How Can a HUD-Approved Housing Counselor Help You Avoid Foreclosure?

What Does a Housing Counselor Do?

A housing counselor helps you understand your situation, choose the right option and get your application in front of the servicer in complete form. Their work usually covers these steps:

• Budget review: they go through your income and bills to see what payment you can truly afford.
• Option check: they explain forbearance, repayment plans, modifications, partial claims and ways to leave the home, and which ones your loan type allows.
• Application help: they help you gather documents and write a hardship letter.
• Servicer contact: with your written permission, they can send your file and follow up with the servicer.
• Program referrals: they know about state help programs, such as state-funded assistance where it exists, and local legal aid.

Many counselors also offer help after the crisis, such as credit counseling or advice on renting if you decide to leave.

How Do You Find a HUD-Approved Counselor?

You find a HUD-approved counselor by searching HUD’s list of approved agencies by city, state or ZIP code, or by calling HUD’s counseling line at 800-569-4287. HUD’s housing counselor search lists each agency’s services, languages and contact details.

The CFPB’s counselor finder searches the same HUD list and shows agencies on a map. Look for agencies that list “mortgage delinquency and default resolution counseling,” which is the service for borrowers who are behind. Many agencies work by phone or video, so you are not limited to your town.

Your servicer must also point you to counselors. Under the CFPB’s early intervention rule, the written notice the servicer sends by the 45th day of delinquency must include a way to reach HUD’s list of counselors (12 CFR 1024.39(b)).

How Do You Tell a Real Counselor from a Scam?

You tell a real counselor from a scam by checking that the agency is on HUD’s list and by noticing whether anyone asks you for money upfront. Real HUD-approved agencies do not charge for foreclosure prevention counseling.

• Upfront fees: a request for money before any help is the clearest warning sign.
• Guarantees: no one can promise that your loan will be modified or that a sale will be stopped.
• Pay us, not your lender: never send mortgage payments to anyone except your servicer.
• Sign over the deed: never sign papers that transfer your home’s title to a third party.
• Look-alike names: some scams use names that sound like government programs, so check the agency name against HUD’s list.

The common tricks and how to report them are covered in foreclosure scams.

When Should You Call a Lawyer Instead?

You should call a lawyer instead of, or along with, a counselor when a foreclosure lawsuit has been filed, a sale date is close, or you think the servicer broke the law. A counselor cannot represent you in court or give legal advice.

Many counseling agencies work with local legal aid offices and can refer you for free legal help if you qualify. If you can afford private help, a foreclosure attorney can review your case, raise defenses and negotiate with the servicer’s lawyers.

What Should You Bring to Your First Session?

You should bring your latest mortgage statement, every letter from your servicer, and proof of income and expenses to your first session. The more complete your papers, the faster the counselor can help.

1. Mortgage papers: the latest statement and any notices of default, sale or help options.
2. Income: 2 recent pay stubs, benefit letters, or a profit and loss statement if you are self-employed.
3. Bank statements: the last 2 months for every account.
4. Tax returns: the last 2 years.
5. Monthly bills: utilities, car loans, credit cards, child care and medical costs.
6. Hardship details: what happened and when, in a few notes.