Homeownership Education and Counseling
For many buyers, the process of purchasing a home can seem complicated and overwhelming. There are also buyers who feel ready to purchase a home but in reality may not be financially ready. Time spent in a homebuyer education class or with a HUD certified housing counselor can help a buyer understand the process and reach a position of being mortgage-ready. REALTORS® can refer the potential buyer to a HUD certified housing counselor who has the tools and expertise to help the client resolve financial, problems, determine actual household needs, and work on a budget and spending plan and an action plan that begins to prepare the buyer to meet the financial requirements of his or her new home. After working with a housing counselor, the client can return to the REALTOR® and begin looking in earnest for the right home.
What is homeownership education?
Homeownership education is a process resulting in a potential buyer’s ability to demonstrate an understanding of the following: preparing for homeownership, budgeting and credit management, financing a home, the loan process and timing, selecting a home, maintaining a home and finances, and avoiding delinquency and foreclosure. Education is formal classes, with established curriculum and instructional goals, provided in a group or classroom setting, or other format such as web-based.
What is homeownership counseling?
Counseling is one-on-one, counselor-to-client assistance that addresses unique financial circumstances and housing issues, and focuses on overcoming specific obstacles to achieving a housing goal including (but not limited to) repairing credit, saving money for a down payment, qualifying for down payment assistance, raising awareness about topics such as predatory lending practices, or resolving a financial crisis. Counseling will usually involve the creation of an action plan identifying what the counseling agency and the client will do in order to meet the client’s housing goals.
What are the benefits of education and counseling?
Homeownership education and counseling provides potential buyers with tools and information to help them make housing choices that are affordable and sustainable. Studies suggest that buyers who participate in education and counseling programs are less likely to experience mortgage delinquencies and foreclosures. In addition an educated buyer can help make the home buying process go more smoothly for the REALTOR® and the lender.
What is the role of the housing counselor?
A housing counselor is a trained professional who provides advice and guidance to individuals and households in order to assist them in improving their housing situation and meeting the responsibilities of homeownership. HUD certified counselors can earn certifications in a variety of areas in addition to pre-purchase counseling, such as foreclosure prevention and reverse mortgage.
Where do potential buyers find a housing counselor?
The U.S. Department of Housing and Urban Development (HUD) sponsors housing counseling agencies throughout the country. HUD provides a directory of HUD approved housing counseling agencies on its website.
Additionally, the HUD Housing Counseling Program approves intermediaries and State Housing Finance Agencies (SHFA) that provide housing counseling services through a network of affiliates and branches. Intermediaries and SHFAs provide their networks with critical supportive services, including training, funding, and technical assistance. Click here for a listing of intermediaries and SHFAs participating in the Housing Counseling Program.
What are the National Industry Standards for Homeownership Education and Counseling?
The National Industry Standards for Homeownership Education and Counseling (Standards) provide a baseline for what constitutes quality homeownership education and counseling. Organizations and homeownership professionals can use the Standards to ensure that quality homeownership education and housing counseling services are delivered to clients. These standards create a level of consistency in the industry and add to the continued professional delivery of specialized services by counselors and educators nationwide. The Standards were created by the National Industry Standards for Homeownership Education and Counseling Committee. The National Association of REALTORS serves on the committee and played a role in the development of the Standards. Learn more about the Standards.
Read about REALTORS® and counselors working together
REALTORS®’ collaborations with housing counseling agencies are featured in August 2104 edition of The Bridge, which is published by the HUD Office of Housing Counseling. Check out how the NAR Housing Opportunity grant program is supporting these partnerships.
Learn more about the benefits of housing counseling
NAR comment letters related to housing counseling issues
NAR submitted comments to the Federal Housing Administration on its "Homeowners Armed with Knowledge (HAWK)" pilot program which provides reduced mortgage insurance premiums to first-time home buyers who participate in housing counseling. Read the comments.
NAR submitted comments to the U.S. Department of Housing & Urban Development (HUD) on its proposed rule entitled "Housing Counseling Program: New Certification Requirements.” Read the comments.