To amend the Housing and Urban Development Act of 1968 to provide reforms to housing counseling and financial literacy programs.
- Sponsor
- Rep. Scott, David [D-GA-13]
- Committees
- Financial Services Committee (primary)
- Last action
- Dec 15, 2025
Bottom line
The bill aims to enhance the quality and accountability of HUD-approved housing counseling services and ensure delinquent mortgage borrowers receive timely access to foreclosure mitigation counseling.
What it actually does
This bill amends the Housing and Urban Development Act of 1968 to introduce significant reforms to housing counseling and financial literacy programs. It mandates performance reviews for housing counseling agencies and individual counselors, allowing for actions such as requiring continued education, retesting, or suspending certifications based on competence. Furthermore, it requires that borrowers who are 30 days or more delinquent on certain mortgage loans be offered foreclosure mitigation counseling, with the costs for FHA-insured loans potentially covered by the Mutual Mortgage Insurance Fund.
Proponents argue
Supporters argue that the bill will improve the effectiveness of housing counseling by implementing performance-based reviews and certification requirements, ensuring that counselors are competent and agencies are compliant. They also contend that providing timely foreclosure mitigation counseling to delinquent borrowers will help prevent foreclosures, stabilize housing markets, and protect consumers.
Opponents contend
Critics might argue that the performance metrics, particularly those tied to default rates, could unfairly penalize counselors working with high-risk populations, potentially leading to a reduction in services for those who need them most. Concerns could also be raised about the administrative burden of new review and certification processes on smaller counseling agencies, potentially leading to service gaps.
The bill is relatively short and its core provisions are accessible, allowing for a thorough understanding within a reasonable timeframe.
Section 1(a)(1)
Geographic Diversity in Grant Distribution
This provision amends existing law to require that HUD's housing counseling grant recipients are geographically diverse and include organizations serving both urban and rural areas. This replaces a prior focus on 'adequate distribution' and 'foreclosure rates' as primary criteria for grant allocation.
Supporters argue
Supporters argue this ensures that housing counseling services are available to a wider range of communities, particularly those in underserved rural areas, and promotes equitable access to federal resources.
Critics contend
No specific opposition is typically raised against ensuring geographic diversity, though some might argue it could dilute focus from areas with the highest need based on other metrics like historical foreclosure rates.
Tradeoffs
Balances the need for broad geographic coverage with potentially concentrating resources in areas of highest demonstrated need based on other factors.
Section 1(a)(2), adding subsection (e)(6)
Periodic Performance Reviews for Counseling Agencies
This provision mandates that the Secretary of HUD conduct periodic on-site reviews and comprehensive performance reviews of all participating housing counseling agencies. These reviews will assess compliance with program requirements and may take into account the aggregate performance of the agency's counselors.
Section 1(a)(2), adding subsection (e)(7)(B)
Counselor Performance Comparison to Default Rates
For each counselor employed by an organization receiving assistance for pre-purchase housing counseling, the Secretary of HUD may consider their performance compared to the default rate of all counseled borrowers of certain covered mortgage loans in comparable markets. This comparison is a discretionary factor in agency performance reviews.
Section 1(a)(2), adding subsection (e)(8)
Certification Actions Based on Counselor Competence
If a counselor is determined to lack competence based on the performance comparison (and if such action will not create a significant loss of capacity), HUD may require continued education, a probationary period, retesting, or permanently suspend their individual certification after not fewer than two retesting failures.
Section 1(a)(3), adding subsection (i)(3)
Denial of Grant Renewal for Non-Compliance
HUD may deny the renewal of covered assistance to an organization or entity if it determines, based on performance reviews, that the organization or its individual counselors are not in compliance with program requirements. The organization must receive at least 60 days' prior written notice and is entitled to an informal conference to present mitigating factors before a final determination.
Section 1(a)(4), adding subsection (j)(2)
Opportunity for Delinquent Borrowers to Receive Foreclosure Counseling
This provision mandates that a borrower with a covered mortgage loan (including FHA, VA, USDA, and certain Housing and Community Development Act loans) who is 30 days or more delinquent on payments must be given an opportunity to participate in available housing counseling.
Section 1(a)(4), adding subsection (j)(3)
Funding for Foreclosure Mitigation Counseling
For FHA-insured loans, the fair market rate cost of counseling for delinquent borrowers, provided certain National Housing Act requirements are met, shall be paid for by the Mutual Mortgage Insurance Fund. This ensures that financial barriers do not prevent eligible FHA borrowers from accessing vital counseling.