Chairman Judy Biggert (R-IL)

Subcommittee on Insurance, Housing and Community Opportunity

Hearing on “HUD and NeighborWorks Housing Counseling Oversight”

September 14, 2011

Good afternoon, and welcome to this hearing on “HUD and NeighborWorks Housing Counseling Oversight.”  I welcome today’s witnesses.  

Today, we will examine the Federal housing counseling programs administered by HUD and the Neighborhood Reinvestment Corporation, or NeighborWorks.  

Housing counseling is an important form of financial literacy.  As a former real estate attorney, I especially understand and appreciate the value of wise counsel.  In Illinois, we don't even go to closing on a home purchase without an attorney.  

And I cannot say enough good things about encouraging prospective or current homeowners to seek in-person HUD-certified housing counseling.  When constituents come to my office for help, we always coordinate with our local housing counselors.

That’s why I’m concerned that appropriations for the housing counseling programs administered by HUD were zeroed-out in Fiscal Year 2011 and would remain cut under the current Fiscal Year 2012 appropriations bill.  

Meanwhile, a separate and more narrowly-focused program, NeighborWorks, has become the only recipient of federal housing counseling funds.  I fear that by eliminating funding for the over 2,300 HUD-certified, local housing counseling agencies as well as states and intermediaries, many seniors, first-time homebuyers, and others will lose access to housing counseling.  That’s unacceptable.  

In the darkest days of this financial crisis, in my Congressional district, it has been the counselors – not the array of new Federal foreclosure programs – that have helped many families restructure their budget, communicate with lenders or servicers, avoid foreclosure, and stay in their homes.  More than any government foreclosure scheme, reliable and effective financial counseling has made the difference for struggling homeowners.

They also help potential borrowers make informed decisions and avoid financial pitfalls down the road.  Throughout this crisis, we’ve been reminded that some individuals would be better served by renting versus owning a home.  We’ve also seen how certain financial products, such as a mortgage or reverse mortgage, are not suitable for every household.  That is why the law requires seniors to obtain impartial advice from a HUD-certified housing counselor before securing a reverse mortgage.

Today, our task is to closely examine Federal housing counseling programs and ensure they are working effectively to help those in need.  I look forward to today’s discussion, particularly about: the distribution of funds; standards for agencies, counselors, and counseling; and data on the effectiveness of counseling.  

I also look forward to an update on HUD’s progress to set up the Office of Housing Counseling, and witnesses’ comments on discussion draft legislation to enhance oversight and transparency of NeighborWorks’ housing counseling programs.

The bottom line is that Congress should fund and encourage effective housing counseling to be more accessible in our communities.  It’s the first line of defense to prevent another foreclosure crisis, helping some families recover from this one, and is critical for our seniors seeking security in their retirement years.