Department of Housing and Urban Development sealOn December 14, the U.S. Department of Housing and Urban Development (HUD) issued a Final Rule for the Housing Counseling program. The most significant of these changes is the requirement that all individuals that provide housing counseling in connection with a HUD program must take and pass a HUD-administered certification exam. This means that all counselors working for a HUD Approved Counseling Agency will need to take and pass the examination in order to continue working with clients. Personnel that do not provide one-on-one or group counseling to consumers will not be required to take the exam. For example, an Executive Director would only need to take the exam if he/she directly counsels consumers.

Counselors will have 36 months from when the examination becomes available to take and pass the test. The examination will be available online or at an in-person testing center, and will cost approximately $100 for the online test and $140 to take the test in-person. When testing will start and locations for the examination have not been announced yet. Counselors who do not pass the exam on the first try may retake the exam as many times as necessary to receive a passing grade. Counselors should expect a charge to retake the exam. There is no continuing education requirement currently mandated.

The examination will cover the following six subject areas:

  • Financial Management
  • Housing Affordability
  • Fair Housing
  • Homeownership
  • Avoiding Foreclosure
  • Tenancy

The examination is comprehensive, and counselors will need to understand all of the topics listed above to pass. The test is scored from 200 to 800, and the minimum passing score is 500.

Upon passing the exam, a counselor will receive a “HUD Certified Housing Counselor” certificate. A counselor must work for a HUD Approved Housing Counseling Agency for the certificate to be valid. Counselors who pass the exam but do not work for a HUD Approved Housing Counseling Agency will not be considered a HUD Certified Counselor until employed by a HUD approved agency.

HUD has previously published exam study guides at its HUD Housing Counselor website. In addition, Housing Action Illinois intends to offer a combination of place-based and online training to help counselors prepare for the examination. Our first training class will begin in spring, and we will offer trainings throughout Illinois. Sign up for our housing counselor updates or continue to check our website for additional information.

In addition to the counselor certification, HUD also made the following program changes:

  • Agencies participating in HUD’s Housing Counseling program that provide Homeownership Counseling must address the entire process of homeownership;
  • Agencies participating in HUD’s Housing Counseling program must distribute Home Inspection Brochures to consumers once HUD issues a brochure;
  • Agencies found to have misused Housing Counseling program grant funds would need to reimburse HUD using non-federal funds and would be barred from future program participation;
  • HUD Housing Counseling program funds cannot be distributed to organizations convicted of violating federal election laws or that employ persons that have been convicted of violating federal election laws;
  • Agencies currently providing housing counseling in connection with a HUD program must meet all HUD requirements prior to the end of the 36-month compliance period to continue participating in the program;
  • All housing counseling reported on HUD Form 9902 that occurs after the 36-month compliance period must be performed by HUD-certified housing counselors;
  • Agencies applying to participate in HUD’s Housing Counseling Program after the 36-month compliance period must meet the Housing Counseling Certification Requirements at the time of application

Each of the bullet points is further explained below.

Addressing the entire process of homeownership

HUD expects Housing Counseling agencies to be able to address the following steps in the homeownership process:

  • The decision to purchase a home;
  • The selection and purchase of a home
  • Issues arising during or affecting the period of ownership of a home (including financing, refinancing, default, and foreclosure, and other financial decisions); and
  • The sale or other disposition of a home.

Housing Counseling agencies need to revise their Housing Counseling work plans to explain how agencies will incorporate the above. For example, an agency may revise its work plan to demonstrate that the required topics will be included in group pre-purchase education classes or handouts to consumers attending individual counseling. Housing Action is available to assist agencies with revising their work plans.

While the rule regarding addressing homeownership goes into effect January 13, HUD does not expect that its grantees will have revised their work plan by that date. Agencies should look to make the changes to their work plans by the end of the 1st quarter of 2017 (March 31).

Distribution of Home Inspection Brochures

As it is currently with Fair Housing and Lead Paint brochures, Housing Counseling agencies will be expected to distribute Home Inspection brochures to consumers once HUD issues such a brochure. Agencies should update their work plans to reflect that Home Inspection brochures as HUD may require will be distributed to consumers, and that the agency will document client receipt of the brochure in the client notes or CMS. This rule will apply whether the agency receives HUD funding or not.

Misuse of Housing Counseling program funds

HUD Housing Counseling program grantees found to have misused program funds will be required to reimburse HUD using non-Federal funds and return any and all unused funds. Agencies receiving Housing Counseling program funds, either directly or through an Intermediary, should review their Grantee or Sub Grantee Agreements and adhere to all HUD rules in order to avoid potential problems.

Federal Election Violations

Housing Counseling agencies that have been convicted of violating Federal election laws or organizations that employ persons in any capacity (FT, PT, Consultant, or Temporary) that have been convicted of violating Federal election laws cannot receive Housing Counseling program funds. Intermediaries are required to Notify HUD of any potential election law violation of its sub grantees within 15 days.

HUD Agency Approval

Agencies providing housing counseling in connection with a HUD program must be approved to participate in HUD’s program prior to the end of the 36-month compliance period. This means that the agency must ensure that all of its counselors meet the certification requirements prior to the end of the compliance period and meet all other program requirements. Failure to comply with the rules could lead to agency suspension or elimination from the Housing Counseling program.

9902 Reporting

Any counseling reported on the HUD form 9902 after the compliance period must be performed by a HUD Certified Housing Counselor.

Agencies Seeking HUD Approval After the Compliance Period

Agencies seeking HUD approval after the compliance period will need to meet all of the requirements, including having Certified Counselors employed by the agency.

HUD has released a chart detailing the changes included in Final Rule and when each change goes into effect. HUD also released a list of Frequently Asked Questions (FAQ). We suggest that you review these materials and also visit HUD’s Housing Counselor web page for additional information.