II 110th CONGRESS 1st Session S. 2399 IN THE SENATE OF THE UNITED STATES November 16, 2007 Mr. Menendez introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To expand and improve housing counseling services by increasing financial education and counseling services available to homeowners and prospective homebuyers in financial turmoil or who seek credit or other personal financial assistance, and for other purposes.

1.

Short title

This Act may be cited as the Financial Education and Counseling Assistance Act of 2007.

2.

Financial education and counseling

(a)

Demonstration program

Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the following: (g)

Financial education and counseling

(1)

Purposes

The purposes of this subsection are to— (A)increase financial education and counseling services available to homeowners and prospective homebuyers; (B)assist homeowners and prospective homebuyers to develop monthly budgets, build personal savings, finance or plan for major purchases, reduce their debt, improve their financial stability, and set and reach their financial goals; (C)help homeowners and prospective homebuyers understand their credit histories and its relationship to their credit score, so as to improve their credit score; (D)educate homeowners and prospective homebuyers about the options available to build savings or plan for retirement; and (E)provide financial education and counseling for homeowners and prospective homebuyers seeking to understand or improve their credit, savings, bill payments, or other personal financial needs. (2)

Authority

The Secretary of Housing and Urban Development shall carry out a grant program to assist eligible organizations to provide financial education and counseling services to homeowners and prospective homebuyers. (3)

Grants

(A)

In general

The Secretary shall make grants to eligible organizations to enable such organization to provide a range of financial education and counseling services to homeowners and prospective homebuyers. (B)

Selection

The Secretary shall select organizations to receive assistance under this subsection based on their experience and ability to provide financial education and counseling services to homeowners and prospective homebuyers. (C)

Preference

The Secretary shall give preference to established community-based financial education and counseling organizations capable of providing in-person services. (4)

Eligible organizations

To be eligible to receive a grant under this subsection, an eligible organization shall be a— (A)housing counseling agency certified by the Secretary under subsection (e); (B)nonprofit organization organized under section 501(c)(3) of the Internal Revenue Code; (C)State, local, or tribal government agency; or (D)community development financial institution (as defined in section 103(5) of the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4702(5)) or a credit union. (5)

Eligible uses

A grant awarded to an eligible organization under this subsection shall be used to provide a range of financial education and counseling services, including— (A)assisting in the expansion of mortgage and housing-related financial counseling services; (B)providing information on important financial topics to homeowners and prospective homebuyers; and (C)assisting homeowners and prospective homebuyers to— (i)develop sustainable monthly budgets; (ii)understand their credit history and their credit scores, so as to improve their credit score; (iii)develop a plan to manage their bills, reduce their debt, and improve their savings; and (iv)set and reach their financial goals. (6)

Counseling activities

(A)

Regulations

The Secretary shall develop and issue guidelines and regulations to carry out the financial education and counseling program established under this subsection. (B)

Content of regulations

The guidelines and regulations required under subparagraph (A) shall be modeled on the regulations issued by the Secretary pursuant to the housing counseling program under subsection (c) and shall require each eligible organization under this subsection to— (i)conduct a preliminary interview with a homeowner or prospective homebuyer to determine the financial needs of such homeowner or renter; (ii)develop a financial plan tailored to meet the financial needs of such homeowner or prospective homebuyer; and (iii)help each such homeowner or prospective homebuyer achieve their financial goals. (7)

Coordination with the Financial Literacy and Education Commission

In developing the guidelines and regulations required under paragraph (6) and in carrying out the grant program established under this subsection, the Secretary shall seek advice from and work in coordination with the Financial Literacy and Education Commission established under section 513 of the Fair and Accurate Credit Transactions Act of 2003 (20 U.S.C. 9702) in order to avoid duplication and to utilize the resources and experience of the Commission. (8)

Outreach

(A)

To individuals

The Secretary, in cooperation with eligible organizations, shall— (i)carry out outreach efforts to ensure that homeowners and prospective homebuyers are aware of the financial education and counseling opportunities under this subsection; and (ii)make an special effort to serve individuals who— (I)qualify for the earned income tax credit under section 32 of the Internal Revenue Code; (II)have a low credit score, damaged credit, or are without sufficient data to create a credit score; (III)are in danger of filing for bankruptcy; (IV)are subject to, or are in danger of, becoming subject to foreclosure proceedings; and (V)have low levels of personal saving, low net-worth, or high levels of debt. (B)

To grantees

The Secretary shall also make an effort to publish grant opportunities under this subsection to eligible organizations who may not typically seek out such Federal funding. (9)

Study and report on effectiveness and impact

(A)

In general

Not later than 2 years after the date of enactment of the Financial Education and Counseling Assistance Act of 2007, the Inspector General of the Department of Housing and Urban Development shall conduct a study and report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the effectiveness and impact of the grant program established under this subsection. (B)

Content of study

The study required under subparagraph (A) shall include the following: (i)The effectiveness of the grant program established under this subsection in improving the financial situation of homeowners and prospective homebuyers served by the grant program. (ii)The impact of the financial education and counseling services provided under this subsection on reducing debt, building savings, and improving the overall financial well-being of homeowners and prospective homebuyers served by the grant program. (iii)An evaluation of the effectiveness and quality of the counselors providing financial education and counseling services under the grant program. (10)

Authorization of appropriations

There are authorized to be appropriated such sums as are necessary to carry out this subsection. . (b)

Certification of financial counselors

Section 106(e)(1) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)(1)) is amended by striking (c), or (d), and inserting (c), (d), or (g).