4 Tips to Keep Your HUD Home Out of Foreclosure

With the HUD mortgage counseling budget eliminated, more homeowners are at risk for foreclosure

The ongoing foreclosure problem facing U.S. homeowners is about to get worse now that Congress has eliminated the entire mortgage-counseling budget for HUD, the Department of Housing and Urban Development. The 2011 federal budget completely eliminates all $88 million in HUD funds for housing counseling. It’s yet another blow to those struggling to stay in their homes, especially African-Americans, who have borne the brunt of the mortgage meltdown and the U.S. housing crisis. There were a record 3.8 million foreclosure filings in 2010. And since even more foreclosures are expected in 2011, housing advocates are shocked at the magnitude and timing of the HUD mortgage counseling cuts. After all, it was the housing mess that tipped America into the Great Recession.

George Roe, Chief Operating Officer of the National Foundation for Debt Management, a HUD-certified credit counseling agency that helps struggling homeowners called the funding cuts “devastating,” and said “the timing of these cuts could not have come at a worse time.”

“It seems that most of our counseling sessions are growing more complex, requiring additional time to complete as well as an enhanced skill/knowledge ability for our counselors,” Roe said. “This does not come without additional costs to provide these services.”

“The end result is that our agency will be forced to reduce our staff and some of our much needed services that we provide,” he added. “I believe that this will be the case for most HUD approved agencies throughout the country.”

Russell Graves, Executive Director of Consumer Credit and Budget Counseling, another HUD-certified agency, echoed Roe’s sentiment. “The housing counseling industry is reeling from this blow,” Graves said. “We all understand the need for government support cuts to balance the budget, but this was unexpected.”

“Taking away funding for housing counseling is selling the American homeowner short,” Graves added.

Housing counseling is designed to educate and empower consumers, giving them the knowledge and information they need to make good choices when it comes to buying – and keeping – a home. In decades past, getting a mortgage and buying a home was a relatively simple process. Most people bought reasonably-priced homes, obtained a 30-year-mortgage, and could count on their homes appreciating in value. Today, however, despite the recent drop in values, housing prices remain out of the reach of many would-be buyers. What’s more, the mortgage process is far more complicated, as is the range of mortgage products being offered to consumers. And unfortunately, most U.S. home buyers are ill prepared to take out a mortgage, with nearly half of them failing to understand the basics about mortgages, according to a May 2011 Zillow Mortgage Marketplace survey. For instance, 57% of prospective homebuyers polled did not understand how adjustable rate mortgages (ARMs) work.

That’s why housing counseling is so vital.

So if you’re having trouble paying your mortgage, where should you turn for help? Here click to the next page for 5 tips to keep in mind:

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