Housing and Credit Counseling

If you’re a homeowner who has fallen behind on mortgage payments, you may be facing foreclosure. You may be close to losing your home because of a difficult financial situation.

But you don’t need to handle the foreclosure prevention process alone. Depending on your situation, you may want to speak with a housing counselor. Read on to learn how a housing counselor can help you maintain homeownership in the face of crisis. You can also consult with a foreclosure lawyer about your options. 

What Is a Housing Counselor?

A housing counselor is a professional who has the training and government certification to assist people with issues related to their housing. They primarily educate and advocate for renters, homebuyers, and homeowners. Their goal is to help these clients find affordable housing and prevent problems like foreclosure and eviction. 

A counselor with a housing counseling agency can:

• Answer your questions about how to secure or stay in your housing
• Assess your foreclosure situation
• Discuss your options related to housing and managing payments
• Prepare you for discussions with your loan servicer or lender
• Help you prioritize your debts

Assistance programs are available in the form of credit counseling services and foreclosure prevention counseling. 

Cost of Housing Counselors

Under the law, counselors may be required to provide free assistance to eligible homeowners who can’t afford the payment. For example, nonprofit credit counselors may offer free services to people close to experiencing homelessness. But not everyone may qualify for free counseling.

To charge money, counselors must have a clear cost structure. They may charge reasonable fees for the following:

• Pre-purchase counseling
• Reverse mortgage counseling
• Renter eviction counseling
• Post-purchase (non-delinquency) counseling

Some agencies restrict their counseling services to homeowners with FHA mortgages. But for any homeowner having difficulty making mortgage payments, many others will offer free help.

How Counseling Helps During and After Foreclosure

You may be wondering what a housing counselor can and can’t do for you. They can help educate you during a home purchase or foreclosure. A counselor can also direct you to forms and applications related to your needs, and they can explain how to fill them out. 

Housing Counseling Before Buying a Home

First-time homebuyers who take advantage of pre-purchase counseling may complete the homebuying process in a better position to avoid defaulting on their debts.

Homebuyer education programs are available to help you understand the basics of:

• Finding and working with a good real estate agent (realtor)
• Participating in downpayment assistance programs
• Obtaining mortgage loans
• Paying closing costs
• Having responsible debt management

Housing Counseling Before Foreclosure

During foreclosure, a counselor may be able to help you explore loss mitigation strategies. They may be able to prepare you for ways to reach out to your lender. This includes finding solutions for reducing mortgage payments and asking for more time to catch up on late payments.

A counselor might even be able to help modify or refinance your existing loan. By lowering your interest rate or adjusting your monthly payments, you might be able to escape foreclosure.

Housing Counseling After Foreclosure

Even if your home has already been foreclosed, a counselor may be able to offer helpful assistance. For instance, some states allow homeowners to reclaim their foreclosed properties in certain situations. Others provide ways for borrowers to take the sale of their home into their own hands in lieu of having banks conduct it forcefully.

A counselor can help you take advantage of these opportunities to minimize the effects of foreclosure, such as damage to your finances and credit score.

Housing Counselor vs. Real Estate Lawyer

A housing counselor cannot provide certain services, such as:

• Give legal advice about what you should do
• Represent you in court, such as for foreclosure or eviction defense
• File a lawsuit, such as a landlord-tenant dispute or post-purchase lawsuits, on your behalf
• File for bankruptcy in foreclosure on your behalf
• Advise you in complex legal scenarios, such as title disputes or property complications in probate

If you need the above services, consider hiring a real estate lawyer. Unlike a housing counselor, a lawyer has the credentials to fulfill these duties. While lawyers generally charge attorney’s fees, some law firms are willing to negotiate a payment plan or reduced costs for clients experiencing financial hardship. You may also check whether you qualify for free legal aid.

Keep in mind that a housing counselor also has other limitations, such as:

• They can’t give or lend you money.
• They can’t force a bank or lender to agree to a repayment plan or forgive debt. 
• They don’t control the prices of rent or property.
• They can’t waive tax liabilities or debts. 

The role of a housing counselor is to answer your questions and explain the options so you can decide how you want to proceed. If you only need education and one-on-one guidance, a housing counselor can be a helpful resource. 

What To Expect While Working With a Counselor

You might have questions about the counseling process. If you’re looking for a counselor to help you avoid foreclosure in the first place, you’re already ahead of many others. In most situations, borrowers seek counseling specifically because they are already facing foreclosure. But don’t be discouraged. A good housing counseling program can help you develop an action plan to get back on track with managing your debt.

A counselor will ask you for information about your:

• Mortgage lender (bank, servicing company, or other loan institution)
• Credit report (info about the different debts you have)
• Credit score (where your score stands and how you can improve it)
• Income and expenses
• Short-term and long-term financial goals

It’s helpful to go to your counseling appointment with all this information in hand. A counselor can help you balance your budget by prioritizing your expenses. They might review different credit card bills to determine which one has the highest balance and interest. Prioritizing different payments can help you manage your expenses responsibly.

How To Find a Housing Counselor

It’s important to know who to contact. You have to check a credit counselor’s certifications and prioritize legitimate businesses.

Scam artists follow the headlines, and they know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. While their pitches may sound like a way for you to get out from under, their intentions are as far away from honorable as they can be. They mean to take your money. Check out our article on avoiding foreclosure scam artists for tips on avoiding red flags.

Government resources provide some of the most reliable ways to get in touch with housing counselors. Call the local office of the U.S. Department of Housing and Urban Development (www.hud.gov) or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency nearby.

You can also consider contacting the NeighborWorks Center for Foreclosure Solutions at 888-995-HOPE or www.nw.org. The Center is an initiative of NeighborWorks America.

Contact a Lawyer

If you’re not sure if a counselor is right for you, other options are available. A real estate foreclosure lawyer can provide you with valuable foreclosure advice. They might also be able to help you obtain foreclosure counseling from a reliable source.