HUD Counseling Funds Tripled Despite Criticism

From USA Today:

WASHINGTON — Federal funding for a housing counseling program carried out by local non-profit groups such as ACORN has more than tripled since 2002, even though it has been criticized by government auditors for failing to show results.President Obama’s budget calls for a 54% increase next year — $100 million in all — for the program, which helps people buy or refinance a home, prevent a foreclosure or find rental housing. The Senate agreed, while the House of Representatives suggested $70 million; final negotiations over the bill are pending.

The Department of Housing and Urban Development (HUD) has been unable to provide much proof the program works, according to government reports, despite an increase in funding from $20 million in 2002 to $65 million last year.

The reports found:

• “At present there is limited evidence of the benefits of counseling in making homeownership more sustainable,” according to a HUD-commissioned study in 2008 by consulting firm Abt Associates. Abt found that 23% of those completing foreclosure-prevention counseling in 2007 managed to stay in their homes.

• HUD’s inspector general warned in 2006 that the department inadequately supervised counseling agencies and failed to sufficiently measure results. “Despite not meeting its expectations, HUD continued to propose increases in funding,” the report said. HUD has improved training and performance reviews for the program and soon will release a new housing counseling handbook, department spokeswoman Andrea Mead said in an e-mail.

• Earlier this year, non-partisan congressional investigators at the Government Accountability Office reviewed consumer protections for elderly homeowners seeking reverse mortgages. The undercover probe found that none of 15 HUD-funded counselors provided all of the required information. HUD Assistant Secretary David Stevens responded in a letter that the department was making improvements including hiring “mystery shoppers” to test reverse mortgage counseling and report back to counselors’ supervisors.

Read the whole thing here.