The housing industry is getting another boost from the feds, this time in the form of counseling grants. The Department of Housing and Urban Development (HUD) announced Friday the availability of $42 million in grant money for HUD approved housing counseling agencies.
Without the money, many of these agencies would have been forced to lay off more counselors or close their doors entirely, HUD Secretary Shaun Donovan told the press in a phone call Friday.
“The HUD approved counseling agencies this funding supports are crucial in helping struggling families on a one-to-one basis to manage their money, navigate the homebuying process and secure their financial futures,” Donovan said in a press release.
Roughly $36 million in grant funds will directly support the housing counseling services provided by 27 national and regional organizations, six multi-state organizations, 16 State Housing Finance Agencies (SHFAs) and 419 local HUD approved housing counseling agencies.
Counseling agencies will also receive $4 million to help senior citizens interested in home equity reverse mortgages (HECM), commonly known as “reverse mortgages.”
“These funds are complemented by the roughly $2.5 billion provided to the states as part of the $25 billion mortgage servicing settlement. Most states can use those funds for foreclosure prevention activities such as housing counseling and legal aid services,” Donovan added.
Unlike the foreclosure settlement, which prioritized funds to states hardest hit by the foreclosure crisis, this $42 million in grants will be divvied up between HUD approved housing counseling agencies in each state. The idea, according to Donovan, is to reach all homeowners in need with a combination of settlement funds – directed to homeowners who were wrongly foreclosed on or are severely underwater – and grants, which will be used to help homeowners and renters find and stay in their homes.
It sounds good, but it’s not that easy. The $25 billion settlement, which is pending approval by the U.S. District Court, provides 49 states with money that “can be used for homeowner assistance.” But in reality the money is discretionary, and many state governments have already pledged to use it to shore up their budgets.
So while the $42 million in housing counseling grants is great, it still may not be enough if it isn’t combined with foreclosure settlement money. According to Donovan, the funding going to the states is “not something the federal government can directly influence,” though he insists HUD has made it clear how important it is that money be used for its intended purpose.
Still, HUD is confident the grants will give thousands of households a greater opportunity to find housing or keep their current homes.
For a list of HUD approved housing counseling agencies in your area who will benefit from the grants, visit the HUD website.