In April of this year, Congress slashed $88 million in HUD nonprofit counseling funds for 2011[1]. Fortunately, HUD had at least $10 million “left over” and unspent from 2010, and they used this to fund various programs and outreach efforts. However, HUD’s acting deputy assistant secretary for single family housing is now warning that failure to restore the cut funds from the 2011 budget will “jeopardize…the recovery and stability of our housing markets.” Deborah Holston believes that housing counseling is critical to lower default rates and successful loan modifications. To critics who argue that maybe the department had too much funding to begin with since they had so much left over from the 2010 budget, Holsten assures them that HUD has developed a plan to “reduce the time it takes to award funds” and that agencies will be better monitored moving forward[2].
Do you think that Congress should return HUD’s $88 million?
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[1] http://realtormag.realtor.org/daily-news/2011/09/15/hud-wants-housing-counseling-funds-back
[2] http://www.housingwire.com/2011/09/14/hud-asks-congress-to-restore-housing-counselor-funding
For any one who ever sat in on the so called counseling , it is a complete waste of tax payers dollars. I cant counsel you on something that I really have no knowledge on. With regards to modifications most “give the impression” they can help when in fact they sit back do little but watch the redemption period come and go. The number of court filings I have read at the point of eviction that listed “hud counselor failed to respond” are numerous
HUD wants Congress to give back $88M slashed from its “housing counseling” fund. I suggest housing counselors be hired by HUD as independent contractors, trained at their own expense, and paid a only a 5% commission by the bank on every successful loan modification they engineer (one that lasts at least 12 months). Commissions would be escrowed at settlement and disbursed in monthly installments unless the mortgage fell into default, in which case further and other escrowed amounts could be forfeit.
With all the money spent into hopeful and wishful programs let’s talk about some thing real and something that makes sense.
1. The real estate market has been the engine of many businesses in the free capital market.
2. Most property owners in 2011 can’t be blamed anymore for having purchased something they can’t afford. That dogma has come and gone.
3. How about resetting the loans to what they really are in this day and age?
4. Yes, that means for lenders to write down loans sometimes 50-75%.
5. So far, the borrower at the bottom of the heap hasn’t gotten a bailout. How about a 50/50 bailaout now? After all, so far the man on Main Street is not getting bailouts but forced to support bailouts via taxation for many multi national lenders at the top of the pyramid.
6. Somebody or some national accounting firm needs to come up with a fair formula to write down the principal balance and then adjust it over several years to finally forgive it after 10 years or so. I am not an accountant and I am not privy to some super accounting formulas to figure this out. I do know however that there must be a breaking point where lenders could say after xyz years the balance is forgiven. In other words reduce the loan balance corresponding to today’s values with a payoiff formula extending over 10 years if the property is sold. After 10 years the balance written down should be forgiven. It’s already done in some fashion on other loan programs. What say you?