Avoid Foreclosure - FHA/HUD Announces Housing Counseling Grants
The grants were announced in press release HUDno.12-055, which states "Housing counseling grants will assist families in becoming homeowners, many for the first time, and remaining homeowners after their purchase. They also provide assistance to renters and the homeless, and offer financial literacy training to individuals and families."
This grant money will be awarded to local and regional housing counseling agencies to underwrite counseling services designed to help those who want to find a new home or avoid loan default or foreclosure. "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," says HUD Secretary Shaun Donovan, "We fought hard to persuade Congress to restore funding for housing counseling in HUD's budget and now we're working to make these important resources available as quickly as possible."
This funding can also help seniors who are considering applying for an FHA reverse mortgage or HECM loan. According to the press release, "Counseling agencies will also receive $4 million to help assist senior citizens seeking reverse mortgages or Home Equity Conversion Mortgages (HECM). These agencies will provide counseling for the rapidly growing number of elderly homeowners who seek to convert equity in their homes into income that can be used to pay for home improvements, medical costs, and other living expenses."
Some may be confused by the word "grant" used in the press release--this money is not directly available to borrowers, but is furnished to the counseling agencies to offset the cost of providing free or low-cost counseling services. Borrowers benefit from the grants because such services are underwritten by the grant money.
It's important to note that the FHA refers borrowers in trouble to free foreclosure avoidance counseling--there should never be a charge for FHA borrowers to learn how to avoid foreclosure. Some services, such as HECM loan counseling, may be a for-pay service unless the borrower qualifies under low-income guidelines.
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