,
this subpart delineates the criteria that housing counseling agencies
are required to meet in order to become HUD-approved housing counseling
agencies. Key qualifying criteria for HUD approval include but are not
limited to: nonprofit and tax-exempt status; a minimum of one year
successful experience in administering a housing counseling program; at
least one year operating in the geographic area in which the agency
endeavors to serve; and sufficient resources to implement a proposed
counseling plan no later than the date of HUD approval. In addition to
approval criteria, this subpart also explains the application process
for HUD approval. A housing counseling agency must formally apply for
HUD-approved status through an application process. If the agency's
application meets the requirements of this subpart, HUD will approve
the agency. In the event that an application is not approved by HUD,
the agency will have an opportunity to revise and resubmit an
application, or send a letter of appeal to the Department.
Subpart C sets forth the procedures for termination of HUD-approved
status and agency appeal rights. A termination by HUD would be based on
HUD's determination that termination is in the best interests of the
Department. Such a determination may be based on an agency's failure to
or inadequate capacity to comply with, implement, or achieve the
outcomes described in its housing counseling work plan. In addition,
failure to comply with the program requirements described in these
regulations or misuse of grant funds may result in termination of HUD-
approved status.
An agency may appeal an adverse decision by HUD through a formal
appeals process. HUD must receive the agency's formal, written appeal
within 30 days of the date of HUD's decision letter. In addition, HUD
may take other actions as outlined in 24 CFR part 24.
[[Page 77119]]
Subpart C describes the procedures for reapproval or removal resulting
from a performance review by HUD.
Program administration including performance criteria,
recordkeeping and reporting requirements, performance reviews, and
housing counseling fees are explained in subpart D. In addition, this
subpart describes the basic services that HUD-approved housing
counseling agencies may provide to clients beyond preliminary client
interviews. Approved housing counseling services include, but are not
limited to: home buying education; foreclosure prevention; referrals to
rental assistance programs; referrals to community resources and
homeless services.
This subpart describes the criteria that approved housing
counseling agencies must meet in order to maintain HUD-approved status.
In addition to minimum workload, staff, and funding levels, this
subpart explains conflict of interest measures with which HUD-approved
housing counseling agencies must comply. Housing counseling agencies
must provide counseling services to at least the minimum number of
clients, as determined by HUD, annually. Agencies that provide only
Home Equity Conversion Mortgage (HECM) counseling are exempt from the
workload requirement. Compliance with these regulations will be
monitored through periodic performance review (PR). The PR may
determine whether an agency's HUD-approved status will be approved
unconditionally, approved with conditions, or terminated.
Subpart D also describes funding and collection of housing
counseling fees. This subpart explains that HUD-approval does not
guarantee funding from HUD, but that several sources of funding may be
available to HUD-approved housing counseling agencies. Agencies may
charge reasonable fees, except as otherwise prohibited, on a sliding
scale for individual counseling services as long as the fees do not
create a financial hardship for the client.
In addition, subpart D explains the recordkeeping and reporting
requirements for HUD-approved agencies. HUD-approved agencies must
maintain a system of records that HUD may use as part of the PR, and
the agency must ensure the confidentiality of these records. On an
annual basis, each agency must submit an activity report. This subpart
also requires HUD-approved housing counseling agencies to maintain a
client management system that allows the agency to compile client-level
demographic, financial, and outcomes data.
Subpart E provides for the announcement of competitive grant
funding availability. When funds are appropriated by Congress, HUD will
publish a Notice of Funding Availability (NOFA) in the Federal Register
and on Grants.gov.
Current law (12 U.S.C. 1701x) extends eligibility of housing
counseling services for virtually all defaulting homeowners and
tenants. In addition, section 255(d)(2)(B) of the National Housing Act
(12 U.S.C. 1715z-20(d)(2)(B)), which authorizes mortgage insurance of
home equity conversion mortgages (HECM) for elderly homeowners,
requires that a home equity conversion mortgage (HECM) must be executed
by a mortgagor who received ``adequate counseling by a third party
(other than the lender).'' Certain other HUD housing programs may
require participation in the Housing Counseling Program. Accordingly,
the regulations governing individual HUD housing programs should be
consulted.
III. Findings and Certifications
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.),
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
This proposed rule would establish regulations for the Department's
housing counseling program, a voluntary program through which housing
counseling agencies may obtain HUD-approved status and become eligible
for grant funding on a competitive basis. Accordingly, the undersigned
certifies that this rule will not have a significant economic impact on
a substantial number of small entities. Notwithstanding HUD's
determination that this rule will not have a significant economic
impact on a substantial number of small entities, HUD specifically
invites comments regarding less burdensome alternatives to this rule
that will meet HUD's objectives as described in this preamble.
Executive Order 12866, Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this proposed
rule under Executive Order 12866, Regulatory Planning and Review. OMB
determined that the rule is a ``significant regulatory action'' as
defined in section 3(f) of the Order (although not economically
significant regulatory action under the Order). Any change made to the
rule as a result of that review are identified in the docket file,
which is available for public inspection in the Regulations Division,
Room 10276, Office of General Counsel, Department of Housing and Urban
Development, 451 Seventh Street, SW., Washington, DC 20410-0500.
Environmental Impact
This proposed rule would codify the existing housing counseling
program. This proposed rule is categorically excluded from
environmental review under the National Environmental Policy Act (42
U.S.C. 4321 et seq.). In keeping with the exclusion provided for in 24
CFR 50.19(c)(1), this amendment does not direct, provide for assistance
or loan and mortgage insurance for, or otherwise govern or regulate
real property acquisition, disposition, leasing, rehabilitation,
alteration, demolition, or new construction; or establish, revise, or
provide for standards for construction or construction materials,
manufactured housing, or occupancy.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits, to the
extent practicable and permitted by law, an agency from promulgating a
regulation that has federalism implications and either imposes
substantial direct compliance costs on state and local governments and
is not required by statute, or preempts state law, unless the relevant
requirements of section 6 of the Executive Order are met. This proposed
rule does not have federalism implications and does not impose
substantial direct compliance costs on state and local governments or
preempt state law within the meaning of the Executive Order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for federal
agencies to assess the effects of their regulatory actions on state,
local, and tribal governments, and on the private sector. This proposed
rule does not impose any federal mandates on any state, local, or
tribal government, or on the private sector, within the meaning of the
UMRA.
Paperwork Reduction Act
The information collection requirements contained in this proposed
rule have been approved by the Office of Management and Budget in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520) and assigned OMB control
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number 2502-0261. An agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless the
collection displays a valid control number.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance Program number is
14.169.
List of Subjects in 24 CFR Part 214
Administrative practice and procedure; loan program-housing and
community development; organization and functions (government
agencies); reporting and recordkeeping requirements.
Accordingly, for the reasons described in the preamble, HUD
proposes to amend title 24 of the Code of Federal Regulations to add
part 214 as follows:
PART 214--HOUSING COUNSELING PROGRAM
Subpart A--General Program Requirements
Sec.
214.1 Purpose.
214.3 Definitions.
Subpart B--Approval and Disapproval of Housing Counseling Agencies
214.100 General.
214.103 Approval criteria.
214.105 Preliminary application process.
214.107 Approval by HUD.
214.109 Disapproval by HUD.
Subpart C--Termination and Appeals
214.200 Termination of HUD-approved status and grant agreements.
214.203 Re-approval or removal as a result of a performance review.
214.205 Appeals.
Subpart D--Program Administration
214.300 Counseling services.
214.303 Performance criteria.
214.305 Agency profile changes.
214.307 Performance review.
214.309 Reapproval and disapproval based on performance review.
214.311 Funding.
214.313 Housing counseling fees.
214.315 Recordkeeping.
214.317 Reporting.
214.319 Client management system.
Subpart E--Grants
214.400 Grants.
Subpart F--Other Federal Requirements
214.500 Financial reports.
214.503 Other requirements.
Authority: 12 U.S.C. 1701(x); 42 U.S.C. 3535(d).
Subpart A--General Program Requirements
Sec. 214.1 Purpose.
This part implements the Housing Counseling Program authorized by
section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C.
1701x). Section 106 authorizes HUD to provide, make grants to, or
contract with public or private organizations to provide a broad range
of housing counseling services to homeowners and tenants to assist them
in improving their housing conditions and in meeting the
responsibilities of tenancy or homeownership. The regulations contained
in this part prescribe the procedures and requirements by which the
Housing Counseling Program will be administered.
Sec. 214.3 Definitions.
The following definitions apply, as appropriate, throughout this
part:
Affiliate. An organization connected with a regional or national
intermediary for purposes of its housing counseling program. An
affiliate is: (1) Duly organized and existing as a tax-exempt nonprofit
organization; (2) in good standing under the laws of the state of the
organization, and (3) authorized to do business in the states where it
proposes to provide housing counseling services. An affiliate can be a
subgrantee.
Branch or branch office. An organizational and subordinate unit of
a local housing counseling agency, regional or national intermediary,
or State Housing Finance Agency not separately incorporated or
organized. A branch or branch office must be in good standing under the
laws of the state where it proposes to provide housing counseling
services. A branch or branch office cannot be a subgrantee or
affiliate.
HUD-approved housing counseling agencies. Private and public
nonprofit organizations that are exempt from taxation under section
501(a) pursuant to section 501(c) of the Internal Revenue Code of 1996,
26 U.S.C. 501(a) and 501(c)) and approved by HUD, in accordance with
this part, to provide housing counseling services to clients directly
or through their subgrantees, affiliates, or branches and which meet
the requirements set forth in these regulations.
Clients. Individuals and families who are homeless, potential
renters, renters, potential homebuyers, homebuyers, homeowners who are
eligible for and apply for federal, state and local or conventional
financed housing or housing assistance, or persons who occupy such
housing and seek the assistance of a HUD-approved housing counseling
agency to meet a housing need or resolve a housing problem.
Education. Information provided in a group or classroom setting to
a number of people and covering topics applicable to groups of people
such as, but not limited to: Renter rights; the homebuying process; how
to maintain a home; how to set up a budget; fair housing; identifying
and reporting predatory lending practices; rights for persons with
disabilities; and the importance of good credit.
Counseling. One-on-one assistance provided to an individual or
family that addresses unique financial circumstances and focuses on
overcoming specific obstacles to achieving a housing goal such as
repairing credit, addressing a rental dispute, purchasing a home,
locating cash for a down payment, fair housing, finding units
accessible to persons with disabilities, avoiding foreclosure, or
resolving a financial crisis.
Housing counseling work plan. A housing counseling agency's plan to
provide housing counseling activities and services in a specified
geographic area to resolve or mitigate identified community needs and
problems. The plan will also describe the objectives of the agency and
the resources available to meet those objectives. An intermediary's
plan includes similar information for the network of affiliated
agencies or branches.
Client counseling plan. A plan of action that outlines what the
housing counseling agency and the client will do in order to meet the
client's housing goals and, when appropriate, addresses the client's
housing problem(s).
Housing goal. A potential, realistic objective set by the client
with advice from the housing counseling agency and with which the
agency's housing counselor concurs. Under HUD programs, a HUD-approved
housing counseling agency shall not accept as a client a person whose
housing objective is unreasonable and is obviously unattainable.
Intermediary. A HUD-approved Housing Counseling Agency that
provides housing counseling services through its branches, subgrantees,
or affiliates. The term intermediary can be used as follows:
(1) National intermediary. A national intermediary provides housing
counseling services through its branches, subgrantees, and affiliates
in a number of states as determined by HUD.
(2) Regional Intermediary. A regional intermediary provides housing
counseling services through its branches, subgrantees, and affiliates
in a generally recognized region within the United States of America,
such as the Southwest, Mid-Atlantic, New England.
Local housing counseling agency. A HUD-approved housing counseling
agency that is not a State Housing Finance Agency or a Regional or
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National Intermediary. A local housing counseling agency may have only
one location or a main office with one or more branch offices within
the same state or no more than the number of contiguous states as
determined by HUD.
State housing finance agency (SHFA). Any public body, agency or
instrumentality created by a specific act of a state legislature
empowered to finance the activities designed to provide housing and
related facilities through land acquisition, construction or
rehabilitation throughout an entire state. A SHFA may participate in
HUD's housing counseling grant program without prior approval from HUD.
SHFAs may provide direct counseling services or subgrant housing
counseling funds to local housing counseling agencies within the SHFA's
state. ``State'' includes the several states, Puerto Rico, the District
of Columbia, Guam, the Commonwealth of the Northern Mariana Islands,
American Samoa and the U.S. Virgin Islands.
Subgrantee. An organization that receives a subgrant of housing
counseling funds provided under a HUD grant.
Subpart B--HUD Approval
Sec. 214.100 General.
An organization may be approved by HUD as a HUD-approved housing
counseling agency upon meeting the requirements enumerated in 24 CFR
214.103 and upon completing the application procedures set forth in
this subpart B.
Sec. 214.103 Approval criteria.
The following criteria for approval apply to all agencies and
intermediaries including all local housing counseling agencies,
branches, and affiliates that are included in one application:
(a) Nonprofit and tax-exempt status. A housing counseling agency
must function as private or public nonprofit organization. The agency
must submit evidence of nonprofit status and tax-exempt status under
section 501(a) pursuant to section 501(c)(3) of the Internal Revenue
Code of 1996 (26 U.S.C. 501(a) and 501(c)).
(b) Experience. An agency must have successfully administered a
housing counseling program for at least one year. An intermediary must
have operated in an intermediary capacity for at least one year and
must require its branches and affiliates to have administered a housing
counseling program for at least one year.
(c) Ineligible participants. An agency, including any of the
agency's directors, partners, officers, principals, or employees must
not:
(1) Be suspended, debarred, or otherwise restricted under the
Department's, or any other federal regulations;
(2) Be indicted for, or convicted of, an offense that reflects upon
the responsibility, integrity, or ability of the agency to participate
in housing counseling activities;
(3) Be subject to unresolved findings as a result of HUD or other
government audit or investigations; and
(4) Be engaged in activities that in HUD's opinion do not conform
to generally accepted practices of prudent agencies or that demonstrate
irresponsibility.
(d) Community base. A housing counseling agency and its individual
branches and affiliates must have functioned for at least one year in
the geographical area(s) the agency set forth in its housing counseling
work plan.
(e) Recordkeeping and reporting. The agency must have an
established system of recordkeeping so that client files can be
reviewed and annual activity data for the agency can be verified,
reported, and analyzed. This system must meet the requirements of 24
CFR 1.6 and 121.
(f) Housing counseling resources. The agency must have the
following resources sufficient to implement the proposed housing
counseling work plan no later than the date of HUD approval:
(1) Funding. The application for approval must provide evidence of
funds immediately available, or written commitment for funds to cover
the cost of operating the housing counseling work plan during the
initial twelve-month period of HUD approval.
(2) Staff. The agency must employ staff trained in housing
counseling with at least six months experience in the job they will
perform in the agency's housing counseling program.
(3) Language skills. If the agency intends to serve non-English
speaking clients, the housing counselor(s) must be fluent in the
language of the clients they serve, the housing counseling agency must
use the services of an interpreter, or the agency must refer the client
to another agency that can meet the client's needs.
(g) Knowledge of HUD programs and local housing market. The
agency's housing counseling staff must possess a working knowledge of
HUD's housing programs, other state and local housing programs
available in the community, consolidated plans, and the local housing
market. The staff should be familiar with housing programs offered by
conventional mortgage lenders and other housing or related programs
that may assist their clients.
(h) Contracts or agreements to provide eligible housing counseling
services. An agency and its branches, affiliates, and subgrantees must
deliver all of the housing counseling activities set forth in the
agency's housing counseling work plan. It is not permissible to
contract out housing counseling services, except:
(1) In geographic areas where a need for housing counseling
services is demonstrated and no HUD-approved housing counseling agency
or its branches, affiliates, or subgrantees exists. Under this
exception, the contract must delineate the respective housing
counseling program responsibilities of the contracting parties, the
agency providing services (contractor), must meet the HUD-approval
eligibility standards, and the contracting agency must receive prior
written approval from HUD.
(2) Intermediaries may enter into agreements with affiliates and
subgrantees to provide housing counseling services. The agreements with
affiliates may be an exchange of letters that delineate the respective
housing counseling program responsibilities of the parties. Agreements
with subgrantees must be sufficiently detailed to establish
accountability and allow for adequate monitoring in accordance with
applicable OMB Circulars and HUD regulations.
(3) With prior approval from HUD, and at HUD's discretion, national
organizations may operate a housing counseling program with a network
of affiliated counselors, rather than affiliated counseling agencies,
if the structure is designed to meet a special housing counseling need
identified by HUD.
(i) Community resources. The housing counseling agency must have
established working relationships with private and public community
resources to which it can refer clients who need help the agency cannot
offer, including agencies offering similar or related services to non-
English speaking clients.
(j) State and local requirements. An agency and its branches and
affiliates must meet all state and local requirements for its
operation.
(k) Facilities. All housing counseling facilities of the agency and
its branches, affiliates, and subgrantees must meet the following
criteria:
(1) Located in the community of the target population;
(2) Have a clearly identified office, with space available for the
provision of housing counseling services, located in a space that is
separate and apart from
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any other entity, except that an agency may share general reception-
type entrances, or lobbies with other business entities. The office
should operate during normal business hours and offer extended hours
when necessary;
(3) Provide privacy for one-on-one counseling and confidentiality
of client records;
(4) Provide accessibility features for persons with disabilities
and elderly persons, or the agency must arrange to meet with such
persons at an alternative accessible location.
(l) Housing counseling work plan. The agency must submit a detailed
yet concise housing counseling plan that explains the needs and
problems of the target population, how the agency will address these
needs and problems with its available resources, the type of housing
counseling services offered, and the results (outcomes) to be achieved
within the two-year period of approval. This plan must be periodically
reviewed and when changed or amended the agency must notify and provide
a copy to HUD. An agency must deliver at least one of the housing
counseling components described in Sec. 214.300. If an agency is to
offer education through group sessions, it must also offer one-on-one
counseling.
Sec. 214.105 Application process.
(a) Submission. All agencies must complete the forms prescribed by
HUD and submit the application and all supporting documentation to HUD.
Agencies with branches or affiliates for which the parent entity
exercises control over the quality and type of housing counseling
services rendered, may submit a single application for approval to
include all offices.
(b) Approval. If an application package meets all requirements
outlined in Sec. 214.103, HUD will inform the agency of its approval,
for a period up to two years, and provide a written certification of
HUD-approved status.
(c) Disapproval. If an application package does not meet all
requirements in Sec. 214.103, HUD will provide the agency with the
reasons for the denial in writing. Within 30 days of receipt of written
notice of denial, the agency may submit a revised application, or
appeal HUD's decision in writing to HUD.
Sec. 214.107 Approval by HUD.
(a) Notice of approval. HUD will send notice of approval in the
form of an approval letter to the agency's main office.
(b) Certificate of approval. HUD will issue a ``Certificate of
Approval'' to the approved agency or intermediary. The certificate will
show the period of approval.
(c) Appearance on list of HUD-approved housing counseling agencies.
As a condition of HUD approval, names and contact information for all
approved local housing counseling agencies, and affiliates of
intermediaries will appear on HUD's Web site for purposes of client
referrals. All clients who contact the agency as a result of these
referrals must be served. In cases where the agency does not offer the
unique services requested by the client, the agency must refer the
client to another HUD-approved housing counseling agency in the area.
In addition, names and addresses of all HUD-approved housing counseling
agencies will be available to the public through HUD's toll-free
housing counseling hotline.
Sec. 214.109 Disapproval by HUD.
HUD will send a letter of disapproval to the agency explaining the
application's deficiencies. Within 30 days of the date of a letter of
disapproval, the agency may appeal the decision by writing to HUD, as
provided in Sec. 214.205, or submit a revised application addressing
deficiencies described in the disapproval letter. If an agency decides
to submit a revised application, the agency may consult HUD to
determine the specific actions needed to resolve the deficiencies.
Subpart C--Termination and Appeals
Sec. 214.200 Termination of HUD-approved status and grant agreements.
(a) Cause for termination by HUD. HUD may terminate an agency's or
intermediary's approval, remove the agency and its branches, or an
intermediary and its branches and affiliates from the list of HUD-
approved agencies, and terminate any grant agreements (if applicable)
upon confirmation of any or all of the following reasons:
(1) In the best interest of the Department;
(2) Non-compliance with program requirements, as defined in these
regulations;
(3) Failure to implement in whole or in part the agency's approved
housing counseling work plan or failure to notify HUD of changes in the
agency's housing counseling work plan;
(4) Lack of the capacity to deliver the housing counseling
activities described in its approved housing counseling work plan;
(5) Failure to achieve outcomes described in the work plan; and
(6) Misuse of grant funds.
(b) Agency withdrawal. The agency may withdraw from the housing
counseling program at any time.
(c) Post-termination, post-withdrawal requirements. All
terminations by HUD, or an agency's withdrawal, must be in writing.
When a termination or withdrawal occurs, the agency must return to HUD
any unexpired ``Certificate of Approval.'' A terminated or inactive
agency cannot continue to display this certificate. If HUD has
determined that an agency will be terminated from participating in the
Housing Counseling Program, and an agency does not voluntarily
withdraw, then HUD may follow the provisions found in 24 CFR part 24.
Sec. 214.203 Re-approval or removal as a result of a performance
review.
HUD may conduct a periodic Performance Review (PR) for all HUD-
approved agencies, intermediaries, and SHFAs receiving housing
counseling grant funds. The Performance Review and the terms of re-
approval or removal of a HUD-approved housing counseling agency are
described in Sec. 214.307 of this title.
Sec. 214.205 Appeals.
An agency making an application for approval, or an approved agency
seeking reapproval, shall have the right to appeal any adverse
decisions rendered by HUD under this part:
(a) Appeal must be in writing. An agency may make a formal written
appeal to HUD.
(b) Timeliness. HUD must receive an appeal within 30 days of the
date of the HUD decision letter to the applicant agency. HUD is not
bound to review appeals received after this 30-day period.
(c) Other action. Nothing in this section prohibits HUD from taking
such other action against an agency as provided in 24 CFR part 24 or
from seeking any other remedy against an agency available to HUD by
statute or otherwise.
Subpart D--Program Administration
Sec. 214.300 Counseling services.
(a) Basic requirements. Unless exempted by HUD, all counseling must
be in-person. For each client, a HUD-approved housing counseling agency
shall offer the following basic services:
(1) Housing counseling that enables a client to make informed and
reasonable decisions to achieve his or her housing goal.
(2) Referrals to local, State, and Federal resources.
(3) Follow-up communication with the client to assure that the
client is
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progressing toward his or her housing goal or that the agency should
modify or terminate housing counseling.
(b) Agency's housing counseling work plan. A HUD-approved housing
counseling agency shall deliver housing counseling services consistent
with the agency's housing counseling work plan. The work plan should
identify housing counseling services needed in targeted communities and
geographic areas where the agency and its branches and affiliates
provide their housing counseling services. An agency and its branches
and affiliates that offer group, educational sessions must also offer
one-on-one housing counseling.
(c) Approved housing counseling activities. The following are
examples of approved areas of housing counseling:
(1) Displacement and relocation;
(2) Homeless services;
(3) Home buying including housing selection/mobility counseling,
search assistance, purchase procedures, and closing costs, and
homebuyer education programs;
(4) Rental topics including landlord-tenant laws, lease terms, HUD
rental programs and rent subsidy programs, qualifying for federal,
state, or local governmental assistance, and rent delinquency;
(5) Home financing including budgeting, escrow funds, foreclosure,
delinquency and default, FHA-insured financing and other mortgage
insurance programs, and the Home Equity Conversion Mortgage Program
(HECM);
(6) Marketing and outreach initiatives including providing general
information about housing opportunities, conducting informational
campaigns, and raising awareness about critical housing topics, such as
predatory lending or fair housing issues;
(7) Referrals to community resources;
(8) Rights and responsibilities of persons who own single family
housing, including cooperatives and condominiums, as well as housing
care and maintenance; and
(9) Any other area of housing counseling that is determined to be
appropriate by the agency and approved by the Secretary.
Sec. 214.303 Performance criteria.
To maintain HUD-approved status, an approved agency must meet the
following requirements:
(a) Workload. During each 12-month period, the agency must provide
housing counseling to at least the minimum number of clients, as
determined by HUD. Agencies that offer only housing counseling services
limited to HECMs, are exempt from this requirement.
(b) Reporting. Every fiscal year, the agency must submit to HUD a
complete, accurate and timely activity report as described in 24 CFR
214.317.
(c) Agency's housing counseling work plan. The agency must
implement the housing counseling work plan and demonstrate reasonable
achievement of the outcome objectives approved by HUD as described in
24 CFR 214.103(k).
(d) Client referrals from HUD and other HUD-approved agencies. All
HUD-approved agencies must accept all clients referred by HUD and
referred by other HUD-approved agencies that do not provide the
specific housing counseling service or offer this service within a
targeted or geographic area that is covered by a HUD-approved agency to
which the referral is made. If an agency does not have the expertise or
skills to meet the needs of a client, it must refer the client to
another HUD-approved agency.
(e) Conflicts of interest. No director, employee, officer,
contractor, or agent of a HUD-approved housing counseling agency or
intermediary shall engage in activities that would involve a real or
apparent conflict of interest. Such a conflict would arise when the
director, employee, officer, contractor, or agent, any member of his or
her immediate family, his or her partner, or an organization which
employs or is about to employ any of the parties indicated herein has a
direct interest in the client as a tenant, serves as a collection agent
for the client's mortgage lender, landlord or creditor, originates,
holds, or services a mortgage on the client's property, owns or
purchases a property that the client seeks to rent, owns or purchases
the property that the client seeks to purchase, steers clients to
family or business associates such as particular mortgage lenders and
brokers, builders, or real estate sales agents or brokers, acquires the
client's property from the trustee in bankruptcy, or any financial or
other interest in any matter relating to the client. The agency, its
staff, or any member of his or her immediate family shall avoid any
action that might result in, or create the appearance of, administering
the housing counseling operation for personal or private gain;
providing preferential treatment to any organization or person; or
undertaking any action that might compromise the agency's ability to
ensure compliance with the requirements of this part and to serve the
best interests of its clients. HUD may investigate agency practices and
may take action to suspend or terminate the agency's approval.
(f) Disclosure requirements. A HUD-approved agency must provide to
all clients (and potential clients) a disclosure statement that
explicitly describes the various types of services provided by the HUD-
approved agency and any exclusive relationships between this agency and
any other industry partners. The disclosure must clearly state that the
client is not obligated to receive any other services offered by the
organization or its exclusive partners. Furthermore, the agency must
also provide information on alternative services, programs, and
products.
(g) Staff. The agency must employ experienced or trained housing
counselors. Supervisors of the housing counselors must periodically
monitor the work of the housing counselors by reviewing client files
with the housing counselor to determine the adequacy and effectiveness
of the housing counseling. The agency must document these monitoring
activities and make the documentation available to HUD upon request.
(h) Funding. The agency must maintain a level of funds that enables
it to provide housing counseling to at least the required workload of
fifty (50) clients every year whether or not the agency receives HUD
funding. If the agency charges counseling fees to clients, the agency
must comply with its HUD-approved fee structure.
Sec. 214.305 Agency profile changes.
An approved agency should notify HUD in writing within 15 days when
any of the following occurs:
(a) The agency loses or changes its non-profit status.
(b) The agency no longer complies with local and state
requirements.
(c) Changes occur in any of the items below:
(1) Address(es) of the agency's main office and the addresses of
its branches and affiliates;
(2) Staff personnel responsible for the housing counseling program,
such as the housing counselors, and management staff;
(3) Telephone numbers of the main office, affiliates, and branches;
(4) Any other aspect of the agency's purpose or functions that may
impair its ability to comply with these regulations or the applicable
grant agreement (e.g., lack of qualified housing counselors).
Sec. 214.307 Performance review.
(a) HUD may conduct periodic Performance Reviews (PR) to determine
re-approval of the agency. In addition, HUD may conduct on-site or desk
reviews of SHFAs that receive housing counseling grant funding, and
intermediaries or local housing counseling agencies to include
branches, subgrantees, and affiliates.
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(b) The performance review will consist of a review of the agency's
or intermediary's compliance with the requirements of this part, the
requirements of grant agreements, if applicable, and the agency's level
of success in delivering counseling services.
Sec. 214.309 Re-approval and disapproval based on performance review.
Based on the PR, HUD may determine whether to renew the approval
unconditionally, conditionally, or withdraw its approval of the agency.
(a) Unconditional Re-approval. If the agency is in full compliance
with the performance criteria of this part, HUD may re-approve the
agency unconditionally for another two years.
(b) Conditional Re-approval. If the agency fails to meet the
performance criteria, but the failure does not seriously impair the
agency's counseling capability as required in this part, HUD may extend
the agency's approval for up to ninety (90) days. HUD may grant this
conditional extension only if the agency agrees to attempt to correct
its program deficiencies within the period of the extension. Otherwise,
HUD must withdraw its approval of the agency, notify the agency by
letter and specify the deficiencies.
(c) Termination of HUD Approval. When HUD determines that the
agency's program deficiencies seriously impair the agency's ability to
comply with this part, then HUD must terminate its approval of the
agency immediately.
(d) Reinstatement of HUD Approval. If HUD receives acceptable
information indicating the required corrections of deficiencies, HUD
may conduct a follow-up review within ninety (90) days and may
reinstate the agency's approval if the deficiencies have been
corrected.
(e) Appeal. If HUD does not reinstate the approval, the agency may
file an appeal, as prescribed under Sec. 214.205.
Sec. 214.311 Funding.
(a) HUD approval does not guarantee funding from HUD. Funding
depends upon appropriations by Congress and is awarded competitively
under federal and HUD regulations and policies governing assistance
programs, including Department of Housing and Urban Development Reform
Act of 1989.
(b) Notice of Funding Availability (NOFA). If funds become
available, HUD will publish a Notice of Funding Availability (NOFA) in
the Federal Register and on Grants.gov.
(d) Local funding sources. HUD recommends approved agencies seek
funding from all funding sources such as lending or real estate
organizations in addition to units of local government. Agencies must
assure that such arrangements do not violate the provisions regarding
conflicts of interest described in Sec. 214.303(e).
Sec. 214.313 Housing counseling fees.
(a) HUD-approved agencies may charge reasonable and customary fees
for housing education and counseling services as long as the cost does
not create a financial hardship for the client. Agencies must submit
fee schedules for HUD approval and post the approved fee schedule in a
prominent place, easily viewed by clients.
(b) Agencies must inform clients of the fee structure in advance of
providing services. Clients cannot be charged for the initial screening
interview.
(c) If any agency chooses to charge fees, the agency must conform
to the following guidelines:
(1) Provide counseling without charge to persons who cannot afford
the fees;
(2) Charge nominal fees consistent with those of similar agencies
for similar services; and
(3) Set approved fees on a sliding scale in relation to the
client's income and use that scale for all fee clients.
(d) The agency may also be reimbursed from clients for the direct
cost of obtaining copies of clients credit reports from credit
reporting bureaus if this does not cause a hardship for the client. In
cases where the approved agency receives a discount for the cost of
credit reports, this discount must be passed on to the client.
Sec. 214.315 Recordkeeping.
(a) Recordkeeping system. Each HUD-approved housing counseling
agency must maintain a recordkeeping system. The system must permit HUD
to easily access all information needed for monitoring both when it
conducts a PR and when it determines that other reviews of the agency's
housing counseling activities are needed.
(b) File retention requirements. Financial records, supporting
documents, statistical records and all other pertinent records shall be
retained for a period of three (3) years from the date the case file
was terminated for housing counseling. If the housing counseling agency
is a recipient of a HUD housing counseling grant, then the client files
for the housing counseling grant year must be retained for three years
from the date the final grant invoice was paid by HUD.
(c) Grant activities. Recipients of HUD housing counseling grants
are required to report activities under the grant in a format
acceptable to HUD and within the designated time frames required by the
applicable grant agreement.
(d) Race and ethnicity data. HUD-approved housing counseling
agencies must maintain current and accurate data on the race and
ethnicity of their clients.
(e) Client file. The housing counseling agency must maintain a
separate confidential file for each client to document the services
provided to the client as described in Sec. 214.300 of this title. The
agency must hold in strict confidence all client information regardless
of the source or sources from which it is received. The client file
must include:
(1) Details of an intake or screening interview, conducted by a
housing counselor or administrative staff person who is trained in
requirements of the Privacy Act of 1974 (5 U.S.C. 552a). The interview
must be face-to-face, in the office of the HUD-approved housing
counseling agency, unless it would be a hardship on the client. During
the intake interview and counseling session sufficient information
shall be documented including:
(i) Client name, address, and telephone number;
(ii) Client's file number;
(iii) FHA case number for clients with HUD-insured single-family
mortgages or project number for HUD-assisted rental units; or a loan or
project number if not a HUD-insured mortgage or HUD project;
(iv) Interviewing housing counselor's name;
(v) Interview date;
(vi) Race and ethnicity information;
(vii) Purpose and results of each visit, clearly identifying client
need or problem, type of housing counseling provided, and results of
housing counseling;
(viii) Income and financial obligations information;
(ix) Client's housing counseling plan, which outlines what the
agency and the client will do in order to meet the client's housing
goal(s). The housing counselor and client must sign the housing
counseling plan. A copy of the signed housing counseling plan must be
given to the client and the original placed in the client's file; and
(x) Documentation of any follow-up with the client, as needed,
together with copies of pertinent records and correspondence.
(2) [Reserved]
(f) Confidentiality. HUD-approved agencies must ensure the
confidentiality of each client's personal and financial information,
including credit reports, whether the information is received from the
client or from another source. Failure to maintain the confidentiality
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of, or improper use of, credit reports may subject the agency to
penalties under the Fair Credit Reporting Act (14 U.S.C. 1681 et seq.).
(g) Termination of services. The housing counseling agency must
document in the client's file every termination of housing counseling.
Termination occurs or may occur under any of these conditions:
(1) The client meets his or her housing need or resolves the
housing problem.
(2) The agency determines that further housing counseling will not
meet the client's housing need or resolve the client's housing problem.
(3) The client does not follow the agreed upon client housing
counseling plan.
(4) The client otherwise terminates housing counseling.
(5) The client fails to appear for housing counseling appointments.
Sec. 214.317 Reporting.
All HUD-approved housing counseling agencies shall submit to HUD an
activity report during each year of approval. The report must be
submitted on a form prescribed by the Secretary, on a date and in a
manner prescribed by the Secretary. HUD-approved agencies that are also
recipients of HUD grants may be required to submit additional reports
as described in their grant agreements and prescribed by the Secretary.
Sec. 214.319 Client management system.
All HUD-approved housing counseling agencies shall utilize an
automated housing counseling client management system for the
collection of client-level information including, but not limited to,
financial and demographic data, counseling services provided, and
outcomes data. The system used must meet HUD's standards and must
provide the counseling agency with the tools necessary to track and
manage all counseling and educational activities associated with each
client. HUD may require HUD-approved agencies to use a Departmental
Client Management System, based on HUD's determination that such a
requirement is in the best interests of the Department.
Subpart E--Grants
Sec. 214.400 Grants.
When funds are appropriated by Congress, HUD will publish a Notice
of Funding Availability (NOFA) in the Federal Register and on
Grants.gov. HUD will select applications for funding on a competitive
basis as provided in the applicable NOFA.
Subpart F--Other Federal Requirements
Sec. 214.500 Audit.
Housing counseling grant recipients and sub recipients shall be
subject to the audit requirements contained in 24 CFR parts 84 and 85,
as amended. HUD must be provided a copy of the audit report within
thirty days of completion.
Sec. 214.503 Other requirements.
The housing counseling program is subject to applicable federal
requirements in 24 CFR 5.105.
Dated: November 5, 2004.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 04-28049 Filed 12-22-04; 8:45 am]
BILLING CODE 4210-27-P