[Federal Register Volume 81, Number 240 (Wednesday, December 14, 2016)]
[Rules and Regulations]
[Pages 90632-90660]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29822]
[[Page 90631]]
Vol. 81
Wednesday,
No. 240
December 14, 2016
Part V
Department of Housing and Urban Development
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24 CFR Parts 5, 92, 93, Et al.
Housing Counseling: New Certification Requirements; Final Rule
Federal Register / Vol. 81 , No. 240 / Wednesday, December 14, 2016 /
Rules and Regulations
[[Page 90632]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 5, 92, 93, 214, 570, 574, 576, 578, and 1006
[Docket No. FR 5339-F-03]
RIN 2502-AI94
Housing Counseling: New Certification Requirements
AGENCY: Office of the Secretary, HUD.
ACTION: Final rule.
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SUMMARY: HUD's housing counseling program provides housing counseling
to consumers seeking information about financing, maintaining, renting,
or owning a home. The housing counseling statute was amended to improve
the effectiveness of housing counseling in HUD programs by, among other
things: establishing the Office of Housing Counseling and giving this
office the authority over the establishment, coordination, and
administration of all regulations, requirements, standards, and
performance measures under programs and laws administered by HUD that
relate to housing counseling; requiring that organizations providing
housing counseling required under or in connection with HUD programs be
approved to participate in the Housing Counseling Program (Housing
Counseling Agencies, or HCAs) and have all individuals providing such
housing counseling certified by HUD as competent to provide such
services; prohibiting the distribution of housing counseling grant
funds awarded to agencies participating in HUD's Housing Counseling
Program that are found in violation of Federal election laws or that
have employees found in violation of Federal election laws; and
requiring the reimbursement to HUD of housing counseling grant funds
that HUD finds were misused. HUD issued a proposed rule on September
13, 2013, to establish in regulation the statutory changes made to the
housing counseling program and solicited public comment. This final
rule revises HUD's Housing Counseling Program regulations to adopt the
new requirements established in the housing counseling statute.
Additionally, this rule amends HUD's general and other program
regulations to clarify for grantees the requirement that housing
counseling under Other HUD Programs must be provided by HCAs.
HUD will issue a separate Federal Register notice to announce the
start of the testing and certification process, and entities and
individuals providing housing counseling will have 36 months to be
approved or certified by the Office of Housing Counseling.
DATES: Effective Date: January 13, 2017.
FOR FURTHER INFORMATION CONTACT: William McKee, Office of Housing
Counseling, at [email protected]. Please include ``Housing
Counseling Program: New Certification Requirements'' in the subject
line of the email. Requests can also be sent by mail to William McKee
at Office of Housing Counseling, Office of Housing, Department of
Housing and Urban Development, Santa Ana Federal Building, 34 Civic
Center Plaza, Room 7015, Santa Ana, CA 92701; telephone number 702-366-
2126 (this is not a toll-free number). Persons with hearing or speech
challenges may access this number through TTY by calling the Federal
Relay Service at 800-877-8339 (this is not a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose of the Regulatory Action
Section 106 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x) (Section 106) was amended by Subtitle D of title XIV of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L.
111-203, 124 Stat. 1376, approved July 21, 2010) to strengthen and
improve the effectiveness of housing counseling that is required under
or provided in connection with HUD programs (Section 106 amendments).
Specifically, the Section 106 amendments were enacted for the purpose
of improving, by the following, the quality, consistency, and
effectiveness of housing counseling delivered to consumers: (1)
Establishing within HUD the Office of Housing Counseling and vesting in
that office responsibility for all activities and matters related to
housing counseling under all programs and laws administered by HUD; (2)
defining certain terms related to housing counseling for purposes of
clarity and consistency; (3) requiring that the individuals providing
housing counseling required under or provided in connection with HUD
programs be certified by taking and passing an examination administered
by HUD's Office of Housing Counseling (HUD certified housing
counselors); (4) requiring that all housing counseling required under
or provided in connection with HUD programs (Other HUD Programs) be
provided by agencies approved to participate in HUD's Housing
Counseling program, referred to as housing counseling agencies (HCAs);
\1\ and (5) placing new requirements on the distribution and use of
housing counseling grant funds awarded to HCAs. This final rule
implements the Section 106 amendments by requiring that, within 36
months of the issuance of the certification examination, ``housing
counseling,'' as defined in this final rule and that is ``required by
or in connection with'' HUD programs, may only be provided by HUD
certified housing counselors working for HCAs that are approved to
provide such housing counseling by HUD's Office of Housing Counseling.
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\1\ The Housing Counseling regulations at 24 CFR part 214
identify agencies approved to participate in HUD's Housing
Counseling program as participating agencies. An approved agency
must meet HUD's requirements in 24 CFR part 214, and is considered
certified for purposes of 12 U.S.C. 1701x. While the preamble for
clarity refers to HUD-approved Housing Counseling Agencies as HCAs,
the regulatory text maintains the participating agency language,
which is defined already in the existing Housing Counseling
regulations.
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This rule codifies the Section 106 amendments in HUD's General HUD
Program Requirements, in 24 CFR part 5, and in HUD's Housing Counseling
Program regulations in 24 CFR part 214. While this rule focuses on
updating HUD's Housing Counseling Program regulations, the rule makes
limited conforming regulatory changes to some of the HUD programs
covered by these new requirements. HUD program offices administering
Other HUD Programs may also issue future conforming regulations or
guidance, as applicable, and advise of any procedures unique to their
programs,\2\ to ensure that participants in all HUD programs are fully
aware of the statutory requirement to use certified housing counselors
employed by HCAs.
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\2\ Regulations for HUD's Native American Housing programs will
be undertaken following consultation pursuant to HUD's Tribal
Consultation Policy.
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B. Summary of the Major Provisions of the Regulatory Action
This final rule adopts the new Section 106 definitions for
``homeownership counseling,'' and ``rental housing counseling,'' and
incorporates these definitions in the new definition of ``housing
counseling.'' The new definition of ``housing counseling'' clarifies
that homeownership counseling and rental counseling are types of
housing counseling and consolidates these definitions with the existing
standards of housing counseling under the Housing Counseling Program in
terms of both the content of housing counseling and the process used to
ensure housing counseling is effective, independent, and helpful to the
consumer or household seeking to purchase or rent,
[[Page 90633]]
or seeking assistance in areas related to effective homeownership or
tenancy.
This preamble clarifies that routine administrative activities
(e.g., program eligibility determinations, intake, case management,
property management, the payment of rental assistance on behalf of a
client, and the collection of rent or loans) have never been
categorized as housing counseling and that neither the Section 106
amendments nor HUD's regulations make these activities housing
counseling. In addition, the final rule defines a ``HUD certified
housing counselor'' as an individual who works for an HCA and who has
passed a certification examination administered by HUD.
This rule implements the requirement that homeownership counseling
and rental housing counseling required under or provided in connection
with HUD programs be provided only by organizations approved by HUD
under HUD's Housing Counseling Program. In addition, this final rule
implements the statutory requirement that, for an organization to be
approved by HUD to participate in HUD's Housing Counseling Program, all
counselors employed by the organization that provide homeownership
counseling and rental housing counseling must pass the certification
examination and become a HUD certified housing counselor within 36
months of HUD's announcement of the availability of the examination.
The certification requires that individuals demonstrate competency by
passing a standardized written examination covering six major areas of
counseling that are primarily provided to prospective homeowners or
tenants or existing homeowners or tenants. These areas include: (1)
Financial management; (2) property maintenance; (3) responsibilities of
homeownership and tenancy; (4) fair housing laws and requirements; (5)
housing affordability; and (6) avoidance of, and responses to, rental
and mortgage delinquency and avoidance of eviction and mortgage
default. In addition to passing the certification examination, HUD
requires that individuals must also work for an HCA in order to be a
HUD certified housing counselor.
However, if the services provided by the individual are limited to
overseeing or administering the provision of housing counseling, but do
not include the provision of housing counseling services directly to
the consumer, then the individual is not required to become a HUD
certified housing counselor and the individual's employer is not
required to be an HCA.\3\ Within 36 months of the date that HUD begins
administering the certification examination, entities that offer
housing counseling covered by this rule will have to either become HUD-
approved housing counseling agencies that employ HUD certified housing
counselors, create partnerships with HCAs using certified housing
counselors to deliver housing counseling services on their behalf, stop
providing housing counseling services, or otherwise modify their
program to comply with this rule.
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\3\ An entity that participates in HUD's Housing Counseling
Program must comply with 24 CFR part 214 requirements regardless of
whether there are individuals performing only administration or
oversight.
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Lastly, this final rule prohibits the distribution of Comprehensive
Housing Counseling or Housing Counseling Training funding authorized by
Section 106 to any HCA that has been convicted for a violation under
Federal law relating to an election for Federal office, or any HCA that
employs an individual who has been convicted for a violation under
Federal law relating to an election of a Federal office. In addition,
this final rule requires an HCA that has been found to have used
Housing Counseling Program funds in a material violation of the
regulations, statutes or other conditions associated with the Housing
Counseling Program funds to reimburse HUD for the misused Housing
Counseling Program funds through non-Federal funds and return any
unused or unobligated grant funds. This final rule prohibits such an
agency from receiving housing counseling grant funds in the future.
C. Costs and Benefits
The compliance cost of the rule will be borne to a large degree by
the individual housing counselors who will be required to take and pass
the Housing Counseling Certification Examination to be administered by
HUD's Office of Housing Counseling. HUD is providing training for the
Housing Counseling Certification Examination through its training
grantees and also for free at www.hudhousingcounselors.com. The
examination is anticipated to cost $100 for online testing at the
examinee's location and $140 for an on-site proctoring center
examination, and an estimated average cost of $120 per housing
counselor to take the certification examination. The cost to
individuals would be incurred only once if the individual passes the
examination. For those that use HUD's free training materials, the time
it takes to review the material will be approximately 11 hours, which
is $396 of lost wages based on the average wage of a housing counselor.
With an estimated 8,433 housing counselors that work for HCAs or
currently provide housing counseling for or in connection with Other
HUD Programs that will need to be certified, the initial nationwide
cost of the examination and training would total approximately
$3,936,340.\4\
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\4\ This includes a retest rate of 20 percent for those that do
not pass on the first time, and cost of loss wages for hours spent
training for 80 percent of test takers
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In addition, some of the entities that are not currently HCAs but
deliver housing counseling services now covered by this rule may choose
to become HCAs, incurring a cost to the entity to bring their programs
into compliance with Housing Counseling Program requirements and
regulations. These entities may also choose to partner with existing
HCAs to deliver services, modify their programs to comply with this
rule, or eliminate the activities they perform that would be considered
housing counseling from their programs. Because these entities are
already delivering housing counseling services, the cost to become an
HCA will primarily be in time to develop systems and train staff in HUD
Housing Counseling Program requirements. They may choose to become an
HCA either by applying directly to HUD, or by affiliating with a HUD-
approved intermediary or state housing finance agency that participates
in the Housing Counseling Program. Given the options provided to these
entities that have been administering housing counseling services in
Other HUD Programs and the benefits that these entities would receive
if they participate in HUD's Housing Counseling Program, HUD only
includes the cost of the certification exam for the employees of these
entities that might pursue the certification.
There are significant benefits to implementing the final rule,
especially the certification requirement. The benefits to the renter,
the prospective homebuyer, or the existing homeowner are increased
assurance, as a result of the certification requirements, of a more
knowledgeable housing counselor providing more effective housing
counseling services to the consumer. HUD expects that more
knowledgeable housing counselors will lead to better identification of
issues, more knowledgeable referrals, and resolution of barriers. HUD
also expects that consumers will recognize the value of housing
counseling delivered by
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certified housing counselors, with greater ability to avoid scams, and
HCAs will benefit from the greater visibility that certification and
HUD approval is expected to bring to the programs. The certification
will be a valuable credential to housing counselors who are seeking
employment from HCAs and will help consumers avoid fraudulent offers to
solve housing problems.
Housing counseling helps a borrower make an informed decision when
obtaining an affordable purchase loan or an affordable loan
modification and avoid foreclosure, and this type of assistance
provides a net benefit to the borrower and the market. In 2014, a total
of 108,875 homeowners avoided foreclosure after seeking assistance from
a HUD Housing Counselor.\5\ Statistically, borrowers who received loan
modifications after receiving post-purchase housing counseling had an
average savings of $4,980 annually.\6\ In addition, foreclosures
prevented as a result of housing counseling have an estimated social
benefit of $40,730.\7\ Consequently, if 140 loan modifications are made
and 125 foreclosures are avoided over a period of 5 years as a result
of this rule, the benefits of this rule will exceed the projected
compliance costs.
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\5\ HUD Form 9902 Data for Fiscal Year 2014, http://portal.hud.gov/hudportal/documents/huddoc?id=OHC_2014Q49902020615.pdf.
\6\ National Foreclosure Mitigation Counseling Program
Evaluation, Final Report, Rounds 3 Through 5, Prepared by Kenneth M.
Temkin Neil S. Mayer Charles A. Calhoun Peter A. Tatian with Taz
George, Prepared for NeighborWorks[supreg] America (Urban Institute:
September 2014).
\7\ HUD's Office of Policy Development and Research found that
the total ``deadweight'' loss per foreclosure prevention cost is
approximately $40,730. (See http://www.huduser.org/periodicals/cityscpe/vol14num3/Cityscape_Nov2012_impact_lim_sellers.pdf, at page
219.)
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II. Background
HUD's Housing Counseling Program, established pursuant to Section
106, authorizes HUD, through HUD-approved organizations,
intermediaries,\8\ multistate organizations, state housing finance
agencies, and their branches and affiliates (collectively referred to
as Housing Counseling Agencies, or HCAs) to provide housing counseling
services to potential homebuyers, homeowners, homeowners at risk of
default, renters, and the homeless. Section 106 also authorizes HUD to
provide housing counseling directly or to enter into contracts with, or
make grants to, eligible private or public organizations with special
competence and knowledge in providing housing counseling to low- and
moderate-income families. Section 106 was amended to strengthen and
improve the effectiveness of HUD's Housing Counseling Program.
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\8\ Intermediaries provide housing counseling services through a
network of affiliates or branches. See http://portal.hud.gov/hudportal/HUD?src=/ohc_nint.
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Sections 1441, 1442, 1443, 1444, 1445, and 1448 of the Dodd-Frank
Act amended Section 106 and revised HUD's Housing Counseling Program
by, among other things: (1) Defining certain terms in the program; (2)
establishing the Office of Housing Counseling and giving it authority
over all requirements, standards, and performance measures under
programs and laws administered by HUD that relate to housing
counseling; (3) ensuring that HUD certified housing counselors provide
housing counseling covering the entire process of homeownership, from
the purchase of a home to its disposition; (4) ensuring that rental or
homeownership counseling, as defined by the Dodd-Frank Act, is
administered in accordance with procedures established by HUD; and (5)
requiring that all homeownership counseling and rental housing
counseling \9\ is delivered through HUD certified housing counselors.
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\9\ Section 1443 of the Dodd-Frank Act amended Section 106(e)(3)
and added Section 106(g)(1)(A) to require that homeownership
counseling or rental housing counseling provided in connection with
any program administered by HUD must be provided only by
organizations or counselors certified by the Secretary as competent
to provide such counseling.
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III. The Proposed Rule
On September 13, 2013 (78 FR 56625), HUD published a proposed rule
that set out regulations describing how HUD would implement the changes
to Section 106 made by the Dodd-Frank Act. The following presents a
brief summary of the key regulatory revisions proposed. A detailed
description of the proposed amendments can be found in this preamble to
the proposed rule at 78 FR 56625, available at http://www.gpo.gov/fdsys/pkg/FR-2013-09-13/pdf/2013-22229.pdf.
Definitions Sec. 214.3
The September 2013 rule proposed to add and revise existing
definitions for consistency with the definitions in Section 106. Of
particular note, the proposed rule sought to revise the definitions of
``HUD-approved housing counseling agency,'' and added new definitions
for ``homeownership counseling,'' ``HUD certified housing counselor,''
and ``rental housing counseling.'' Section 1443 of the Dodd-Frank Act
amended Section 106(e)(3) and added Section 106(g)(1)(A) to require
that homeownership counseling or rental housing counseling provided in
connection with any program administered by HUD must be provided only
by organizations or counselors certified by the Secretary under this
subsection as competent to provide such housing counseling.
Counseling That Covers the Entire Process of Homeownership Sec.
214.300
The September 2013 rule proposed to amend Sec. 214.300 to reflect
the new statutory requirement that homeownership counseling address the
entire process of homeownership and require, as part of the home
purchase counseling, that information regarding home inspections be
provided to clients considering whether to purchase a home. The entire
process of homeownership includes the decision to purchase a home, the
selection and purchase of a home, issues arising during or affecting
the period of ownership of a home (including refinancing, default, and
foreclosure, and other financial decisions), and the sale or other
disposition of a home.
Certification To Provide Counseling Sec. 214.101
The September 2013 rule proposed to amend the approval criteria to
require that any individual providing homeownership or rental housing
counseling related to HUD programs must be a HUD certified housing
counselor. In addition, the rule proposed to add a new paragraph (n) to
Sec. 214.103 to provide the certification criteria for housing
counselors and HCAs. The proposed paragraph (n) also provided that HCAs
and individual counselors must be in compliance with the certification
requirements no later than one year after the effective date of the
final rule that would follow the proposed rule.
The September 2013 rule also proposed to require that organizations
providing housing counseling, and individuals providing housing
counseling through such organizations, in connection with any HUD
program, be certified by HUD as competent to provide housing
counseling. For an organization to participate in HUD's Housing
Counseling Program and be eligible for HUD certification under Section
106(e), all individuals through which the organization provides housing
counseling under HUD's Housing Counseling Program must be certified to
provide such counseling. The proposed rule would require that in order
for an individual to become HUD certified, that individual must work
for an HCA and must demonstrate
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competency by passing a standardized written examination covering six
major areas of housing counseling. These areas are included: (1)
Financial management; (2) property maintenance; (3) responsibilities of
homeownership and tenancy; (4) fair housing laws and requirements; (5)
housing affordability; and (6) avoidance of, and responses to, rental
and mortgage delinquency and avoidance of eviction and mortgage
default.
Requirements Relating to Housing Grant Funds Sec. 214.311.
The September 2013 proposed rule would prohibit the distribution of
grants awarded under HUD's Housing Counseling Program to any agency
that has been convicted for a violation under Federal law relating to
an election for Federal office, or any agency that employs an
``applicable individual'' who has been convicted for a violation under
Federal law relating to an election of a Federal office. The rule also
proposed to require that an HCA that was found by HUD to have used
Housing Counseling Program grant funds in a material violation of the
regulations, statutes, or other conditions associated with the funds,
to reimburse HUD for the misused Housing Counseling Program funds and
return any unused or unobligated grant funds, and that such HCA would
be ineligible to receive housing counseling grant funds in the future.
Lastly, the proposed rule prohibited the distribution of assistance for
counseling activities to an HCA unless the agency has been certified by
HUD as competent to provide counseling.
IV. Final Rule
This final rule follows publication of the September 2013 proposed
rule and takes into consideration the public comments received on the
proposed rule. The final rule does not substantively revise the
proposed rule; however, in response to public comments, HUD has
clarified policies regarding the housing counseling certification
examination, amended several provisions for consistency and clarity,
and clarified the application of this rule to Other HUD Programs.
Definitions. This final rule incorporates the statutory definitions
``homeownership counseling'' and ``rental counseling'' and adds
clarifying definitions for ``housing counseling'' in HUD's General part
5 requirements at Sec. 5.100 and cross-references the definitions in
Sec. 214.3. The final rule incorporates these definitions in Sec.
5.100, because they apply to all of HUD's programs, and includes cross-
references in some other programs for clarification. The final rule is
also adding a definition of ``housing counseling grant funds'' and the
other definitions provided in the Section 106 amendments to Sec.
214.3.
The definition of rental housing counseling is amended from the
proposed rule by including a list of items (decision to rent,
responsibilities of tenancy, affordability of renting, and eviction
prevention) that may be included in rental housing counseling, similar
to the homeownership counseling definition.
A new ``housing counseling'' definition is added at this final rule
stage, which consolidates existing statute, regulation and handbook
definitions, and incorporates the requirement that the housing
counseling activity must meet both the content and process standards
that are set by 24 CFR part 214 and by guidance issued by the Office of
Housing Counseling. This clarification provides the framework for
making clear that homeownership counseling and rental counseling are
subsets of housing counseling, and what activities trigger the
certification requirements under Section 106.
HUD includes a definition of ``required under or provided in
connection with any program administered by HUD'' in Sec. 5.111 to
clarify for grantees whether ``housing counseling,'' as defined in this
regulation, is subject to the new Section 106 requirements. This
requirement is also incorporated by cross-reference, into some HUD
programs.
HUD is also adding the definition of ``housing counseling grant
funds'' and adopting the term through the Housing Counseling Program
regulations to clarify when the provisions of the rule apply solely to
grant funds awarded under HUD's Housing Counseling Program.
Lastly, HUD is removing ``the Trust Territories of the Pacific''
from the definition of ``State,'' given the United States ended its
administration over the Trust Territories of the Pacific on October 21,
1986.
Extension of timeframe for certification. The final rule
changes the September 2013 rule's proposed requirement for Other HUD
Programs, HCAs, and individual counselors to be in compliance with the
certification requirements to no later than 36 months (rather than 12
months as was stated in the proposed rule) after the date that HUD
announces the availability of the certification examination, in order
to address concerns raised by commenters. The date that is 36 months
after the date that HUD announces the availability of the certification
examination is referred to as the final compliance date. The final rule
outlines some of the activities that HUD, entities affected by the
final rule, and individual housing counselors will undertake during the
period between the publication of this rule and the final compliance
date.
Delayed certification examination availability. There are
two requirements for housing counselor certification: (1) Passing the
examination and (2) working for an HCA. Both requirements are necessary
to ensure that the consumer receives knowledgeable, independent, and
effective housing counseling following standards established by the
Office of Housing Counseling. HUD is working to implement a new housing
counselor certification structure that will link several systems--FHA
Connection, HUD's online system for FHA lenders and business partners;
the current HUD system for tracking housing counseling program
activities (Housing Counseling System); HUD's list of approved HCAs
(also supported by Housing Counseling System); and housing counselor
certification examination results--in a new database. The systems'
linkages will validate that the individual works for an HCA and, thus,
provide HUD with the evidence required to validate the individual's
eligibility for certification. The system will also maintain the
database of HUD certified housing counselors and will allow users to
issue certificates that confirm to consumers, lenders, and other
stakeholders that homeless, rental, homeownership (prepurchase, post-
purchase, and mortgage default), or reverse mortgage housing counseling
meeting HUD standards has occurred. To ensure that the counselor
certification database will be available when individuals take the
certification examination, HUD will first publish a notice in the
Federal Register announcing the date when the certification examination
will become available and that date will start the 36-month timeframe
for individuals to become HUD certified housing counselors.
Individual HUD Certified Housing Counselor. The
certificate that HUD issues to an individual who has passed the
certification examination and whom HUD has verified works for an HCA as
a housing counselor will be called a ``HUD Certified Housing
Counselor'' certificate. This is a name change from the term
``Certification of Competency'' that was used in the proposed rule, and
the change in terminology was adopted in Sec. Sec. 214.103 and
214.311. The terminology better aligns with the purpose of the statute
to improve the
[[Page 90636]]
quality, consistency, and effectiveness of housing counseling by
providing housing counselors with a credential that confirms a level of
expertise and provides consumers and stakeholders with a way to
distinguish the housing counseling services of trustworthy
professionals from those who are unqualified or perpetrating scams and
fraud.
Other HUD Programs. The Section 106 amendments require
that HUD certify or approve organizations that provide housing
counseling required under or provided in connection with HUD programs.
Furthermore, all individuals providing housing counseling for an HCA
must be certified housing counselors. HUD is implementing the new
requirement that all housing counseling required under or provided in
connection with HUD programs meet the regulations, requirements,
standards, and performance measures set by the Office of Housing
Counseling, including requirements relating to the certification of
organizations and individuals. To clarify that these requirements apply
to all HUD programs under which housing counseling is provided, this
rule includes a new provision in Sec. 5.111 that incorporates the
statutory language into HUD's General Requirements, and cross-
references to the requirements of HUD's Housing Counseling Program in
part 214. This section also defines the phrase ``required under or
provided in connection with any program administered by HUD''.
The discussion of the public comments in this final rule preamble
adds guidance for Other HUD Programs covered by the rule that are not
currently delivering housing counseling through HCAs. Entities covered
by the rule will have the opportunity to choose among a number of
alternatives to bring their housing counseling services into compliance
prior to the Final Compliance Date, including (i) applying to HUD or to
a HUD-approved intermediary or state housing finance agency in order to
become HCAs and ensuring that their housing counselors become certified
prior to the Final Compliance Date; (ii) partnering with an existing
HCA to deliver housing counseling, homeownership counseling or rental
counseling services; (iii) modifying the program in order to become
compliant with this rule; or (iv) choosing to stop delivering housing
counseling services before the Final Compliance Date.
The final rule clarifies that entities that provide funding or
otherwise authorize housing counseling that is required under or
provided in connection with Other HUD Programs, and that do not provide
housing counseling services directly to consumers, do not have to
become HCAs, and their employees do not have to become HUD certified
housing counselors. These entities will nevertheless have the
responsibility to ensure that housing counseling conducted with their
funding or provided under their authority through recipients,
subrecipients, grantees, or contractors complies with the statutory
requirements. They may choose to apply to become HUD-approved housing
counseling intermediaries, becoming eligible to participate in the
Housing Counseling Grant Program and providing greater programmatic
support to the housing counseling delivered under their auspices.
However, they may also choose to require that housing counseling under
their programs is delivered by HCAs without becoming HUD-approved
housing counseling intermediaries themselves.
Many counseling services are provided in HUD-funded programs but
every reference to counseling does not automatically make these
services ``housing counseling'' as defined in Sec. 5.100. It is
important to note that the Section 106 amendments do not alter the
meaning of ``counseling'' services as has been applied to date in these
programs and not all activities that may be labeled as counseling
services equate to housing counseling as defined by Section 106 and
this final rule. HCAs and certified housing counselors may elect to
provide any of the services listed below as part of their housing
counseling program. However, entities that provide the services listed
below, in the absence of providing housing counseling as defined by
Sec. 5.100, do not have to become HCAs and do not have to use
certified housing counselors in order to be compliant with this final
rule. The following are examples of counseling that do not constitute
housing counseling:
1. Services that provide housing information, or placement or
referral services, (for example, mobility-related services for the
Housing Choice Voucher (HCV) program), do not constitute housing
counseling and would not necessitate an individual providing these
services to become a HUD certified housing counselor working for an HCA
under this rule.
2. Routine administrative activities (e.g., program eligibility
determinations, intake, case management, property management, payment
of rental assistance on behalf of a client, and the collection of rent
or loans) have never been categorized as housing counseling. Neither
the Section 106 amendments nor HUD's Housing Counseling Program
regulations make these activities housing counseling.
3. Holistic case management for persons with special needs, for
persons undergoing relocation in the course of a HUD program (including
relocation and other advisory services provided pursuant to the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of
1970 and other Federal laws), or for social services programs that also
provide housing services as incidental to a larger case management
program, are not housing counseling. Thus, the Housing Opportunities
for Persons With HIV/AIDS (HOPWA) program, Emergency Solutions Grants
(ESG) program, and Continuum of Care (CoC) program permit various
housing and support services as eligible uses of funds. If these
housing services are part of a larger set of case management services,
they do not trigger the certification requirements of this rule.
However, in these programs, there may be instances where housing
counseling, as defined in this rule, is being provided. For example, if
a participant in these program is receiving housing counseling, as
defined in Sec. 5.100, as a separate specialized service, the housing
counseling has to be provided by a certified housing counselor working
for an HCA.
4. Fair housing advice and advocacy offered in isolation from
housing counseling as defined in Sec. 5.100 (i.e., without providing
for an intake); financial and housing affordability analysis; an action
plan to address other housing needs or goals; and follow-up.
HUD will maintain, in four categories, a list of ``Other HUD
Programs'' that this rule covers consistent with the definition added
to Sec. 5.111 that defines ``required under or provided in connection
with.'' In this rule, HUD used the programs named in Section 106 as a
guide to the HUD programs that may be providing housing counseling as
defined in this final rule, but removed obsolete programs or those that
do not cover ``housing counseling.'' HUD has included additional
programs that provide housing counseling to the list of programs
consistent with Sec. 5.111. In the future, the list of HUD programs
for which housing counseling must be provided by a HUD certified
housing counselor working at an HCA will be posted on HUD's Housing
Counseling Web site and will be updated as appropriate to add or remove
HUD programs.
The following list of programs provide housing counseling as
defined
[[Page 90637]]
in this final rule under the four categories in Sec. 5.111. Therefore,
``housing counseling'' provided by these programs must be provided by
certified individual housing counselors that work for HCAs as of the
final compliance date:
1. HUD programs where housing counseling is required by statute,
regulation, Notice of Funding Availability (NOFA), or is otherwise
required by HUD. The current list of programs that universally require
housing counseling or may require housing counseling in part of the
program, as identified by HUD, include the Housing Counseling Program
(12 U.S.C. 1701x); Housing Choice Voucher Homeownership Option (42
U.S.C. 1437f(y)); HOME Investment Partnership--Homeownership only (42
U.S.C. 12701 et seq.); Housing Trust Fund--Homeownership Only (12
U.S.C. 4568(c)); FHA Single Family Mortgage Insurance Program (12
U.S.C. 1707 et seq.); and Home Equity Conversion Mortgage Program (12
U.S.C. 1715z-20).
2. HUD programs where housing counseling is funded under the HUD
program. The current HUD programs that include ``housing counseling''
as an eligible funding activity or project cost, include: The Community
Development Block Grant Program (42 U.S.C. 5301, et seq.), including
Disaster Recovery; Displacement Due to Demolition and Disposition of
Public Housing (42 U.S.C. 1437p(a)(4)(D)); Conversion of Distressed
Public Housing to Tenant-Based Assistance (42 U.S.C 1437z-5(d)(2)(B)
and 42 U.S.C. 1437t); HOME Investment Partnership Program (42 U.S.C.
12701 et seq.); Housing Trust Fund (12 U.S.C. 4568(c)); Housing
Opportunities for Persons With AIDS (42 U.S.C. 12906); Emergency
Solutions Grant (42 U.S.C. 11371, et seq.); the Continuum of Care
program (42 U.S.C. 11381, et seq.); Indian Housing Block Grants and
Native Hawaiian Housing Block Grants (25 U.S.C. 4132(3), 25 U.S.C.
4229(b)(2)(A)); \10\ Indian Community Development Block Grant program
(42 U.S.C. 5301, et seq.); \11\ Rural Housing Stability Assistance
Program (Pub.L. 111-22); Housing Choice Voucher program (42 U.S.C.
1437f(o)); and Public Housing Operating Fund (42 U.S.C. 1437g(e)).
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\10\ Application of Section 106 amendments to the Indian Housing
Block Grant program will undergo tribal consultation before
applying.
\11\ Application of Section 106 amendments to the Indian
Community Block Grant program will undergo tribal consultation
before applying.
---------------------------------------------------------------------------
3. HUD Programs where housing counseling is required by a grantee
or subgrantee of a HUD program as a condition of receiving assistance
under the HUD program. Any HUD program where a grantee or subgrantee
elects to require housing counseling as a condition of receiving
assistance under a HUD program must provide ``housing counseling''
consistent with Sec. 5.111. An example of such a program would be the
Public Housing Resident Homeownership Program (42 U.S.C. 1437z-4),
where Public Housing Agencies may elect to require participants in the
program to participate in housing counseling as a condition of
participating in the Public Housing Resident Homeownership Program.
Such housing counseling would be considered ``required under or
provided in connection with a HUD program'' and the ``housing
counseling'' must be provided by a certified individual housing
counselors working for HCAs as of the final compliance date of the
final rule. Another example of such a program would be a State Housing
Finance Agency that has elected to require consumers to obtain
``housing counseling'' as a condition of eligibility for its
downpayment program funded by Community Development Block Grant (CDBG).
Because the downpayment program is funded by CDBG funds, the ``housing
counseling'' must be provided by certified individual housing
counselors working for HCAs as of the final compliance date of the
final rule.
4. HUD programs where housing counseling referrals are made by a
grantee or subgrantee of the program for use by a family assisted under
the program. Any HUD program where a grantee or subgrantee makes a
housing counseling referral to a family assisted under the HUD program
must make the referral to an HCA consistent with Sec. 5.111. Examples
include the Family Self-Sufficiency Program (FSS); and Resident
Opportunity and Self-Sufficiency Program (ROSS). In these programs, HUD
funding provides for the salaries of coordinators who may refer
participants to housing counseling services. While these housing
counseling services are not funded through the FSS or ROSS programs and
are provided by a third party, the third party must be a certified
individual housing counselor working for an HCA as of the final
compliance date of the final rule.
This final rule also includes language clarifying the application
of this rule to a number of programs, including ESG, COC, HOPWA, CDBG,
and the Native Hawaiian Housing Block Grant program. HUD program
offices administering Other HUD Programs may also issue future
conforming regulations or guidance, as applicable, and advise of any
procedures unique to their programs to ensure that participants in all
HUD programs are fully aware of the statutory requirement to use
certified housing counselors employed by HCAs.
Housing Counseling Agency certification of competency. HUD
will not issue a separate agency ``Certificate of Competency'' as
originally stated in the proposed rule. For a housing counseling agency
to be HUD-approved or maintain status as an HCA under HUD's Housing
Counseling Program, each individual providing housing counseling for
the HCA must be a HUD certified housing counselor. This requirement
will be implemented through this final rule by amending existing HUD
Housing Counseling Program regulations at 24 CFR part 214 that
determine if an entity is eligible to be an HCA.
HUD will notify HCAs on the OHC Web site, after publication of the
final rule, of the timing and process for identifying that the housing
counselors who work for them are HUD certified housing counselors. The
removal of the agency certification is reflected in amendments to Sec.
214.103(n), and the requirement for HUD certified housing counselors is
clarified in Sec. Sec. 214.101, 214.103(n), and 214.311(c)(2).
The discussion of public comments explains the transition process
for entities that are providing housing counseling under Other HUD
Programs and choose to become HUD-approved HCAs by the final compliance
date. Information about the current application process for entity
approval under the Housing Counseling Program may be found here: http://portal.hud.gov/hudportal/documents/huddoc?id=OHC_9900FAQS011415.pdf.
Who must be certified. The final rule applies to the
individuals that provide ``housing counseling'' services to consumers
under HUD programs, including Home Equity Conversion Mortgage (HECM)
counselors. The certification requirement applies to all HCAs, whether
grantees or nongrantees, and whether directly approved by HUD or
participating in HUD's Housing Counseling Program as an affiliate or
branch of an intermediary, multi-state organization, or state housing
financing agency. Individuals whose roles are limited to overseeing or
administering a housing counseling program are not required to become
HUD certified housing counselors. The final rule clarifies that an
individual providing housing counseling under Other HUD Programs,
regardless of employment status (i.e., a contractor, volunteer, part-
time employee, etc.), must be certified. (See Sec. Sec. 5.111,
214.103(g).) In addition,
[[Page 90638]]
the final rule retains language in the current regulation at Sec.
214.103(g), which required the agency to employ staff trained in
housing counseling, and that at least half the agency's counselors must
have at least 6 months of experience from significantly comparable work
to the job that the counselor will be performing. A clarification is
also made in Sec. 214.103, paragraph (n).
The final rule also clarifies that all individual housing
counseling activity reported by HCAs on form HUD-9902,\12\ whether
attributed to a HUD Housing Counseling Grant or not, must be performed
by HUD certified housing counselors. Lastly, while not all group
education presenters are required to be certified, all group education
offered by an HCA as part of its Housing Counseling Program must be
overseen by a HUD certified housing counselor and all group education
reported by HCAs to form HUD-9902, whether attributed to a HUD Housing
Counseling Grant or not, must be overseen by a HUD certified housing
counselor.
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\12\ See http://portal.hud.gov/hudportal/documents/huddoc?id=9902.pdf.
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Housing counseling certification examination training.
Section 106 requires that HUD contract with an appropriate entity to
provide training and administer the housing counselor certification.
HUD's Contracting Office, therefore, published a market research notice
in FedBizOpps on June 18, 2013, seeking an entity to administer the
housing counselor certification and training. The Office of Housing
Counseling identified a qualified certified 8(a) small business entity
registered with the Small Business Administration (SBA) to conduct
business with the Federal Government and awarded a contract to Bixal
Solutions, Inc. (Bixal) on September 30, 2013, to develop the housing
counselor certification training, examination, and to host the Web
site. Information on the requisition and award is located on
FedBizOpps.gov.
The Housing Counseling Certification Examination training was
developed by Bixal, using experienced instructional designer and
technology specialists, adult learning specialists, and subject matter
experts in housing counseling, lending, and fair housing. Free training
has been made available to the public. The training course is currently
available online in an interactive format, and is also offered in a
portable document format (PDF) format for those who prefer text-based
instruction. The study guide is available for download onto multiple
types of electronic devices. The training Web site can be accessed at
www.hudhousingcounselors.com.
Housing counseling certification examination. Bixal was
also selected to administer the Housing Counseling Certification
Examination. A Federal Register notice will be issued announcing when
the certification examination will be available and at that time
individuals interested in becoming HUD certified housing counselors can
register for the examination. The administration of the examination
will be made available through video conferencing at an examinee's
location or at a commercial proctoring site identified by HUD's
contractor. Those choosing to use video conferencing must have
equipment available. Additional information on test locations and
online proctoring will be available on HUD's Office of Housing
Counseling Web site, www.hudhousingcounselors.com, and also at
www.hud.gov/housingcounseling.
HUD originally estimated the training and certification examination
would be approximately $500. Since the issuance of the proposed rule,
HUD took into account a number of public comments expressing concern
that the cost was too high. With the contractor employed by HUD, HUD
has been able to significantly reduce that cost through value
engineering the examination, through free training, and by adding
flexibility in the administration of the certification exam. HUD has
determined the cost of the examination at a commercial proctoring site
will be $140 and online at the examinee's location it will be $100.
This cost is based on the actual cost to administer the examination in
Fiscal 2016, and changes to the cost after Fiscal 2016 will be
published in the Federal Register.
HUD will also offer the examination in English and Spanish, and
will continue to review options to add other languages. For those test
takers that need a reasonable accommodation pursuant to the Americans
with Disabilities Act (ADA) and subsequent amendments to the act, HUD's
contractor will arrange for accommodations. Individuals who do not pass
the examination will receive an email notifying them of results and
indicating the subject areas that should be reviewed before retesting,
and can re-register for the exam. There is no limit to the number of
attempts an individual can make to pass the examination.
Individual housing counselor certification. A person
taking the Housing Counseling Certification Examination who
successfully passes the examination will receive notification of
passage by email. HUD will track the examination results, and an
individual HUD certified Housing Counselor Certificate will be issued
for a housing counselor that has passed the examination when HUD
verifies that the counselor works for an HCA.
Content Standards. At the proposed rule stage, HUD
provided in paragraph (b) of Sec. 214.300 a requirement that an HCA
must offer homeownership counseling, which was more extensive than that
required by the Section 106 amendments. Therefore, this final rule
removes the requirement that an HCA is required to provide
homeownership counseling and instead clarifies in paragraph (a) of
Sec. 214.300, which covers the basic requirements for housing
counseling, that if an HCA offers homeownership counseling the HCA must
do so as defined in Sec. 214.3. This final rule also adds the same
requirement for the content of rental housing counseling if an HCA
offers rental counseling. This final rule also moves the home
inspection requirement from paragraph (b) to paragraph (a) of Sec.
214.300.
V. Discussion of Public Comments and HUD's Responses
This section of the preamble discusses the key issues raised by the
comments submitted in response to the September 13, 2013, proposed
rule. The public comment period on the proposed rule closed on December
12, 2013, and 215 public comments were received in response. All public
comments can be viewed at the following Web site, www.regulations.gov,
under docket number HUD-2013-0083. (See http://www.regulations.gov/#!docketDetail;D=HUD-2013-0083). Comments were submitted by advocacy
groups, service providers, state and local government agencies,
nonprofit organizations, private companies, and individuals. The
following represents the significant issues and questions related to
the proposed rule raised by the commenters.
HUD also received comments in support of the proposed rule that do
not require a response. These comments expressed support for the
certification process, writing that the proposed certification provided
a less expensive, clearer, and less cumbersome process than the current
process in which housing counselors obtained certifications from
multiple agencies. Commenters also supported the introduction of
training from HUD to aid counselors in learning the examination topics.
A few commenters also stated that this rule will provide
[[Page 90639]]
additional consumer protection for homebuyers and the public. Lastly,
commenters stated that certification will improve the integrity of the
housing counseling profession and the quality and value of housing
counseling.
Comment: Opposition. Some commenters generally opposed the proposed
rule, writing that the certification requirement is unnecessary,
redundant, and costly given that housing counselors are already
required by HUD (and their agencies) to receive continuing education
and training. One commenter added that certification will not
supplement housing counselors' experience or improve the services that
they provide to clients. A few commenters wrote that certification
punishes housing counselors and HCAs by requiring them to pay for and
pass the certification. In addition, a few commenters wrote that this
industry did not cause the financial crisis and applying this
certification to the industry will compound the problem by causing
agencies to leave the field, resulting in fewer agencies to serve
clients. Lastly, a few commenters worried about the certification
displacing long-standing high quality certification programs.
HUD Response: HUD understands that many housing counselors believe
that the current requirements to participate in HUD's Housing
Counseling Program are sufficient. Nevertheless, the Section 106
amendments require housing counselors to pass an examination that
covers the following six areas of housing counseling: Financial
management; property maintenance; responsibilities of homeownership and
tenancy; fair housing laws and requirements; housing affordability; and
avoidance of, and responses to, rental and mortgage delinquency and
avoidance of eviction and mortgage default. HUD recognizes that the
Housing Counseling Program currently requires counselors to fulfill
education and training obligations for successful participation in the
program. The intent of the new certification and testing requirements
is not redundancy but to establish a single, national baseline
certification that covers the broad spectrum of housing issues required
under the statute.
As noted, HUD is striving to present the housing counseling
certification examination, including training and study materials, in
the most cost-efficient way feasible. HUD is using online testing in
its Housing Counseling Certification Examination as an economical and
convenient approach. Subject to available appropriations HUD intends to
allow housing counseling agencies to use HUD's Comprehensive Housing
Counseling Program Grant funds to pay for the costs associated with
training, testing, and certification of counselors. The housing
counseling certification requirements, as were outlined in the proposed
rule, are intended to benefit clients who will be assisted by housing
counselors who are tested and certified in six areas of housing
counseling. Consumers can, as a result, be further confident in the
quality and consistency of the housing counseling services and
referrals they receive.
The statutory mandate, as reflected in this final rule, is not
placing responsibility for the financial crisis on the counseling
agencies or discrediting existing housing counseling training programs.
The new certification is designed to assure baseline housing knowledge
by housing counselors, consistent service delivery by a network of
HCAs, and increased consumer confidence in housing counselors through a
single, government-issued national credential.
HUD recognizes that numerous training and certification programs
have provided housing counselors with the instruction and information
that HUD has long required for participation in HUD's Housing
Counseling Program. HUD supports many training and certification
programs and, while the final rule does not address existing
certification programs, HUD supports and expects that housing
counselors will continue to seek training and certification
opportunities in areas that will complement the required HUD individual
housing counselor certification.
A. New Definitions Sec. 214.3
Comment: Definition of HUD-Approved Counseling Agency. Several
commenters requested confirmation as to whether the definition of
``non-profit organizations'' found in the proposed rule includes
organizations exempt from taxation under section 501(c)(4) of the
Internal Revenue Code (IRC) of 1996.
HUD Response: Private or public nonprofit organizations described
in IRC section 501(c) and exempt from taxation under IRC section 501(a)
including section 501(c)(4) organizations, are eligible to participate
in HUD's Housing Counseling Program. To be a HUD-approved housing
counseling agency, however, an eligible nonprofit organization must
also comply with the approval requirements in Sec. 214.103 and all
other eligibility requirements.
Comment: Definition of HUD Certified Housing Counselor, Counseling,
Education, and Housing Counseling. Several commenters recommended HUD
expand on the definition of a housing counselor to indicate what a
housing counselor does and to distinguish counseling activities from
education activities. One commenter asked HUD to distinguish between
activities that must be performed by HUD certified housing counselors
and activities that can be performed by noncertified personnel. In
addition, a commenter recommended that only housing counseling reported
on the form HUD-9902 be required to be performed by a certified housing
counselor. Commenters requested clarification of the definition of
housing counseling required under or provided by Other HUD Programs.
HUD Response: The proposed rule added a definition of ``HUD
certified housing counselor'' in Sec. 214.3 as a housing counselor who
has passed the requisite examination, provides housing counseling
services for an HCA and is certified by HUD as competent to provide
housing counseling services pursuant to 24 CFR part 214. HUD clarifies
in the final rule that this can include paid workers or volunteers that
provide housing counseling on a full or part time basis by removing the
word ``employed by'' and focusing on the provision of housing
counseling services. The existing regulations provide a definition of
counseling (in contrast to education) under the Housing Counseling
Program, and the HUD Handbook 7610.1 \13\ also clarifies what
constitutes housing counseling and what constitutes education
activities.
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\13\ See http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh/7610.1.
---------------------------------------------------------------------------
In the final rule at Sec. 5.100 and cross-referenced at Sec.
214.3, HUD has consolidated existing definitions of ``housing
counseling'' in response to comments seeking clarification of
activities in Other HUD Programs that are subject to the final rule.
HUD believes that the language in Sec. 5.100, as augmented by current
descriptions of counseling and education activities in the HUD
Handbook, and the new definitions of ``housing counseling,''
``homeownership counseling'' and ``rental housing counseling'' in the
regulations, are sufficient. HUD further clarifies that an activity
conducted in connection with administering a program--such as intake,
loan application, and eligibility assessment--that is limited in scope
and that is not part of process that focuses on ways of overcoming
specific obstacles to achieving a housing goal, may not be in
[[Page 90640]]
and of itself housing counseling, homeownership or rental counseling.
As addressed in Section IV of this preamble, HUD clarifies in this
final rule that all individual providing housing counseling under HUD's
Housing Counseling Program must be performed by HUD certified housing
counselors, and all individual housing counseling reported by HCAs to
the Office of Housing Counseling on Form HUD 9902, whether attributed
to a HUD housing counseling grant or not, must be performed by HUD
certified housing counselors. HUD recognizes that agencies may use
other agency staff and industry professionals such as real estate
agents, home inspectors and loan officers as presenters at home buyer
education and other group workshops as long as the education is in
compliance with HUD requirements. This final rule does not require that
all group education presenters obtain individual HUD housing counselor
certification. However, HUD believes it is important that housing
counselors overseeing group education be tested and certified in the
six areas of counseling so they can provide consumers with consistent
quality education. Therefore, HUD is requiring that all group education
under the HUD housing counseling program must be overseen by a HUD
certified housing counselor. In addition, group education reported by
HCAs to the Office of Housing Counseling on Form HUD 9902, whether
attributed to a HUD housing counseling grant or not, must be overseen
by a HUD certified housing counselor.
B. Counseling That Covers the Entire Process of Homeownership Sec.
214.300
Comment: Home Inspection Materials. A commenter requested that the
requirement to provide home inspection information in Sec. 214.300
should include the specific home inspection requirements in section
1451 of the Dodd-Frank Act. The same commenter requested that HUD issue
a mortgagee letter clarifying the section 1451(b) requirement that
lenders provide prospective homebuyers, at first contact, the home
inspection materials specified in section 1451(a). The commenter
suggested HUD include how the information should be delivered and
include specific documents to be provided by the agencies as prescribed
in the statute in this final rule. The commenter also requested that
HUD disclose a timetable for developing the documents required under
section 1451(a), noting progress was being made in early 2012 but has
since ceased.
HUD Response: The new language in Sec. 214.300 requires housing
counseling agencies to address the home inspection process as part of
home purchase counseling and provide clients with such materials as HUD
may require regarding the availability and importance of obtaining an
independent home inspection. In addition, the proposed rule states that
HUD may periodically update and revise the home inspection materials,
as HUD deems appropriate. In order to maintain flexibility in revising
the home inspection materials and training elements, HUD retains the
proposed language in the final rule. HUD is continuing to develop the
required publications under section 1451(a) of the Dodd-Frank Act.
C. Certification To Provide Counseling Sec. 214.103
Comment: Programs Covered. Several commenters had questions
concerning the applicability of HUD's rule to agencies, including
Tribally Designated Housing Entities, that provide counseling or
administrative services incidental to such programs as Family Self
Sufficiency, HOME Investment Partnerships, Housing Choice Vouchers
(HCV), and Indian Housing Community Development Block Grants, but that
are not directly approved by HUD as Housing Counseling Agencies or
participating in HUD's Housing Counseling Program through an
intermediary or state housing finance agency. One commenter questioned
the breadth of the definitions of homeownership counseling and rental
housing counseling, to include counseling related to topics pursuant to
programs such as the Public Housing Operating Fund and rental
assistance under Section 8. The commenters expressed concern that the
definition of rental housing counseling goes so far as to include
providing referrals for renters and prospective renters to entities
providing housing counseling, and that by using broad definitions,
their members provide some degree of ``counseling'' as part and parcel
of administering these HUD programs. The commenter requested explicit
clarification that the certification requirements apply only to
agencies receiving housing counseling funds and/or voluntarily seeking
HUD approval as a housing counseling agency, and was concerned that the
rule could be misconstrued to require that housing authorities must
become approved housing counseling agencies, with frontline housing
authority staff required to be certified housing counselors, in order
to perform basic program functions such as explaining payment standards
or rent determinations or even simply to provide a referral to a HUD-
funded housing counseling agency.
HUD Response: As discussed in Section IV of this preamble, the
Section 106 amendments added a requirement that all homeownership and
rental housing counseling required under or provided in connection with
all HUD programs must be provided only by HUD certified organizations
and individuals, under Section 106(e). Section 106 also requires that
for HUD to certify organizations, all individuals through whom the
organization provides housing counseling must be certified. This final
rule implements this requirement using the existing service delivery
structure that housing counseling be provided by HCAs. Therefore, only
HCAs that have HUD certified housing counselors can provide
homeownership and rental housing counseling that is required by or
provided in connection with Other HUD Programs.
HUD has expanded this preamble to elaborate upon which entities and
which activities will require the use of a HUD certified housing
counselor working for an HCA. HUD has also provided additional
definitions in order to clarify which entities, individuals, and
activities will be affected by the final rule, and adopted those
definitions in Sec. 5.111. As noted earlier in this preamble, housing
counseling includes ``Housing Counseling'': (1) Required by statute,
regulation, NOFA, or otherwise required by HUD; (2) funded under a HUD
program; (3) required by a grantee or subgrantee of a HUD program as a
condition of receiving assistance under the HUD program; or (4) to
which a family assisted under a HUD program is referred, by a grantee
or subgrantee of the HUD program.
HUD programs that require or provide for homeownership and rental
housing counseling activities will be required to use HUD certified
housing counselors that work for an HCA after the final compliance
period as defined in this preamble. An activity conducted in connection
with administering a program--such as intake, loan application, and
eligibility assessment--that is limited in scope, and that is not
customized to the individualized need of the consumer to address his or
her housing barriers and achieve housing goals, is not in and of itself
homeownership or rental housing counseling. HUD has added cross-
references to the new definitions in Sec. 5.100 and new Section 106
requirements in Sec. 5.111 to a number of programs for additional
clarity for those
[[Page 90641]]
grantees, including the ESG program, the CoC program, and CDBG.
As for tribes, however, the application will only apply after HUD
undergoes tribal consultation and addresses the participation of tribes
in HUD's Housing Counseling Program in future rulemaking or guidance,
as appropriate.
Comment: Section heading. A commenter recommended that HUD change
the heading of paragraph (n) of Sec. 214.103 to include the definition
of the term ``participating agency.'' The commenter wrote that
inclusion of this term would clarify that the requirement applies to
HUD-approved intermediaries, multi-state organizations, and state
housing finance agencies.
HUD Response: The definition of ``participating agency'', as
provided in Sec. 214.3, includes the list the commenter seeks to be
added to the heading of paragraph (n). HUD believes amending the
heading to include the definition would be confusing. Therefore, HUD in
the final rule retains the Sec. 214.103(n) heading as proposed. HUD
has added to this preamble the term HCA to represent all HUD-approved
and HUD participating agencies, including intermediaries, state housing
finance agencies, multi-state organizations, local housing counseling
agencies, affiliates and branches.
Comment: Consultation in Development of Housing Counseling
Certification Examination. Many commenters recommended that HUD consult
with subject matter experts on all areas covered by the test to provide
input on test question development, including leaders and long-term
experienced housing counselors, real estate professionals, national
housing counselor trainers, and existing training providers such as
NeighborWorks America. Several commenters requested that HUD create
subject matter expert workgroups that would convene and help manage the
test. A commenter recommended that experts represent the diversity of
the trade organizations, including National Association of Real Estate
Brokers, Inc.; National Association of Realtors[supreg]; National
Association of Hispanic Real Estate Professionals; and Asian Real
Estate Association of America. One commenter recommended that HUD use
formal criteria established by national housing counseling training
organizations to establish the requirements for credentials as a ``HUD
certified Housing Counselor.''
Several commenters asked if there will be an opportunity for
existing certification programs to provide input on the new
examination. Another commenter recommended that leaders and long-term
housing counselors be required to administer the test prior to
implementation of the final rule to make sure the questions are
relevant to real life situations. Other commenters recommended the
curriculum and examination should be reviewed by experienced counselors
and allow for feedback on format and content to ensure that the
examination will accurately gauge a housing counselor's competency.
Commenters also recommended HUD allow for feedback to ensure that
training meets the needs of housing counselors. One commenter suggested
HUD withhold the examination requirements, material, and other items
without notice and fair opportunity for public comment. Another
commenter recommended an 18-month timeframe for testing development to
evaluate the quality of the questions.
HUD Response: In order to preserve the integrity and fairness of
the rulemaking process and testing, HUD was unable to share information
with select groups on the certification process, including the training
and examination. HUD agrees with commenters that the use of subject
matter experts is critical for developing the housing counselor
certification training and testing. Therefore, HUD selected a
contractor that utilized subject matter experts in adult learning,
housing counseling, lending, and fair housing to develop the housing
counselor certification training, online study guide, and examination.
HUD does not believe an 18-month timeframe for the development of
the test to evaluate the quality of the certification examination
questions is necessary. Instead, HUD will welcome feedback from all
sources, including the housing counseling and real estate industries,
regarding the certification training and examination after publication
of the final rule and after implementation of the Housing Counselor
Certification examination. The existing training Web site,
www.hudhousingcounselors.com, provides the opportunity for comments and
feedback on the content of the training materials. Those taking the
examination will be encouraged to provide immediate feedback after
completing the test. Anyone interested in submitting comments regarding
the training and examination may write to [email protected]
and include Certification in the subject line. After the examination is
initiated, HUD and the contractor will evaluate test questions
quarterly, and both the training and testing will be updated as needed.
Comment: Content of Housing Counselor Certification Examination.
Commenters submitted numerous suggestions and questions regarding the
content of the Housing Counselor Certification Examination. Commenters
asked that HUD be more specific about the six areas to be tested and
more clearly define how competency will be determined in each subject
area. A commenter stated that knowing the level of expertise and
knowledge required to pass the examination is critical. Another
commenter recommended HUD provide more details regarding the test
itself as soon as possible, prior to any deadlines beginning to run.
Commenters requested HUD provide a sample curriculum so that national
education and training providers can adjust the curriculum to provide
training to new and experienced counselors.
Commenters also recommended that the test be general enough to
allow housing counselors who specialize in certain types of counseling
to take an alternative approach to learn the information through
training, while being sufficiently stringent and comprehensive. Other
commenters suggested that the test focus on general knowledge, and
additional professional qualifications should be earned in specialized
areas. Commenters stated that testing must be appropriate as a
meaningful measurement; that is, that the test should be reasonable and
passable and reflect the comprehension of material relevant to housing
counseling services.
Commenters recommended specific topics to be included in the
Housing Counselor Certification Examination. These topics included
testing on knowledge of: Qualified mortgage standards; mortgage
products, homeownership programs and regulations; financial management;
loss mitigation; local, state, and regional programs; laws and
conditions including rental laws; State eviction laws; home inspection
documents; rental readiness; finding affordable housing; applying for
Section 8 vouchers; housing for people with disabilities; finding
cooperative housing; downpayment assistance; types of loan programs;
foreclosures prevention; budgeting income and expenses; the bankruptcy
process; and Social Security disability income. Other recommendations
were that the examination should include a state-specific portion, in
addition to a HUD basic portion of the examination; and that there
should be optional testing on
[[Page 90642]]
reverse mortgage counseling areas as a possible component under the
financial management subject area. Some commenters asked how a broad
set of national standards can be developed in a subject area in which
the rules and practices vary by locality. Other commenters asked if the
examination will vary from state to state. Commenters also stated that
the examination should be tailored to meet only the areas of counseling
offered by the HUD-approved housing counseling agency, and recommended
that housing counselors be trained to make referrals as appropriate.
Commenters also addressed the current HECM certification
examination, recommending that the Housing Counselor Certification
Examination mirror HUD's HECM certification test. Other commenters,
however, recommended that the new test not be modeled after the
original HECM examination as many counselors found it difficult to pass
and the stringency and inconsistencies of the HECM examination resulted
in a decrease in the availability of reverse mortgage counseling.
Several commenters mentioned existing certifications, and
recommended that the certification process align with the standards for
existing certification programs such as those offered by
NeighborWorks[supreg] America.\14\ Other commenters recommended that
HUD integrate existing third-party counselor-certification exams into
HUD's certification examination, and that HUD's housing counselor
training not be duplicative of existing trainings or preempt existing
specialized trainings.
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\14\ See http://www.neighborworks.org/Training-Services/Training-Professional-Development/Courses-Certifications.
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Several commenters asked whether HUD would allow housing counselors
to continue to complete other certifications in addition to the HUD
Housing Counselor Certification. A commenter asked if a housing
counseling agency should hold off either recertifying using other
housing counselor certifications or having housing counselors receive
new certifications from other entities before the final rule is
published. Another commenter asked how often the examination will be
updated to reflect current trends and issues.
HUD Response: To address concerns and questions put forward by
commenters, HUD provided access to the online training materials at
www.hudhousingcounselors.com prior to releasing the final rule. HUD's
training is designed to provide basic knowledge on the six counseling
areas, required by Section 106, that are specific to the certification
examination. Under the six counseling topics required by Section 106,
HUD's contractor developed content information for the training and
examination after reviewing HUD's statute, regulations, and handbooks,
as well as National Industry Standards for Homeownership Education and
Counseling,\15\ and training provided by HUD's housing counseling
training NOFA grantees. The examination will focus on the knowledge
base needed by a housing counselor to address basic issues related to
the six areas specified in Section 106. Many of the topics suggested by
commenters are addressed in the training and certification examination,
such as loss mitigation, mortgages, and budgeting. However, it is HUD's
view that other topics suggested by commenters are subjects that do not
fall within the scope of a national examination designed to test basic
knowledge related to the six counseling topics required by Section 106.
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\15\ See http://www.homeownershipstandards.com/Home/Home.aspx.
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HUD will also continue to require the separate HECM Counselor
Roster examination and certification pursuant to the statutory
requirements of National Housing Act sections 255(d) and (f) and the
HECM Roster regulations at 24 CFR part 206, subpart E. HECM counselors
must, however, also pass the certification examination required by
Section 106, which is applicable to all counselors. In response to
comments regarding the administration of the HUD HECM Roster
examination, HUD has taken prior experience with the HECM Roster
examination into consideration when developing the Housing Counselor
Certification Examination.
HUD intends to evaluate the examination questions quarterly and
update where necessary to reflect current regulatory and policy
changes. HUD also intends to evaluate the Housing Counselor
Certification Examination, utilizing analyses of test results and
stakeholder feedback.
The training and examination will not focus on specific state and
local laws and regulations but the training will address ways to access
local and state information. The training offered by HUD may include
topics similar to those found in classes offered by HUD housing
counseling training grant recipients such as NeighborWorks[supreg]
America, National Council of La Raza, and the National Community
Reinvestment Coalition. However, HUD's training is specifically
designed to prepare housing counselors for the Housing Counselor
Certification Examination. The learning objectives identified for each
topic may be different than those offered by other entities. HUD's
training is not designed to replace other training offered. HUD's
training is designed to provide general knowledge on the six topics.
HUD has not changed the existing requirement that an HCA must
employ staff trained in housing counseling, and that the HCA's staff
must possess a working knowledge of HUD's housing and single-family
mortgage insurance programs, other state and local housing programs
available in the community, consolidated plans, and the local housing
market. The staff should be familiar with housing programs offered by
conventional mortgage lenders and other housing or related programs
that may assist their clients. Existing training opportunities may be
used to meet HUD's ongoing knowledge requirements and may be helpful to
gain mastery of housing counseling related topics or to gain additional
credentials. HUD will continue to provide funding for such activities
and encourage housing counselors to take continuing education courses.
HUD recommends that housing counselors continue to seek other housing
counseling certifications.
Comment: Drafting of Housing Counseling Certification Examination,
Format and Scoring. Commenters offered recommendations about the format
of the exam, including the number of questions; that the examination
require no more than 2 hours for successful completion; the possibility
of taking components of the examination allowing each component area to
be tested separately; and that counselors with five or more years of
experience take a shorter examination.
Commenters questioned how the test will be scored, and one
recommended a 70 percent passage rate, while others recommended 80
percent, the same as the National Industry Standards. Commenters also
questioned whether graders will consider relative knowledge of subjects
and if there is a way to compensate for areas where the counselor may
test lower in one area but test higher in another. Commenters
recommended that HUD require a minimum overall score rather than a
minimum score in each subject area, and that the scoring methodology of
the examination be transparent, and results be given instantaneously
and reveal correct answers for any items that were not answered
correctly. Another commenter recommended that the examination have
controls or proctors to validate counselors. Another commenter
[[Page 90643]]
asked whether scoring will accommodate certification in one or two of
the subject areas. A commenter suggested that scoring give partial or
full credit for existing certifications and recommended framing the
test to housing counselors based on the specialized areas of counseling
offered by their agencies.
HUD Response: The Housing Counselor Certification Examination has
approximately 90 multiple-choice questions. The test is administered
online by a proctor either by web-cam or at a proctoring location, and
the proctoring service verifies the identity of individuals taking the
examination. The test is designed to be completed in two hours, and
accommodations will be made for those with disabilities. Guidance on
requesting accommodations will be provided by the certification
examination contractor.
The examination score will be scaled based on a range from 200 to
800. The test will not have individual sections. The examination cannot
be divided into topic areas, nor taken by topic area. Many examination
questions relate to multiple topics, which precludes dividing up the
examination ``by topic.'' Further, each examination goes through an
industry standard certification review process and is considered as a
whole, and scored as a whole. To pass the examination, the individual
must achieve a scaled score of 500 or more. The scaled score does not
represent the percentage of items correct, but is a numeric score for
the overall examination.
Test takers will be notified by email whether they pass or fail the
examination. If a test taker does not pass the examination, the email
notification will include feedback on the learning objectives that the
test taker should review before retaking the examination. The test will
not be customized for each individual counselor as that would be
inconsistent with the requirement that each counselor pass an
examination in all six areas.
Comment: Scope of Certification; Six Testing Areas. One commenter
stated it is unclear whether a housing counselor is required to be
certified in all six subject areas. Another commenter recommended
framing the test to counselors based on what areas their agencies
specialize in.
Some commenters noted that obtaining working knowledge in the six
specified areas of expertise, but not specializing in those areas,
seems to be in keeping with the intent of Section 106 amendments.
Another commenter stated that HUD's certification standard should
assess a baseline of skills and knowledge across the range of
counseling services covered by the rule, while acknowledging that
individual counselors and counseling agencies often focus on specific
aspects of the homeownership or rental process.
Several commenters wrote that the proposed testing is unrealistic,
impractical, and that specialization is important to the industry.
Commenters stated that having different types of housing counselors
provides for a greater level of competence in the counselors. A
commenter expressed concern about how general knowledge can impact a
counselor's effectiveness within a specialized area. Commenters
suggested changing the requirement that all six subject areas should be
tested, and instead allow for each subject to be tested separately.
Several commenters also recommended restructuring a change in the
organization of the six competency areas to better reflect the various
types of counseling services performed.
Commenters recommended that there be one certification system,
either HUD's or the NeighborWorks Center for Homeownership Education
and Counseling (NCHEC) \16\ certification program, which allows for
specialization. Generally, commenters suggested that HUD administer
separate tests and certifications based on each subject area.
---------------------------------------------------------------------------
\16\ See http://www.nchec.org.
---------------------------------------------------------------------------
Commenters wrote that a uniform approach to rental and housing
counseling ignores the uniqueness of each area, and requested that the
training and examination reflect these differences. The commenters
submitted that separate training and examination would be appropriate
so that where the statute requires examination in the `responsibilities
of homeownership and tenancy' the homeownership counselor could be
trained and tested on the former, while the rental housing counselor
could be trained and tested on the latter.
HUD Response: Section 106 requires a general knowledge in each of
the six competency areas. All counselors are required to take the
certification examination on the six competency areas and the test will
not be customized based on the specialization of each individual
counselor. The intended goal of this requirement is to increase the
breadth of individual housing counselors' knowledge in an effort to
better assist clients with varied needs. This broad knowledge will
benefit housing counselors and clients, and should not diminish the
effectiveness of current specializations. Agencies can continue to
determine the areas of specialization for each individual counselor,
and for the agency itself, based on the workload of the agency and the
needs of its client base. The Housing Counselor Certification
Examination is a single comprehensive test that covers all six
competency areas. The Section 106 amendments mandate that housing
counselors demonstrate competency for both rental and homeownership
topics. The statutory requirement reflects a basic principle that
housing counselors participating in HUD's Housing Counseling Program
should have general knowledge on both topics to help clients determine
whether they are more suited for renting or owning, based on their
circumstances, and to prepare for the eventuality that owners may
become renters in the future and vice versa.
Comment: Cost; Funding for Cost of Housing Counselor Certification
Examination. Commenters stated that HUD's Housing Counseling Grant
Program should continue to include funding for the certification
requirements. Commenters also wrote that funding is subject to
available appropriations. Recommendations from commenters included:
reducing other monitoring and compliance requirements to help small
nonprofits using HUD funding; HUD assisting nonprofit organizations
through added funding and capacity building to help them achieve
maximum results; and providing separate or outside funds (for example,
funds received from banks in settlement of certain mortgage-related
lawsuits) to assist in certification so that existing annual HUD
housing counseling funding does not need to be used to cover these
expenses. Another commenter requested that HUD increase scholarship
availability specifically for small nonprofits, stating that the
current limitation of one scholarship per organization makes it
difficult for organizations to afford expensive training and
certifications.
Commenters expressed concerns that housing counseling agencies
would lack the funds necessary to pay for training to prepare for the
examination, and requested more funds for training, travel to training,
lodging, and technical upgrades for organizations that do not have
technical capacity needed for training.
Commenters stated that as grant funds continue to decrease, small
community based nonprofits are unable to cover these new costs while
continuing to subsidize general operation costs. A commenter stated
that smaller agencies should have input determining the financial
support necessary to comply
[[Page 90644]]
with the final standards, and another commenter claimed that the new
requirement is an unfunded mandate.
HUD Response: HUD recognizes that costs will be incurred as a
result of the certification requirement. HUD's Fiscal Years 2014 and
2015 Comprehensive Housing Counseling Grant Program NOFA allowed as
eligible expenses costs associated with HUD housing counseling
training, testing and certification requirements. In future NOFAs, HUD
intends to treat costs associated with certification as an eligible
Housing Counseling Comprehensive Grant program expense, subject to
statutory authorization and appropriations.
HUD is providing training for the certification examination online
at no cost. In addition, HUD has strived to make certification and
examination costs as minimal as possible, but cannot provide
scholarships for the examination fee.
HUD cannot reduce the program requirements based on the size of an
agency to help small agencies reduce costs in other areas. HUD's
Housing Counseling Program requirements apply to all HCAs. HUD allows
for agencies to develop revenue sources through charitable grants,
lender-funded agreements, or client payment sources. HUD encourages
agencies to consider these options and others to help offset the costs
associated with housing counselor certification.
While several governmental entities have received settlement funds
arising from national mortgage servicing settlements, and have
designated a portion of those funds for housing counseling services,
each entity is authorized to administer its own settlement funds. HUD
has no authority over the use or distribution of these funds.
Therefore, agencies should consult their State attorney general's
office to determine whether settlement funds can be used for the
Housing Counselor Certification Examination in their particular state.
This rule is not an unfunded mandate. The new certification does
not require individuals, states, tribal governments, and the private
sector to undertake any new requirements. Participation in HUD's
housing counseling program and Other HUD Programs is voluntary.
Comment: Cost: Responsibility to Pay for Cost of Certification.
Commenters wrote that HUD or another Federal agency should pay for the
certification examination. A commenter wrote that HUD should be
responsible for paying the costs of certification because certification
does not provide one with a business opportunity like a professional
degree does. Another recommended that HUD refund the cost of training
and testing after successful passage, which will reduce impact on
awards consistent, with Executive Order 13563, entitled Improving
Regulation and Regulatory Review.\17\ Another commenter recommended HUD
mitigate the costs of the certification process, especially for
agencies with small staff and budgets, by including subsidized
trainings and scholarships.
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\17\ Signed by the President on January 18, 2011, and published
in the Federal Register on January 21, 2011, at 76 FR 3821.
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Commenters stated both agencies and housing counselors will bear
the cost because they are interconnected. Other commenters, however,
wrote that the cost of counseling will fall on the housing counseling
agency because: (1) Counselors do not control their income and are not
paid on commission; (2) they do not make professional salaries; and (3)
they lack mobility because of the limited job opportunities, which will
cause agencies' costs to dramatically rise. Commenters wrote that the
agencies will pay for the cost to maintain their certification, but the
result will be that the agency will pay for less specialized training
for topics such as foreclosure mitigation or other professional
development training that would ultimately benefit the organizations'
clients. Another commenter said that although the counseling agency
will end up paying for the certification, the counseling agency cannot
guarantee that a housing counselor will stay with that agency for any
length of time.
Commenters recommended that the final rule be clear that the
compliance costs of the rule may be borne by the individual housing
counselor or by the individual counselor's sponsoring agency.
HUD Response: Individual housing counselors are responsible for
paying for the examination when payment is required. The housing
counseling agency, however, has the option of paying for the
examination for its counselors. Passing the certification examination
serves as a marketable credential for individuals seeking work at an
HCA as a housing counselor. HUD recognizes that agencies are concerned
about the cost of training for and taking the Housing Counselor
Certification Examination and, therefore, is providing free training.
HUD has determined that the cost of taking the examination will be
significantly less than the cost estimated in the proposed rule.
Lastly, while it is true that an agency cannot guarantee that a
counselor will remain with the agency if the agency pays for the
examination, such a scenario is always a possibility for any employee
who receives training paid for by an employer, and employers can create
incentives to retain their employees consistent with agency policies
and applicable laws.
Comment: Cost: Testing Cost. Some commenters requested that the
examination should be administered free of charge stating that a free
examination would allow retesting without concern of costs for
nonprofit agencies. A commenter proposed that existing counselors have
2 to 3 months to take the test one time for free. Others recommended
waiving the cost for existing certified counselors, and having a
reasonable cost for new counselors entering the field; allowing
approved agencies that do not receive funds to be charged only $100 for
the certification; or charging a fee for the agency instead of a fee
per counselor.
Commenters requested the fee be as low as possible; that HUD keep
the cost reasonable, especially for housing counselors who are serving
communities of color and other underserved communities. A commenter
recommended a low cost for small local practitioners providing a low
volume of housing counseling annually. Another commenter wrote that HUD
should consider the costs of existing continuing education in
determining the cost for training and certification. Another commenter
recommended a fee for training and no fee for the examination.
Commenters also requested free training, or permitting training to be
charged separately so it could be done in house or limited to certain
subjects.
Several commenters wrote that $500 is too high a fee to pay, and
requested that HUD provide information on how HUD plans to implement
the testing for $500. Some commenters requested that the cost of the
certification be limited to a range of $100 to $200. A commenter stated
that the estimated cost is reasonable only if it includes the cost of
trainings.
HUD Response: The fee charged each time an individual takes the
certification examination is based on the cost of administering the
examination. The cost of the examination is well below the $500
estimate. The cost is $100 for testing online at the examinee's
location and $140 at a proctoring site. Any changes to the cost of the
certification examination will be published in the Federal Register.
Comment: Cost: Consequences of Cost, Secondary Costs. Some
commenters stated that certification and
[[Page 90645]]
training are overly burdensome and costly and will take away from
client services. Commenters also stated that this would result in fewer
low-income people receiving counseling and will result in higher
homelessness, and that HUD should seek ways to minimize costs to ensure
that the work of housing counselors in assisting vulnerable households
is not inadvertently hurt in the process.
Other commenters wrote that costs associated with certification
will result in agencies leaving the business of housing counseling,
counselors leaving agencies, or individuals never joining the industry.
Commenters stated that the cost is high for a new housing counselor,
because an agency would not want to hire someone without the
certification and risk losing its agency certification. Another
commenter wrote that given many counselors come from other industries
and their entry is limited, a housing counseling position will be less
financially attractive with the additional compliance cost, and
agencies might as a result see a reduction in current staff-to-client
ratios. Commenters also wrote that the cost could interfere with other
specialized trainings, or that agencies will be unable to afford to
send their counselors to training, which will impact passage rates and
the number of agencies with HUD-approved status. Commenters also wrote
that HUD should consider the cost in the context of the amount of time
it will take for counselors to prepare, travel, and take the
examination, and some stated that opportunity costs and HUD's cost of
monitoring compliance are incurred but not included. Commenters wrote
that the cost associated with compliance for entities offering housing
counseling programs that are not HCAs should be disaggregated in the
cost-benefit analysis.
HUD Response: The certification examination is mandated by statute.
As stated previously in this preamble, HUD strived to make
certification costs as minimal as feasible by providing free training
and allowing for web-based testing which removes the need for
individuals to travel. HUD is providing 36 months for individual
counselors to become certified so that they have time to budget the
cost of taking the examination. In addition, if an organization decides
to help pay for certification the entity also has time to budget for
the cost of ensuring their counselors are certified. Entities that are
not HCAs may choose among four different options in order to become
compliant, and the cost-benefit analysis includes a discussion of the
costs of each option.
Comment: Difficulty of Certification for Small Rural Agencies.
Commenters requested that HUD consider rule changes that help rural
organizations gain certification and meet the stringent reporting
requirements. Commenters wrote that requiring individual counselors and
agencies to be certified is a significant burden on small rural
counseling agencies already facing financial strain. Commenters stated
that some agencies in urban areas have many counselors to get through
the process and those agencies in rural areas with potentially fewer
resources will need more time to allocate the expense of obtaining the
certification.
HUD Response: HUD is keenly aware of the vital role of rural
agencies in providing housing counseling. However, HUD is responsible
for implementing the Section 106 certification requirement in the same
manner for all agencies and the statute did not provide an exemption
for smaller or rural agencies. HUD recognizes that the examination must
be accessible to housing counselors in rural areas. HUD has provided
two testing options: online and on-site. On-site testing is an option
for those agencies and individuals with limited internet access. HUD
has also worked to minimize certification costs for individuals and
agencies, and delayed implementation for all entities to become
compliant.
Comment: Online Testing. Several commenters requested the test be
available online, stating that online testing expedites test delivery,
grading, and recordation. These commenters recommended that: The test
could be exclusively online which will expedite compliance and increase
efficiency; the testing be offered at the convenience of the agency and
a list of examination topics, study materials, and practice
examinations all be made available online; and that web-cam equipment
be used similar to the HECM exam. Commenters stated an online system
will make it easier for HUD or the administering entity to offer re-
examinations at a reduced cost, and that almost all certification
programs provide for online testing, and stated it is critically
important this option is provided for the certification program. A
commenter suggested that the test be offered in person, once a month,
to supplement online testing, increasing ease of access and the ability
for an examinee to choose an examination format of their preference.
Another commenter expressed opposition to the idea of on-line testing,
except for counselors in more rural areas who may have a hardship
getting to a testing facility.
HUD Response: HUD will be providing the Housing Counselor
Certification Examination using online testing through video
conferencing at the test-taker's location, or at a commercial
proctoring site identified by HUD's contractor. Those choosing to use
video conferencing must have equipment available at the location where
they plan to take the examination. This option offers choices for test
takers depending on their circumstances.
Comment: Testing Accommodations. Several commenters requested that
HUD offer the certification examination in multiple languages. A few
commenters recommended the examination be offered in Spanish in
addition to English. Another commenter recommended the language
available should be based on languages spoken by the counselors
participating in the HUD Housing Counseling Program, which would
provide an equal opportunity to the bi-lingual counselors. Other
commenters stated that not providing the certification examination in
multiple languages, will result in an adverse impact on counselors
where English is their second language. These commenters wrote that it
would be unfair for HUD to impose a hardship on those whose second
language is English and provide no alternative vendor to provide the
examination in Spanish. Other commenters recommended that additional
time be provided for non-native English speakers to complete the
certification test, and the test accommodate different learning styles
and take into consideration cultural and linguistic diversity. Another
commenter asked if accommodations would be available for special needs
such as learning disabilities. Commenters recommended making materials
culturally sensitive.
HUD Response: HUD understands commenters' concerns for test-takers
with English as a second language. HUD reviewed data in the HUD Housing
Counseling System (HCS) to identify the most frequently offered
languages other than English for housing counseling services, and found
1,249 HCAs offered counseling services in Spanish. The next most
frequently offered languages were American Sign Language at 78 and
French at 78, followed by Creole at 58 and Vietnamese at 55. Based on
this data, HUD will offer the study guide and the Housing Counselor
Certification Examination in both English and Spanish. HUD, based upon
available appropriations, may offer additional
[[Page 90646]]
translations of the study guide in other languages.
HUD conferred with its contractor concerning how the test could
accommodate different learning styles and considered cultural and
linguistic diversity when creating the test. The training course has
also been designed to accommodate different learning styles. It is
presented in an online, interactive format, and is also offered in a
PDF format for those who prefer text-based instruction. The
certification examination was developed according to professional
standards recognized to the testing industry. The examination was
designed to be free from bias and measure only approved examination
content. Examination writers and reviewers, under the guidance of a
psychometrician,\18\ were made aware of potential bias, including
cultural and linguistic bias, and ways to avoid it.
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\18\ The term psychometrics refers to the measurement of an
individual's psychological attributes, including the knowledge,
skills, and abilities a professional might need to work in a
particular job or profession.
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The contractor will identify procedures to address reasonable
accommodation requests of test-takers with disabilities under
applicable sections of the ADA \19\ and subsequent amendments to the
act. The Web site will also offer training in a format that is
compliant with section 508 of the Rehabilitation Act.\20\
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\19\ 42 U.S.C. 12101 et seq.
\20\ Section 508 of the Rehabilitation Act (29 U.S.C.794d)
requires Federal agencies' electronic and information technology to
be accessible to persons with disabilities. See http://www.section508.gov.
---------------------------------------------------------------------------
Comment: Testing Schedule and Sites. There were several comments
regarding who HUD should use to administer the certification
examination. Commenters recommended the administration and management
of the examination by national trainers. Other commenters suggested
award of contracts to suppliers with a strong diversity policy. A
commenter requested that organizations other than national training
organizations like NeighborWorks and National Council of La Raza be
afforded opportunity to receive grant funds to administer the
certification and training. The commenter stated that HUD should also
allow organizations that administer certification programs to serve as
examination preparation sites or compete to contract for administering
the new certification examination. Conversely another commenter stated
concern that a sole training and certification entity that is also a
counseling agency would be a clear conflict of interest. Other
commenters recommended that HUD use multiple test administrators to
facilitate accessibility of taking the examination for thousands of
counselors to comply in one year. A commenter expressed concern about
whether HUD could handle the volume of test takers registering at the
same time. Another commenter recommended the examination be easy to
administer. Other commenters asked who will administer the testing.
Commenters offered several suggestions about where the HUD
examination should be offered including HUD offices, HUD training
grantee locations, offices of state housing finance agencies, or
regional testing sites. One commenter suggested that NeighborWorks
proctor examinations be at NeighborWorks training institutes or place-
based training locations because NeighborWorks offers scholarships to
attend such trainings. Other commenters wrote that HUD should provide
regional testing sites, which would be closer to the counselors. A
commenter suggested testing be available whenever the counseling agency
and counselor feel the housing counselor is ready to take the
certification examination.
HUD Response: Under Section 106, the Office of Housing Counseling
was required to contract with one entity to develop training and
certification testing for housing counselors. As discussed in Section
IV of this preamble, HUD awarded a contract to Bixal to develop the
housing counselor certification training, the housing counselor
certification examination, and to host a Web site for the training and
examination. HUD and its certification contractor will select the
proctoring service(s) and determine whether offering the training at
locations such as a national training institute is a viable option.
Housing counselors will now have 36 months from when HUD begins
administering the examination to pass the certification examination.
This change should address concerns about access to the examination for
the volume of individuals seeking certification after the publication
date of this final rule. Housing counselors may determine when they are
ready to take the certification examination. However, testing schedules
will depend on the availability of proctors.
Comment: Period Allowed for Passing Housing Counselor Certification
Examination. Commenters indicated that HUD provide a 12-month period in
which to pass the test, and that during the period experienced
counselors should be allowed to continue counseling as if they were HUD
certified, and agencies should be able to provide counseling through
experienced counselors who are not HUD certified. Commenters wrote that
HUD should tie the start date of the 1-year period allowed for passing
the test to the date of the first time the test is administered, to
provide time for all entities to take the test. A commenter wrote that
if the test is not administered promptly counselors could not become
certified and entities could not receive funding. The commenter also
wrote that this could take into consideration any potential problems
that happen with test administration.
Another commenter wrote that small counseling agencies should be
allowed additional time to comply with the certification and to provide
input as to how much time should be considered. Several commenters
wrote that the National Industry Standards for Homeownership Education
and Counseling's current benchmark for training and certification is
``as soon as reasonably possible, but not later than 18 months from the
start of employment,'' and HUD should also consider the 18-month period
and that would allow HUD time to evaluate and revise the test if first
implementation doesn't meet meaningful measurements. Another commenter
wrote that timing of the rule should consider the needs of agencies
that have to consider quarterly training for NeighborWorks
organizations and the burdens of sending counselors out for training
and testing.
Commenters recommended expanding the timeframe to allow for
adequate preparation time and ability to take the examination while
counselors continue to maintain their workloads--ensuring that clients
do not suffer any ill effects from implementation of the ruling.
Several commenters recommended that the deadline be extended beyond 12
months to 18 months, 24 months, and other commenters recommended 36
months. A commenter recommended that counselors should have 24 months
to be certified, thus allowing agencies to determine when more
experienced versus less experienced employees should be certified and
continue to provide counseling. The commenter also wrote that 24 months
will allow agencies to spread the cost over 24 months to have lesser
financial impacts on organizations. Another commenter wrote that
extending the period to 36 months would ensure compliance and alleviate
administrative burdens and
[[Page 90647]]
that some agencies in urban areas have many counselors to get through
the process and those agencies in rural areas with potentially fewer
resources will need more time to allocate the expense of obtaining the
certification.
HUD Response: In response to concerns raised by commenters,
individuals, and agencies will now have 36 months from when HUD begins
administering the examination to be in compliance with the
certification requirements. The examination will become available upon
publication of a Federal Register notice. Until the 36-month period for
becoming certified expires, individuals who have not yet been HUD
certified may still continue to provide housing counseling services.
However, after the expiration of the 36-month period, only those
individuals who have met HUD's certification requirements may provide
housing counseling services under HUD programs, including HUD's housing
counseling program. In addition, no housing counseling required by or
provided in connection with all HUD programs may be provided after the
36 months unless it is delivered by a HUD certified housing counselor.
The 36-month period will provide sufficient time for housing
counselors to study for and pass the examination. Prior to the date of
publication of this final rule, the materials specific to the
certification examination, including a sample test, will be available.
The certification test will become available upon publication of a
notice in the Federal Register.
Comment: Grace Period for Agencies with Staffing Changes. Several
commenters wrote that the certification requirement will have
detrimental impact on agencies when staff changes, especially for
smaller agencies with only one or two counselors. The commenters asked
that a reasonable grace period be implemented to allow new staff to
become certified without agencies losing their approval or their
ability to draw down grant funds, and many commenters recommended a 12-
month grace period. A few suggested that 6months would be sufficient to
allow uncertified counselors to see clients and perform day-to-day
tasks to enhance learning and productivity. Another commenter suggested
allowing for a grace period will provide time for agencies to hire HUD
certified staff or allow their current counselor time to gain 6 months
of experience and pass the examination.
Commenters stated HUD should clarify the process to ensure that
agencies can continue to operate and not lose certification status or
be placed on probation if counselors do not pass the housing counseling
certification examination, and agencies should get at least a 90-day
grace period to cure the situation. A commenter recommended a temporary
inactive agency list for those that are HUD-approved but do not have a
HUD certified housing counselor at the time, so they do not have to go
through the difficult work of being approved again.
Commenters recommended that, under proper supervision, new housing
counselors should be exempted from the requirement that all staff
providing homeownership or rental counseling required under or in
connection with Other HUD Programs must be certified by HUD.
Alternatively, many commenters stated that the final rule should
encourage the entry of potential housing counselors into the field and
allow new hires to work as apprentices or trainees under the
supervision of a HUD certified housing counselor. A commenter stated
that a trial period allows for practical implementation of providing
services when faced with staff turnover or expansions given it is
unlikely that applicants for positions will already be certified.
Commenters recommended HUD provide new housing counselors time to
develop knowledge before taking the written examination. Some
commenters recommended that this timeframe for new counselors be a
minimum of 60 days to 90 days, while others recommended 6 months to 1
year to gain experiential knowledge before requiring them to take the
examination without risk of de-certification of the agency. Some
commenters believe 12 to 24 months is needed.
Other commenters wrote that the organization may not be able to
afford the cost of maintaining an employee during the time it will take
for them to become certified. A commenter recommended that the same
standards be adopted as the National Industry Standards for
Homeownership Education and Counseling (NISHEC), and HUD should allow
18 months for a new counselor to be fully certified.
A few commenters stated that new counselors in their agency need a
NeighborWorks[supreg] Center for Homeownership Education and Counseling
(NCHEC) certification prior to taking the HUD examination to understand
housing counseling concepts, but NeighborWorks[supreg] Training
Institutes are only held every quarter.
HUD Response: HUD is implementing a statutory requirement, which
requires that all counselors providing homeownership or rental
counseling required under or provided in connection of HUD programs
must be certified. New counselors are also subject to this requirement.
A non-HUD certified housing counselor may continue to provide
counseling services up to 36 months following the start of HUD
administering the certification examination. After the expiration of
the 36-month period, only those individuals who meet HUD's
certification requirements may provide housing counseling services
under HUD's Housing Counseling Programs and for HUD's programs. An
individual who has not passed the certification examination may work
for an HCA and assist certified housing counselors but may not provide
housing counseling or oversee the group education sessions.
For an HCA to remain compliant with the HUD Housing Counseling
Program, all housing counseling must be provided by a HUD certified
housing counselor. If a situation occurs in which an HCA's only
certified housing counselor is no longer employed with the agency, HUD
will allow the agency to be placed in inactive status, consistent with
Sec. 214.200, for a period of up to 6 months or such longer time as
may be approved by HUD, to allow the agency to hire a certified housing
counselor. This rule does not change HUD's existing requirement that at
least half the counselors must have at least 6 months of experience in
the job they will perform in the agency's housing counseling program.
The experience requirement for housing counselors can be met by
previous relevant housing counseling employment and experience. If an
agency does not meet this requirement, HUD may change the agency's
status to inactive, consistent with Sec. 214.200, for a period of
time, pursuant to that section, until the agency again meets the
requirement that at least half the counselors must have at least 6
months of experience. Placing an HCA in inactive status will give the
HCA an opportunity, while on inactive status, to hire a new housing
counselor that meets the certification and experience requirements or
to ensure that an existing staff person meets the requirements.
To address the question of an agency's ability to draw down funds
if an agency no longer has a HUD certified housing counselor, HUD will
allow the agency to submit grant reports that support eligible costs
under the applicable grant agreement, incurred during the period of
time that housing counseling services were provided by a certified
housing counselor, or for other eligible Housing Counseling Program
expenses as determined by HUD.
[[Page 90648]]
Comment: Agency Certification. Commenters questioned the
requirement that the agency itself must be certified, instead of just
the counselors being required to be certified. A commenter recommended
that the certification for agencies and counselors should be separate,
because otherwise an agency's status will change any time a counselor
leaves the agency, or alternatively that the rule allow for a dual
certification system--a licensure for an agency, and a separate
licensure for individual counselors. Another commenter recommended that
in place of the ``Certification of Competency'' to the agency, HUD
provide a ``Counseling Agency Certification of Competency'' when all
counselors are certified.
Commenters asked for clarification on whether an agency can only
achieve certification once there are counselors on staff who are
certified and have 6 months of experience.
Commenters questioned whether the definition for being an approved
housing counseling agency is limited to agencies that have only HUD
certified housing counselors who have at least 6 months experience or
if HUD is allowing more flexibility in this definition. Some commenters
asked if the 6 months of experience could be waived if a counselor
passes the certification examination. They recommended that a counselor
should still be required to follow the 6 month experience requirement
because the general information on the test is not necessarily
sufficient to train the counselor to do full counseling services. Other
commenters asked HUD to clarify that at least 6 months of experience
for a counselor can be from another housing counseling agency certified
by HUD. Other commenters recommended that such certification should be
made as a self-certification by the agency. Commenters suggested that
HUD should reconsider the restriction that agencies have a HUD
certified housing counselor on staff and at least half of their
counseling staff must have 6 months of experience
Commenters also asked if all the counselors employed by the agency
had to be certified in order for the agency to be certified, and what
would happen if one of their counselors was not certified. Commenters
asked for clarification on the proposed rule requirement that all HUD
certified agencies employ ``at least one'' HUD certified housing
counselor at all times to maintain organizational certification. A
commenter recommended HUD make reasonable allowances for small and
existing housing counseling agencies with strong track records to
comply with the requirement to employ at least one HUD certified
housing counselor at all times.
Commenters expressed concern that HUD certified housing counselors
will be much sought after by counseling agencies that find themselves
with a vacancy and the laws of supply and demand will result in the
poaching of counselors among agencies and that the agencies will have a
harder time finding a HUD certified housing counselor to fill a
vacancy. Commenters requested that HUD clarify how an independent
agency demonstrates that every counselor is certified. A commenter
wrote that having to develop a database or report to HUD regularly
could be difficult with high counselor turnover.
A commenter recommended a temporary inactive agency list for those
that are HUD-approved but do not have a HUD certified housing counselor
at the time, so they do not have to go through the difficult work of
being approved again. Another commenter stated that any decision
regarding recertification should wait until there has been an
opportunity to assess the first rounds of individual certification.
Commenters asked if a new agency applying for HUD certification
will need to have all housing counseling staff certified at the time of
application. An agency commenter asked about opportunities that may be
available for new agencies to gain HUD approval. Several commenters
asked whether the same standards for HUD approval for an agency will
continue to exist so as to ensure that scam artists cannot pass the HUD
counselor exam, throw up a shingle and call the entity a HUD-approved
or -certified counseling agency in order to prey upon consumers.
A commenter asked whether an agency that does not have its own HUD-
approved housing counseling status but is a subgrantee of a HUD
Intermediary is considered a HUD-approved housing counseling agency for
the purposes of housing counselor certification as long as: (1) The
agency remains a subgrantee; and (2) is subject to the same
requirements as a HUD-approved housing counseling agency.
Commenters wrote that HUD should further clarify compliance and
oversight procedures, and any possible financial penalties for
noncompliance. The commenter stated that the current rule only
addresses retraction of housing counseling funds, which will not apply
to all organizations.
HUD Response: The proposed rule provided that, in order to maintain
or obtain HUD approval, a housing counseling agency must demonstrate
that all counselors who provide counseling services for the agency are
HUD certified and that upon demonstrating this the housing counseling
agency would be issued an agency ``Certification of Competency.'' HUD
carefully reviewed the comments that questioned the separate agency
certification. Based on these comments, the final rule will not require
that HUD issue a separate agency ``Certification of Competency.''
However, the final rule still requires that all counseling, including
homeownership and rental counseling, performed under all HUD programs,
including the Other HUD Programs and HUD's Housing Counseling Program,
must be provided by counselors who are HUD certified and who also work
for an HCA, and this requirement must now be met 36 months after the
examination becomes available. This final rule also maintains the
requirement that, to participate in HUD's Housing Counseling Program,
an agency must meet HUD's approval requirements at Sec. 214.103, as
amended by this rule, as evidenced either by (1) direct approval from
HUD as a local housing counseling agency, multi-state organization,
state housing finance agency, or national or regional intermediary, or
(2) participation as an affiliate, branch, or subgrantee of a local
housing counseling agency, multi-state organization, state housing
finance agency or national or regional intermediary.
Beginning 36 months after the certification examination becomes
available all individuals who provide homeownership and rental housing
counseling required under or provided in connection with any HUD
program and all individuals providing housing counseling, including
homeownership and rental housing counseling, under HUD's Housing
Counseling Program must be HUD certified. Because all housing
counselors who provide counseling services for an HCA must be HUD
certified, if an HCA no longer has at least one certified housing
counselor such agency will no longer meet HUD requirements. To
participate in the HUD Housing Counseling Program, an HCA must meet all
of the approval requirements at Sec. 214.103, as amended by this rule.
If an entity applies for HUD approval, the individuals providing
housing counseling as part of the agency's housing counseling work plan
must have passed the certification examination as a condition to HUD
approving the agency. If the agency is approved, the housing counselors
who have passed the examination would be
[[Page 90649]]
eligible for a HUD certified Housing Counselor Certificate.
An agency that is a subgrantee or affiliate of a HUD-approved
intermediary or state housing finance agency is also an HCA. Any
housing counseling provided by an HCA must be performed by a certified
housing counselor. Individuals who work for an HCA who pass the
examination will be eligible for certification. This rule does not
change HUD's existing requirement that at least half the counselors
must have at least 6 months of experience in the job they will perform
in the agency's housing counseling program. The experience requirement
for housing counselors can be met by previous relevant housing
counseling employment and experience. The experience requirement may
have been met by working as a housing counselor or by on-the-job
training assisting a housing counselor for an agency that provides
housing counseling services.
If an agency no longer has at least one certified housing counselor
and therefore cannot meet the requirement that all housing counselors
who provide counseling services for an HCA be HUD certified, the agency
must notify HUD. HUD may change the agency's status to inactive,
consistent with Sec. 214.200, for a period until the agency again
meets these requirements. If the agency fails to hire a HUD certified
housing counselor within the initial 6 months of inactive status, HUD
may at its discretion extend the period of inactive status, or HUD may
move forward with terminating the agency's approval, pursuant to Sec.
214.201.
If an agency needs to hire an individual to conduct housing
counseling, the agency need not hire only an individual who was already
certified. The agency may hire an individual who has passed the
certification examination and, upon being employed by the HCA, can
become HUD certified and can conduct housing counseling for the agency.
HUD is not restricting individuals who can take the examination to only
those counselors who work for an HCA. The absence of such a restriction
will allow for agencies to hire individuals who have taken and passed
the examination on their own initiative, or individuals that were
previously certified at another agency, in addition to those
individuals who have never taken the examination. However, an
individual who has not yet passed the examination may not conduct
housing counseling until he or she has passed the examination and has
become HUD certified.
HUD will maintain an internal database of individuals who have
passed the examination along with its current HCA list. An HCA will be
required to validate employment of their housing counselors who have
passed the certification examination.
Comment: Post Examination Tracking and Recognition. Several
commenters requested information on how HUD plans to track the
certification of individual counselors so that agencies can determine
that HCAs are certified agencies. Another commenter suggested HUD use
national housing counseling training organizations to track the
certification process nationwide.
Several commenters suggested that HUD provide a list of HUD
certified housing counselors on its Web site, and several suggested
that the list be available to consumers. Some commenters recommended
that HUD keep a list of HUD certified housing counselors and agencies
so consumers can confirm certification, and that each counselor have a
unique identification number to track examination results, training,
and possible recertification.
Several commenters asked whether intermediaries will be responsible
for monitoring certifications of subgrantees.
Commenters asked whether the certification would be portable and
how long the certification will last. A commenter recommended that
counselors should be able to take their certification with them from
one housing counseling agency to another agency. Some commenters
requested that HUD certified housing counselors only be considered
certified when they are employed by a HUD-approved agency.
HUD Response: If an individual passes the examination, the
individual will be notified. HUD will keep track of the individuals who
have passed the examination. However, the list of individuals who
passed the examination will not be published on HUD's Web site for
access by the general public, as the requirements for certification are
that the individual has both passed the examination and works for an
HCA. HUD is concerned that if it publishes the names of individuals who
have passed the test, but may not work for an HCA, consumers may think
that an individual on the Web site list is certified to provide housing
counseling in connection with HUD programs even if the individual is
not working for an HCA.
HUD will continue to maintain the list of HCAs on its Web site, and
consumers will still be able to visit the HUD Web site to verify that
the agency is an HCA. HCAs will be notified by HUD, after publication
of the final rule, of the process for identifying housing counselors
who work for them and have passed the examination, and when such
information will be required. HUD will issue certificates that indicate
the name(s) of individual(s) that have passed the examination and that
also work for an HCA. The HUD Housing Counselor Certificate will have
the name of the housing counselor and the name of the HCA.
The HUD certified Housing Counselor Certificate will be valid only
while the counselor works for an HCA. The HCA will verify with HUD that
a housing counselor works for the agency, in order for the certificate
to be issued. If a HUD certified housing counselor leaves the HCA, the
individual will no longer be deemed ``Certified,'' until the individual
once again works for an HCA. HCAs will be responsible for reporting to
HUD when counselors have left their employment and when new counselors
are hired. HUD anticipates that this reporting will occur
electronically and will provide further instructions outside of this
final rule as to how such reporting will be implemented.
Although passing the certification examination is a one-time
requirement regardless of employment status, a housing counselor will
not be considered HUD certified when the counselor is no longer working
for an HCA. Intermediaries and state housing finance agencies are
responsible for ensuring that their subgrantees and affiliates follow
all HUD requirements, including the requirement that all housing
counseling required under or provided in connection with HUD programs
be conducted by HUD certified housing counselors, as well as the
requirement that the subgrantee or affiliate report to HUD if a HUD
certified housing counselor is no longer in their employment.
Comment: Retaking the Examination. Several commenters inquired
about the course of action to be taken if a housing counselor fails the
initial examination, and how many re-examinations will be permitted and
the cost associated with the re-examination. Several commenters
recommended that housing counselors who do not pass the examination be
allowed to limit re-examination to the area(s) of the examination the
housing counselor did not initially pass. A few commenters stated
limiting re-examination to the deficient scored examination subject
areas will reduce the expense associated with retaking the examination
and reduce counselor examination time. Commenters indicated that
housing counselors be provided an unlimited number of times to take the
examination. One commenter addressed the frequency of the
[[Page 90650]]
examination, requesting that the examination be offered on a reasonably
frequent basis, be easily accessible to provide for more opportunities
for certifications, and be offered on a continuous schedule. Commenters
requested that housing counselor re-examination be offered within a
short time period. Commenters also requested a grace period to permit
the continuation of client counseling during that time period.
Commenters recommended that: re-examinations be offered at no fee;
there be two and up to a maximum of three re-examinations without
additional financial costs; HUD waive the fees or provide a one-time
fee reduction for persons who retake the examination a second time;
offer training and testing at a fee. A few commenters indicated the
need for clarity in determining re-examination fees.
HUD Response: HUD has made provisions for immediate re-examination
in the event the housing counselor fails the examination. However,
testing schedules will depend on the availability of proctors. HUD has
determined that housing counselors will need to retake the entire
examination because the examination is not separated into six areas. As
noted in a prior response to commenter questions, the examination
cannot be divided into topic areas, nor taken by topic area. However,
no restrictions or limitations will be placed on the number of times
the examination can be taken or on the frequency of re-examination. If
an individual fails the examination, the individual will be notified of
general subject deficiencies and topic areas to help focus their
studies in preparation for retesting. Results of individual examination
questions will not be provided. Because the compliance period has been
extended to 36 months, HUD determined that a grace period is not
necessary for housing counselors who fail the examination.
HUD is offering free online training, study guides, and practice
exams, which HUD encourages individuals to use. While the preparatory
training is highly recommended, the training is not mandatory.
HUD must charge a fee to cover the costs of administering the
examination, but as noted earlier in this preamble, HUD is providing
the study materials for free. The fee charged each time an individual
takes the certification examination will be based on the cost of
administering the examination. The initial cost of the examination and
training is below the proposed rule's $500 estimate. The cost for
taking the examination is $100 for online testing at the examinee's
location and $140 at a proctoring site, and the training is provided
for free. If it is necessary for an individual to retake the
examination, a fee of $100 for online testing at the examinee's
location and $140 at a proctoring site will be required each time the
examination is retaken. Any changes to the cost of the certification
examination will be published in the Federal Register.
Comment: Retesting after Passing the Test/Continuing Education.
Some commenters stated that re-examination should not be required after
a housing counselor has passed the test. A commenter stated that adding
a recertification component at a later date will create yet another
cycle of expense and delays in service delivery. Commenters stated that
they already have to track training for state and national
certifications, now it would be necessary to employ someone to just
track the certifications and expiration dates. Commenters recommended
that a housing counselor could be inactive for a certain amount of time
but after that reinstatement would require retesting. Some commenters
questioned why retesting is not required and stated that it should
become a requirement. Another commenter asked for clarity about
recertification after the 3-year period ends.
Commenters suggested that instead of retesting, HUD should
implement continuing education requirements consistent with National
Industry Standards (NIS). A commenter recommended a specific time frame
for certification with additional annual continuing education credits.
Another commenter recommended that to maintain the HUD certification a
housing counselor should be allowed to complete continuing education
and on the job training. One commenter recommended that HUD implement a
continuing education requirement to ensure HUD certified housing
counselors remain able to serve clients.
Commenters recommended that new requirements incorporate continuing
education training for housing counselors with local community colleges
and technical training centers; and several versions of continuing
education, from a minimum of 30 hours of classroom time every 3 years
to 15 hours every 2 years, to every year, as a continuing education
requirement for counselor recertification. Another commenter wrote that
HUD should require continuing education that is relevant to services
identified in the form HUD-9902, while another commenter recommended
that continuing education should include ethics.
Commenters stated that agencies should keep track of educational
credits, and HUD should develop a portal for tracking purposes and
certifying in-house continuing education programs. Commenters stated
that HUD should require approved agencies to provide their own
continuing education and that HUD should create a portal to track
whether agencies are providing continuing education. Another commenter
encouraged HUD to offer continuing education online. Commenters also
recommended that HUD wait to require continuing education until the
certification has rolled out and can be evaluated, and such
requirements should be subject to formal notice and comment.
HUD Response: Section 106 does not require retesting or continuing
education as a requirement for a HUD certified housing counselor to
maintain certification. Neither concept was included in the proposed
rule because the proposed rule was meant to only implement the new
Section 106 requirements. Therefore, adding retesting or a continuing
education component at this point would be outside the scope of this
rulemaking. HUD may take this into consideration for future rulemaking.
HUD has not changed the existing requirement at Sec. 214.103(h)
that the agency's housing counseling staff must possess a working
knowledge of HUD's housing and single-family mortgage insurance
programs, other state and local housing programs available in the
community, consolidated plans, and the local housing market. The staff
should be familiar with housing programs offered by conventional
mortgage lenders and other housing or related programs that may assist
their clients. Existing training opportunities may be used to meet
HUD's ongoing knowledge requirements and may be helpful to gain mastery
of housing-counseling related topics or to gain additional credentials.
HUD intends to continue to provide, subject to available
appropriations, funding for such activities and encourages housing
counselors to take continuing education courses. HUD does not currently
have the resources to create a portal to track housing counselor
training and will continue to expect the HCA to ensure that housing
counselor knowledge and training requirements are met.
Comment: Grandfathering Prior Certifications, Experience, or
Training as Alternatives to the Examination. Commenters recommended
grandfathering currently certified
[[Page 90651]]
housing counselors who meet certain criteria, such as length of
certification and level of knowledge. A commenter stated that many
counselors have already attended trainings to develop specific skills
(such as those of NeighborWorks[supreg] Training Institutes) and
requested further guidance on whether credit from previously acquired
certifications can be applied toward HUD certifications.
Several commenters asked whether HUD would recognize certifications
such as those offered by NeighborWorks Training Institute, National
Foundation for Credit Counseling (NFCC), Association of Independent
Consumer Credit Counseling Agencies (AICCCA), National Council of La
Raza Homeownership Network Learning Alliance (NHNLA), NeighborWorks
Center for Homeownership Education and Counseling (NCHEC), HomeFree
USA, and National Community Reinvestment Coalition (NCRC). A commenter
wrote that NeighborWorks training is so comprehensive and requires
continuing education, not recognizing such training, in lieu of
certification, is a waste of time and resources. Another requested that
HUD recognize the Homebuyer Training certification for meeting the
certification requirements because it tests on the same six topics. A
commenter wrote that, by HUD not accepting other trainings, HUD is
making the new requirement overly burdensome for small rural and
poverty stricken areas. A few commenters recommended that HUD should
accept existing housing counselor certification in specific areas and
only require the counselor to test in areas where they are not already
certified, at a reduced cost. Commenters also stated that if
grandfathering-in previous certifications is impossible, then have an
extended grace period for housing counselors who have previous,
unexpired certifications. In contrast to these commenters, some
commenters opposed grandfathering in housing counselors, stating that
it would destroy the uniformity that would be provided for the clients
the counselors are being certified to serve.
Commenters requested that HUD give experience (2-10 plus years
working in a HUD certified agency) some consideration or exempt those
with experience from the new requirement. Another wrote that for very
experienced housing counselors it would be consistent with the Section
106 requirements to provide a waiver of the testing requirements rather
than have the most experienced counselor fail a well-meaning test. A
commenter recommended allowing existing, experienced housing counselors
to take an examination to demonstrate their current competencies and be
certified.
Several commenters asked whether HUD would allow housing counselors
to continue to complete other certifications in addition to the HUD
Housing Counselor Certification. Another commenter asked if a housing
counseling agency should hold off either recertifying other housing
counselor certifications or having housing counselors receive new
certifications from other entities before the final rule is published.
HUD Response: Under this final rule, HUD defines a HUD certified
housing counselor as a housing counselor working for an HCA and
certified by HUD as competent to provide housing counseling services
pursuant to this part. HUD appreciates the work and training provided
by all of the agencies providing training and national certifications.
HUD also appreciates the years of experience many housing counselors
have. However, Section 106 requirements are clear that HUD provide its
own training and a certification examination to certify all housing
counselors providing housing counseling for HUD's programs. The statute
provides no exemptions or ``grandfathering'' of counselors for
certification purposes. Thus, every housing counselor must take and
pass the written examination in order to be certified. HUD cannot
permit non-HUD certified housing counselors to provide counseling that
must, by statute, be provided by certified housing counselors.
Housing counselor training and certification in other areas
enhances knowledge and skills and improves the quality of counseling.
HUD recommends that housing counselors continue to seek other training
and certifications. Existing training opportunities may be used to meet
HUD's ongoing knowledge requirements and may be helpful to gain mastery
of housing counseling related topics or to gain additional credentials.
Housing counselors are not required to take HUD's training before
taking the certification examination. However, HUD does recommend that
all counselors, regardless of experience, complete the training for the
examination, as that will contribute to the counselors' understanding
of what is required by the Housing Counselor Certification Examination.
Comment: Test Preparation. A commenter stated there should be
early, ongoing online training for housing counseling certification to
reduce costs. Commenters wrote that the test preparation should be
free, voluntary, easily accessible, and readily available; include
practice tests, online study guides, an education track, and e-learning
courses, and be offered in a variety of methods and languages,
including in-person and online. A few commenters asked for an
opportunity to provide public comment on the training materials to
ensure the topics are applicable to housing counseling services on the
ground. Commenters also requested that HUD provide detailed curriculum
and training resources by the effective date so counselors could have
the entire year to prepare for the examination. Commenters also wrote
that the HECM test guide is not a good model because the HECM test
guide does not reflect the materials on the test nor was it relevant to
the current HECM test.
A commenter requested that HUD publish frequently asked questions
(FAQs) on the examination and the content. Other commenters recommended
HUD provide a space for counselors to share information on topics that
will be on the test for those who may not take the training classes to
help assist in studying for the examination.
HUD Response: HUD has created extensive training for the Housing
Counselor Certification Examination, which is currently available. The
training includes a no-cost interactive online training course and a
downloadable study guide. A practice test, to help housing counselors
prepare for and pass the examination, will be made available prior to
the availability of the certification examination. The materials will
meet the Rehabilitation Act's Section 508 accessibility guidelines. The
study guide is also available for download onto multiple types of
electronic devices.
The rulemaking process did not allow for HUD to consult with
stakeholders as to the content of the training and the examination
prior to publication of the final rule. However, after publication of
this rule, HUD welcomes feedback regarding the training and the
examination, which may be submitted to the housing counseling
certification Web site or by sending an email to
[email protected] and including Certification in the subject
line.
HUD plans on providing a list of FAQs on the HUD Web site and on
the examination Web site.
Comment: Administering Training. Commenters recommended that local
trainings be provided, and webinars should not take the place of group
training. Commenters asked about qualifications of trainers and who
will
[[Page 90652]]
provide the training. Several commenters provided recommendations for
trainers including housing counselors from across the nation, housing
counseling training entities, and training vendors. One commenter
recommended utilizing regional and local agencies to help train on
different state and local regulations and conditions. Another commenter
suggested that the training coincide with national conferences of HUD's
approved intermediaries. A commenter recommended that, as with the
mortgage lending industry, it is best practice to have more than one
approved training provider to help prepare counselors for the test.
A few commenters requested that HUD provide additional funds to
state housing finance agencies, major metropolitan cities, or existing
training institutes, including NeighborWorks, National Council of La
Raza (NCLR), and National Reinvestment Coalition (NCRC), to provide
training for certification in the areas identified by HUD.
HUD Response: Under Section 106, the Office of Housing Counseling
must contract with one entity to develop training specifically for the
housing counseling certification. HUD selected a qualified entity to
administer and prepare the training, as described in section IV. HUD
has determined that the most effective and accessible option to housing
counselors for examination preparation is through a free online,
interactive, and self-paced training. For those individuals that prefer
a textbook style of learning, HUD is also offering a downloadable study
guide. HUD will not be providing in-person training for the
examination.
HUD provides funding for housing counselor training through the
Housing Counseling Program's training grants. Training grantees used
funds in the 2013 and the 2014 and 2015 grant cycles to provide general
training on the six topic areas stated in Section 106, in addition to
other training for housing counselors. Subject to need and to available
appropriations, HUD may continue to provide funding through training
grants for this purpose.
Comments: Who needs to be Certified: Several commenters had
questions concerning the applicability of HUD's certification rule to
state housing finance agency staff overseeing a Housing Counseling
Program or providing direct housing counseling services or both.
Additional commenters had questions about who should be taking the
housing counseling certification test. A commenter asked if home buyer
education must be provided by a HUD certified housing counselor, and
another sought clarification on whether educators must be certified to
offer group counseling.
Other commenters recommended exempting from the certification
requirement agencies whose housing counselors provide only reverse
mortgage counseling or another single area of recognized housing
counseling. Some commenters sought clarification on whether HECM
counselors will need to be tested.
A commenter requested that attorneys with separate standardized
certifications be allowed to provide housing counseling services
without being required to separately qualify under HUD's rule. One
commenter requested that HUD add a limited provision in the
certification rule that provides that housing counseling funds may be
available for legal services attorneys who meet certain requirements
and work with HUD certified housing counselors. Other commenters asked
whether applicability of HUD's rule was limited to agencies receiving
HUD funding for housing counseling services or only counseling funded
by HUD grants. In addition, a commenter recommended that only housing
counseling reported on the Housing Counseling Activity Report Form 9902
be required to be performed by a certified housing counselor.
HUD Response: HUD reiterates that all staff of entities providing
housing counseling to clients, including HCAs participating in HUD's
Housing Counseling Program and staff of state housing finance agencies,
must be certified. Staff of entities who deliver housing counseling
services required under or provided in connection with Other HUD
Programs, will also have to be certified and as a result their
employers will have to become HCAs before the final compliance date.
Staff of entities whose roles are limited to funding, overseeing or
administering a housing counseling program and who do not provide
housing counseling services directly to clients are not required to
become HUD certified housing counselors, and these entities are not
required to become HCAs.
Section 106 does not authorize HUD to exempt housing counselors who
provide a single type of housing counseling, or counselors who provide
HECM or other types of reverse mortgage counseling exclusively, from
the housing counselor certification requirements of this final rule. As
discussed earlier in this preamble, all HECM Roster requirements
continue to apply, pursuant to the statutory requirements of sections
255(d) and (f) of the National Housing Act and regulatory requirements
at 24 CFR part 206, subpart E. All HECM counselors must meet the
certification requirements of this final rule. Housing counselors and
housing counseling agencies successfully meeting HUD certification
requirements may still limit the counseling they provide to a single
type of counseling, such as reverse mortgage counseling or rental
counseling.
HUD cannot exempt attorneys who provide housing counseling under
HUD's Housing Counseling program from the certification requirements.
Comment: Delay Implementation. Commenters wrote that HUD should
delay implementation to determine whether the language in the
President's budget will be enacted so experience can be substituted for
the examination and other entities could provide the examination.
Commenters wrote that by waiting it would save potential costs in time
and dollars.
HUD Response: Section 106, as amended, is the law until changed.
HUD cannot delay implementation of this rule based on the possibility
that a change to that law could be enacted at a future date.
Comment: New Requirement for Broader Counseling. Other commenters
wrote that agencies should have discretion based on capacity and
mission to provide services in specific areas rather than have HUD
dilute counseling that is currently being provided by masters (i.e.,
subject matter experts) in a specific area. Another commenter requested
that HUD clarify whether the new rule requires counseling agencies to
offer all broad-based services if outside their chosen scope of work.
The commenter wrote that this requirement could be an undue hardship
and force critical smaller nonprofits out of the industry and that such
smaller nonprofits offer geographic specific information necessary for
foreclosure prevention and rental assistance through in-person
counseling, unlike some larger nonprofits that offer only national
phone counseling.
Commenters also stated that agencies should and are making
referrals to other qualified HUD-approved agencies to address a
consumer need that the agency currently does not cover.
HUD Response: This final rule does not require that a housing
counseling agency provide services in all areas or that housing
counselors change their specializations. The new certification assures
baseline housing knowledge through a single, government-issued national
credential. The requirement that all housing counselors have this
[[Page 90653]]
base of knowledge in the six areas will ensure that counselors that
specialize will have the knowledge to make appropriate referrals for
clients that have housing issues beyond the scope of the services that
a housing counselor is providing.
Comment: What is a Housing Counseling Session. Commenters requested
that HUD clarify what constitutes a session with regard to providing
counseling, in contrast to education, and emphasized the innovative
ways the industry is growing. In addition, the commenters wrote that
HUD should take into consideration that the most important aspect to
effective housing counseling is a one-on-one engagement.
HUD Response: The existing regulation at Sec. 214.3 defines
counseling with a Housing Counseling Program as counselor-to-client
assistance that addresses unique financial circumstances or housing
issues and focuses on ways of overcoming specific obstacles to
achieving a housing goal such as repairing credit, addressing a rental
dispute, purchasing a home, locating cash for a downpayment, being
informed of fair housing and fair lending requirements of the Fair
Housing Act, finding units accessible to persons with disabilities,
avoiding foreclosure, or resolving a financial crisis. Except for
reverse mortgage counseling, all housing counseling shall involve the
creation of an action plan. HUD agrees that one-on-one engagement is
important, and the definition specifies that it involves counselor-to-
client assistance that addresses unique financial circumstances or
housing issues.
D. Requirements Relating to Housing Counseling Grant Funds Sec.
214.311
Comment: Misuse of Housing Counseling Grant Funds. Some commenters
requested that HUD define the terms ``material violation'' or
``misuse.'' A few commenters requested that HUD define material
violation as something intentional and nontrivial. A commenter wrote
that adding a definition would lower the number of violations committed
by agencies and provide a clearer understanding for agencies. Another
commenter requested HUD clarify the language to require intentional
misuse of funds.
Commenters requested that a material violation only be considered
where there is purposeful disregard for regulations rather than where
inadvertent errors have occurred or where good faith efforts have been
made to comply with regulations. Commenters wrote that the misuse of
funds provision is too severe a penalty for an unintentional misuse of
funds. One commenter provided an example when his agency incorrectly
charged the HUD account for providing counseling outside their service
area, realized it during an audit, and then reimbursed HUD. The
commenter wrote that under the regulations as drafted such an action
could prohibit a good housing counseling agency from ever participating
in the competitive grant program.
Commenters wrote that if the error was in good faith then under
certain conditions the agency should again be eligible for funds.
Some commenters wrote that misuse of funds should not bar an entire
agency until an investigation is complete. Commenters also requested
that after an agency approval is revoked a process for recertification
after the necessary safeguards are in place should be permitted. In
addition, commenters recommended that if an individual employee misuses
funds there should be a way for the agency to remedy the situation and
continue to receive funds and serve its community. Commenters also
stated that the process for remedying misuse and having access to funds
again is extremely important for rural areas.
Commenters requested that HUD clarify the effect of the violation
and the role of HUD certified intermediaries. Specifically, the
commenters asked HUD to discuss the role of the intermediary during an
investigation and whether any of its funds will be frozen during this
investigation of a subgrantee. Another commenter requested
clarification as to whether the intermediary will be responsible for
returning the portion of overhead grant funds that the intermediary
spent associated with administering the grant and will the intermediary
be punished or not eligible for funds. The commenters noted that this
clarification will help strengthen the relationship between HUD and
intermediaries.
HUD Response: HUD appreciates the commenters concerns regarding
intentionality and good faith but will make a determination of whether
a violation is material based on individual circumstances using
procedures outlined in the relevant grant agreement. The new
requirement is consistent with the HUD policy that intermediaries and
grantees share responsibility for their subgrantees' use of funds and
all HCAs are responsible for their employees.
Comment: Violation of Federal Election Law. Commenters requested
clarification on how HUD plans to check for compliance around the new
requirement related to a violation of Federal election laws. The
commenters recommended that instead of having to create a database HUD
should require agencies to sign an annual representation or warranty
statement for the process.
HUD Response: Like all other requirements, agencies participating
in HUD's Housing Counseling program must ensure that they are in
compliance with the requirement related to a violation of Federal
election laws. In addition, organizations that are applying for
approval to participate in the HUD Housing Counseling Program are
reviewed to determine if they are in compliance with the approval
requirements at Sec. 214.103, including that they are in compliance
with Sec. 214.103(c) related to ineligible participants. Compliance
with the requirement related to a violation of Federal election laws
will be enforced in the same manner as existing program requirements.
HUD intends to provide further guidance on this provision.
E. Recommendations: Other suggestions for the Housing Counseling
Program
Comment: Require Broader Housing Counseling. A few commenters
discussed the need to support more housing counseling services. One
commenter suggested HUD require ongoing housing counseling for
homebuyers beyond a 1-hour session to help avoid foreclosure. The
commenter suggested that each new homeowner be required to attend
classes for at least 8-10 sessions and once-a-year counseling after
buying a home. The commenter suggested HUD explore incorporating a more
comprehensive approach to housing counseling, such as requiring
homebuyers to attend prepurchase counseling, prior to purchasing a home
with a federally insured mortgage, followed by post-purchase follow-up
and continuing education sessions.
HUD Response: This rule is not addressing the protocol for
prepurchase homeownership counseling, which is outside of the scope of
this final rule.
Comment: Public Education and Outreach. A commenter recommended HUD
undertake a public education and outreach campaign to educate consumers
about working with a legitimate HUD certified housing counselor who is
currently employed by an HCA, in order to avoid misunderstanding and
the potential for fraud.
Another commenter requested that HUD provide a webinar explaining
the need for the certification, whether it is optional, and a basic
overview of the
[[Page 90654]]
housing counseling certification rule and key pieces to the rule.
HUD Response: HUD agrees that public education and outreach to
housing counseling agencies is important. At the time of publication of
this final rule, and subject to available resources, HUD will provide
webinars and other guidance for entities and individuals affected by
this rule. HUD will also work with housing counselors and HCAs to help
educate the public about the dangers of scams and the benefits of
working with a HUD-approved housing counseling agency and a HUD-
approved housing counselor.
Comment: Background/Credit checks. Some commenters recommended
that, in addition to testing, housing counselors pass a criminal
background check. Another commenter wrote that often housing counselors
have access to sensitive information and it is important that new hires
have not engaged in criminal activity in the past that may put clients
in jeopardy.
Another commenter recommended that housing counselors be required
to have a minimum credit score as a condition of employment, because
many people in the industry have not mastered the information
themselves.
HUD Response: HUD agrees that it is important that housing
counselors not have been convicted of certain offenses relevant to
their positions as housing counselors. The existing regulation on
ineligible participants at Sec. 214.103(c) already provides that an
agency, including any of the agency's directors, partners, officers,
principals, or employees, must not be: (1) Suspended, debarred, or
otherwise restricted under HUD's, or any other Federal regulations; (2)
indicted for, or convicted of, a criminal offense that reflects upon
the responsibility, integrity, or ability of the agency to participate
in housing counseling activities (these offenses include criminal
offenses that can be prosecuted at a local, state, or Federal level);
or (3) subject to unresolved findings as a result of HUD or other
government audit or investigations. All agencies participating in the
HUD Housing Counseling Program are currently responsible for ensuring
compliance with this requirement. In addition, agencies that are
applying for approval to participate in the HUD Housing Counseling
Program and persons in a position of trust with these agencies are
reviewed to determine if they are in violation of Housing Counseling
Program regulations and other requirements.
An individual's personal credit score is not an element that is
part of the criteria for becoming a HUD housing counselor.
Comment: Social Benefits. A commenter stated that the social
benefit cannot be weighed until the examination is available for
comment.
HUD Response: The certification examination will ensure that
counselors have a comprehensive knowledge of the six areas identified
in Section 106. HUD certified housing counselors will have the
additional knowledge to provide to those they counsel, and the clients
will have the additional information to make better housing decisions.
Once examinations have commenced, HUD will, on an ongoing basis,
evaluate feedback on the examination and will revise the examination if
needed. Additional evaluation of the benefits of this rule can be found
in Section VI of this preamble.
Comment: HUD's Housing Counseling Handbook. A commenter recommended
that HUD provide an update to the HUD Handbook 7610.1 REV-5 to account
for the requirements for the ``comprehensive counseling services''
since HUD has specified the six defined areas that all housing
counselors must be proficient in and added the requirement that housing
counselors pass the Housing Counselor Certification Examination. The
commenter also recommended that HUD revise the handbook to account for
any additional education and/or counseling topics that must be
completed in the session with the client.
HUD Response: HUD agrees. HUD will at a later date update the HUD
Handbook 7610.1 to reflect the new requirements contained in this final
rule. This final rule does not change the types of counseling services
that may be offered by HCAs.
VI. Findings and Certifications
Regulatory Review--Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health, and safety effects; distributive impacts; and equity).
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, of reducing costs, of harmonizing rules, and of
promoting flexibility.
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and, therefore, subject to review by the Office of Management and
Budget (OMB) in accordance with the requirements of the order. This
rule was determined to be a ``significant regulatory action'' as
defined in section 3(f) of the Executive order, but not an economically
significant regulatory action, as provided under section 3(f)(1) of
Executive Order 12866.
As discussed in this preamble, this rule revises HUD's Housing
Counseling Program regulations to adopt, through regulatory
codification, the new requirements established in Section 106. The
Section 106 amendments established the Office of Housing Counseling and
gave the office the authority to establish, administer, and coordinate
all regulations, requirements, standards, and performance measures
related to housing counseling. In addition, the Section 106 amendments
require the certification of entities and of individual housing
counselors providing housing counseling services required under or in
connection with all HUD Programs. Under Section 106, ``certification''
means specifically taking and passing an examination, administered by
HUD, that tests knowledge on six aspects of housing counseling. While
the Section 106 amendments introduced new requirements that a broader
group of entities and individual housing counselors must be certified,
the Housing Counseling statute has always required that approval or
certification by HUD of either counseling agencies or individual
counselors must be implemented through regulation. HUD already reviews
and approves housing counseling agencies that voluntarily seek
participation in the Housing Counseling Program. However, the
requirement on Other HUD Programs is incorporated in HUD's general
requirements in part 5, as well as some program specific regulations.
This rule adds the certification of individual counselors and that
Other HUD Programs providing homeownership counseling and rental
housing counseling, as defined in Section 106, become, partner with, or
use an entity participating in HUD's Housing Counseling Program to
deliver housing counseling services. HUD has attempted to minimize the
costs of this regulation to individual counselors and entities. The
training for the Housing Counseling Certification Examination will be
free and the examination will cost $100 for online testing at the
examinee's location and $140 for an on-site proctoring center
examination. Currently, there are approximately 2,070 HCAs, with an
estimated 7,245
[[Page 90655]]
individual counselors. At an estimated average cost of $120 per
counselor to take the examination required for certification, the
initial cost for housing counselors working for HCAs would total
approximately $869,400. HUD also estimates that 20 percent may not pass
the examination the first time, and adds an additional $252,960 for
those that retake the examination. HUD estimates approximately 880
entities counseling in Other HUD programs will need to either: (1)
Become HUD-approved housing counseling agencies that employ HUD
certified housing counselors, (2) create partnerships with HCAs using
certified housing counselors to deliver housing counseling services on
their behalf, (3) stop providing housing counseling services, or (4)
otherwise modify their program to comply with this rule. Given the
options provided to these entities in Other HUD Programs and the
benefits of being part of the Housing Counseling Program if chosen by
those entities that are not currently HCAs, HUD only includes in its
analysis the cost of the certification examination for the employees of
these entities that might pursue the certification. HUD estimates that
45 percent of the 880 entities will become a HUD-approved housing
counseling agency, or choose to affiliate with an existing intermediary
or state housing finance agency or partner with an HCA. HUD estimates
three counselors per each of these agencies with an estimated average
cost of $120 per counselor taking the examination required for
certification within the compliance period, totaling approximately
$142,560.
As for training for the Housing Counseling Certification
Examination, the training is estimated to take approximately 11 hours
to complete and HUD estimates that 80 percent of test takers will be
housing counselors that take the training and may experience lost
wages. The average housing counselor makes on average $37,000 annually
\21\ for 2080 hours worked, which equates to an hourly salary of $17.79
or a rounded loaded wage of $36.00 an hour.\22\ The approximate lost
wages for a housing counselor undergoing 11 hours of training would be
$396 and for the 6,746 counselors approximately $2,671,420.
---------------------------------------------------------------------------
\21\ The average salary for a housing counselor comes from
http://www.payscale.com/research/US/Job=Housing_Counselor/Salary.
\22\ Multiplying the average salary times two to arrive at a
loaded wage and rounding up from $35.58.
---------------------------------------------------------------------------
Thus, the total initial compliance cost of the regulation in the 36
months entities have to be in compliance is estimated to be $3,936,340.
Subject to available appropriations, comprehensive Housing Counseling
Program grant funds may be used by grantees to help reduce the costs of
compliance with standards and of the examination.
Other statutory changes to improve the effectiveness of housing
counseling include increasing the breadth of counseling services so
that the services are comprehensive with respect to homeownership and
rental counseling. As noted earlier, the statutory mandate to provide
comprehensive homeownership and rental counseling is not a significant
change to HUD's pre-Section 106 Housing Counseling Program. HUD's
Housing Counseling Program currently provides comprehensive
homeownership and rental counseling.
The compliance costs of the rule are examination costs that
primarily must be borne by the individuals becoming certified. There
may, however, be indirect impacts on HCAs that decide to pay for the
cost of certification. There will also be some costs to those entities
that decide, amongst the four alternatives, to become an HCA and an
estimate of the costs has been discussed above. The compliance cost in
the proposed rule was estimated at $4 million in the first year and
less in succeeding years, for an annualized compliance cost over 5
years of $1.0 million ($0.96 million). The compliance cost of the final
rule is estimated to be approximately $3.9 million in the initial
compliance period (3 years) plus $920,620 for year 4 and 5 for new
individuals in the housing counseling industry, for an annualized
compliance cost over 5 years of $1,148,250. Most of the cost will be
incurred only once.
The rule generates substantial benefits to all parties that
entirely or partially offset the cost. The benefits to the prospective
homebuyer or existing homeowner is the more efficient and effective
delivery of housing counseling services if, as a result of the
certification process, one counselor may be able to assess all
questions of the prospective homebuyer or existing homeowner, or make a
more effective referral in order to help the client overcome housing
barriers. Entities that currently conduct housing counseling but do not
meet HUD standards will have the benefits of a better quality program,
with access to public and private funding sources that limit
eligibility to HCAs. The value of the HUD-approved HCA label is
significant, and entities will be able to use their status in marketing
their programs to clients and funders. These entities will have unique
access to downpayment assistance programs, and public and private
mortgage products that are only available to borrowers who work with
HUD-approved HCAs. Individual housing counselors will also benefit from
the rule. Their professional certification should make them more
desirable on the job market, not only for employment with HCAs, but
also for employment in other fields where the government certification
will be recognized. Finally, the statutory mandate to certify
individual counselors may further enhance the performance of agencies
and counselors participating in HUD's Housing Counseling Program.\23\
---------------------------------------------------------------------------
\23\ The Obama Administration referred individuals and families
to HUD housing counseling agencies and counselors as part of the
Making Home Affordable programs. See http://www.makinghomeaffordable.gov/get-started/housing-expert/Pages/default.aspx.
---------------------------------------------------------------------------
The general benefits to the borrower and the market from housing
counseling are well documented by research. Consumers who received
housing counseling from a HUD-approved HCA have better outcomes,
including more savings, better credit, better loan modifications, and
fewer foreclosures, than similar consumers who did not receive housing
counseling. Some of the studies have quantified the benefit. In 2011, a
total of 126,534 loans were modified after seeking assistance from HUD
housing counselors. Statistically, borrowers who received loan
modifications after receiving post-purchase housing counseling had
savings of $4,980 annually.\24\ In addition, foreclosures prevented as
a result of housing counseling have an estimated social benefit of
$40,730.\25\ HUD believes that housing counselor certification
requirements increase assurance of a more knowledgeable housing
counselor for the consumer. Certified housing counselors are expected
to lead to better identification of issues, higher quality referrals,
and even better resolution of client barriers to stable housing, as
well as a greater ability to avoid discrimination and scams. It is not
possible to project the actual value to the consumer of a certified
counselor compared to the state of current counselor knowledge which is
often regulated by State
[[Page 90656]]
requirements. Consequently, HUD expects the benefits of this rule to
equal the projected compliance costs if 140 loan modifications are made
and 125 foreclosures are avoided over 5 years as a result of this rule.
---------------------------------------------------------------------------
\24\ National Foreclosure Mitigation Counseling Program
Evaluation Final Report, Rounds 3 Through 5, Prepared by Kenneth M.
Temkin Neil S. Mayer Charles A. Calhoun Peter A. Tatian with Taz
George, Prepared for NeighborWorks[supreg] America (Urban Institute:
September 2014).
\25\ An analysis HUD's Office of Policy Development and Research
found that the total ``deadweight'' loss per foreclosure prevention
cost is approximately $40,730. (See http://www.huduser.org/periodicals/cityscpe/voll4num3/Cityscape_Nov2012_impact_lim_sellers.pdf at page 219.)
---------------------------------------------------------------------------
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.),
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
This rule would revise the regulations governing HUD's Housing
Counseling Program to reflect changes to the program made by the
Section 106 amendments.
The key changes made to the Housing Counseling Program by this rule
are the requirement that individual housing counselors must be
certified as skilled to provide counseling in HUD's Housing Counseling
Program, and that Other HUD Programs providing homeownership counseling
and rental housing counseling, as defined by the Dodd-Frank Act, become
part of or use an entity participating in HUD's Housing Counseling
Program to deliver housing counseling services.
HUD examined a number of alternatives to minimize the burden of the
Dodd-Frank Act and the regulations. In order to minimize costs and
administrative burden on entities and individuals, HUD has provided a
free Web site offering training for the examination, structured its
testing program to substantially reduce the cost of the examination
from the initial proposal of $500, and made the costs of training for
the examination an eligible use of HUD Housing Counseling Grants. This
rule also provides for a 36-month period after availability of the
certification examination to give time for entities to come into
compliance.
Accordingly, given the additional time for individual counselors to
be certified and for the funding made available to assist in meeting
the core areas specified by statute for certification, the undersigned
certifies that this rule will not have a significant economic impact on
a substantial number of small entities.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has Federalism implications if the rule
either imposes substantial direct compliance costs on state and local
governments or is not required by statute, or the rule preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive order. This rule would not have
Federalism implications and would not impose substantial direct
compliance costs on state and local governments or preempt state law
within the meaning of the Executive order.
Environmental Impact
This rule does not direct, provide for assistance or loan and
mortgage insurance for, or otherwise govern or regulate real property
acquisition, disposition, leasing, rehabilitation, alteration,
demolition, or new construction; or establish, revise, or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this rule
is categorically excluded from environmental review under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321).
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for Federal
agencies to assess the effects of their regulatory actions on state,
local, and tribal governments, and on the private sector. This rule
does not impose any Federal mandates on any state, local, or tribal
government, or on the private sector, within the meaning of the UMRA.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance (CFDA) Program number for
the Housing Counseling Program is 14.169.
List of Subjects
24 CFR Part 5
Administrative practice and procedure, Aged, Claims, Drug abuse,
Drug traffic control, Grant programs--housing and community
development, Grant programs--Indians, Individuals with disabilities,
Loan programs--housing and community development, Low and moderate
income housing, Mortgage insurance, Pets, Public housing, Rent
subsidies, Reporting and recordkeeping requirements.
24 CFR Part 92
Administrative practice and procedure, Low and moderate income
housing, Manufactured homes, Rent subsidies, Reporting and
recordkeeping requirements.
24 CFR Part 93
Administrative practice and procedure, Grant programs--housing and
community development, Low and moderate income housing, Manufactured
homes, Rent subsidies, Reporting and recordkeeping requirements.
24 CFR Part 214
Administrative practice and procedure; Loan program-housing and
community development; Organization and functions (government
agencies); Reporting and recordkeeping requirements.
24 CFR Part 570
Administrative practice and procedure, American Samoa, Community
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Loan programs--
housing and community development, Low and moderate income housing,
Northern Mariana Islands, Pacific Islands Trust Territory, Puerto Rico,
Reporting and recordkeeping requirements, Student aid, Virgin Islands.
24 CFR Part 574
Community facilities, Grant programs--housing and community
development, Grant programs--social programs, HIV/AIDS, Low and
moderate income housing, Reporting and recordkeeping requirements.
24 CFR Part 576
Community facilities, Grant programs--housing and community
development, Grant programs--social programs, Homeless, Reporting and
recordkeeping requirements
24 CFR Part 578
Community development, Community facilities, Grant programs--
housing and community development, Grant programs--social programs,
Homeless, Reporting and recordkeeping requirements.
24 CFR Part 1006
Community development block grants, Grant programs--housing and
community development, Grant programs--Indians, Hawaiian Natives, Low
and moderate income housing, Reporting and recordkeeping requirements.
Accordingly, for the reasons stated above, HUD amends 24 CFR parts
5, 92, 93, 214, 570, 574, 576, 578, and 1006 as follows:
[[Page 90657]]
PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS
0
1. The authority citation for part 5 is revised to read as follows:
Authority: 12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437d,
1437f, 1437n, 3535(d); Sec. 327, Pub. L. 109-115, 119 Stat. 2936;
Sec. 607, Pub. L. 109-162, 119 Stat. 3051 (42 U.S.C. 14043e et
seq.); E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; and E.O.
13559, 75 FR 71319, 3 CFR, 2010 Comp., p. 273.
0
2. In Sec. 5.100, add alphabetically the definitions for
``Homeownership counseling,'' ``Housing counseling,'' and ``Rental
housing counseling'' to read as follows:
Sec. 5.100 Definitions.
* * * * *
Homeownership counseling means housing counseling related to
homeownership and residential mortgage loans when provided in
connection with HUD's Housing Counseling Program, or required by or
provided in connection with HUD Programs as defined in Sec. 5.111.
Homeownership counseling is housing counseling that covers the decision
to purchase a home, the selection and purchase of a home, issues
arising during or affecting the period of ownership of a home
(including financing, refinancing, default, and foreclosure, and other
financial decisions) and the sale or other disposition of a home.
* * * * *
Housing counseling is independent, expert advice customized to the
need of the consumer to address the consumer's housing barriers and to
help achieve their housing goals and must include the following
processes: Intake; financial and housing affordability analysis; an
action plan, except for reverse mortgage counseling; and a reasonable
effort to have follow-up communication with the client when possible.
The content and process of housing counseling must meet the standards
outlined in 24 CFR part 214. Homeownership counseling and rental
counseling are types of housing counseling.
* * * * *
Rental housing counseling means counseling related to the rental of
residential property, which may include counseling regarding future
homeownership opportunities when provided in connection with HUD's
Housing Counseling Program, or required under or provided in connection
with HUD Programs as defined in Sec. 5.111. Rental housing counseling
may also include the decision to rent, responsibilities of tenancy,
affordability of renting and eviction prevention.
* * * * *
0
3. Add Sec. 5.111 to read as follows:
Sec. 5.111 Housing counseling.
(a) Any housing counseling, including homeownership counseling or
rental housing counseling, as defined in Sec. 5.100, required under or
provided in connection with any program administered by HUD shall be
provided only by organizations and counselors certified by the
Secretary under 24 CFR part 214 to provide housing counseling,
consistent with 12 U.S.C. 1701x.
(b) For purposes of this section, required under or provided in
connection with any program administered by HUD means:
(1) Housing counseling required by statute, regulation, Notice of
Funding Availability (NOFA), or otherwise required by HUD;
(2) Housing counseling that is funded under a HUD program;
(3) Housing counseling that is required by a grantee or subgrantee
of a HUD program as a condition of receiving assistance under the HUD
program; or
(4) Housing counseling to which a family assisted under a HUD
program is referred, by a grantee or subgrantee of the HUD program.
PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM
0
4. The authority citation for part 92 is revised to read as follows:
Authority: 42 U.S.C. 3535(d) and 12701-12839, 12 U.S.C. 1701x.
0
5. In Sec. 92.2, add alphabetically the definitions for ``Homebuyer
counseling'' and ``Housing counseling'' to read as follows:
Sec. 92.2 Definitions.
* * * * *
Homebuyer counseling has the same meaning as homeownership
counseling in 24 CFR 5.100, and is a type of housing counseling.
* * * * *
Housing counseling has the meaning given the term in 24 CFR 5.100.
* * * * *
Sec. 92.350 [Amended]
0
6. In Sec. 92.350(a), remove ``and drug-free workplace'' and add in
its place ``drug-free work; and housing counseling.''
PART 93--HOUSING TRUST FUND
0
7. The authority citation for part 92 is revised to read as follows:
Authority: 42 U.S.C. 3535(d), 12 U.S.C. 1701x and 4568.
0
8. In Sec. 93.2, add alphabetically the definitions for
``Homeownership counseling'' and ``Housing counseling'' to read as
follows:
Sec. 93.2 Definitions.
* * * * *
Homeownership counseling has the same meaning given the term in 24
CFR 5.100, and is a type of housing counseling.
* * * * *
Housing counseling has the meaning given the term in 24 CFR 5.100.
* * * * *
Sec. 93.350 [Amended]
0
9. In Sec. 93.350(a), remove ``and drug-free work'' and add in its
place ``drug-free work; and housing counseling.''
PART 214--HOUSING COUNSELING PROGRAM
0
10. The authority citation for part 214 continues to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d).
0
11. Section 214.1 is revised to read as follows:
Sec. 214.1 Purpose.
This part implements the Housing Counseling Program authorized by
section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C.
1701x). Section 106 authorizes HUD to make grants to, or contract with,
public or private organizations to provide a broad range of housing
counseling services to homeowners and tenants to assist them in
improving their housing conditions and in meeting the responsibilities
of tenancy or homeownership. Section 106 also directs HUD to provide
housing counseling services only through agencies or individuals that
have been certified by HUD as competent to provide such services. The
regulations contained in this part prescribe the procedures and
requirements by which the Housing Counseling Program will be
administered, including the process by which agencies are approved and
individuals will be certified to provide the homeownership and rental
counseling, as defined by section 106. These regulations apply to all
agencies participating in HUD's Housing Counseling Program, and to all
organizations or entities that deliver
[[Page 90658]]
housing counseling, including homeownership counseling or rental
housing counseling, required under or provided in connection with HUD
programs.
0
12. In Sec. 214.3, remove the definition of ``HUD-approved housing
counseling agencies'' and add alphabetically the definitions of
``Homeownership counseling,'' ``Housing counseling,'' ``Housing
counseling grant funds,'' ``HUD-approved housing counseling agency,''
``HUD certified housing counselor,'' ``Nonprofit organization,''
``Rental housing counseling,'' ``State,'' and ``Unit of general local
government'' to read as follows:
Sec. 214.3 Definitions.
* * * * *
Homeownership counseling. See definition at 24 CFR 5.100.
Housing counseling. See definition at 24 CFR 5.100.
Housing counseling grant funds. Grants awarded to participating
agencies under section 106 of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x).
* * * * *
HUD-approved housing counseling agency. Private and public
nonprofit organizations that are exempt from taxation under section
501(a), pursuant to section 501(c) of the Internal Revenue Code of
1996, 26 U.S.C. 501(a) and 501(c) and approved by HUD, in accordance
with this part and 106(e) of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(e)), to provide housing counseling services to
clients directly, or through their affiliates or branches, and which
meet the requirements set forth in this part.
HUD certified housing counselor. A housing counselor who has passed
the HUD Certification examination, works for a participating agency,
and is certified by HUD as competent to provide housing counseling
services pursuant to this part.
* * * * *
Nonprofit organization. Shall have the meaning given in section
104(5) of the Cranston-Gonzalez National Affordable Housing Act (42
U.S.C. 12704(5)), except that subparagraph (D) of such section shall
not apply.
* * * * *
Rental housing counseling. See definition at 24 CFR 5.100.
* * * * *
State. Each of the several States, the Commonwealth of Puerto Rico,
the District of Columbia, the Commonwealth of the Northern Mariana
Islands, Guam, the Virgin Islands, American Samoa, or any other
possession of the United States.
* * * * *
Unit of general local government. Any city, county, parish, town,
township, borough, village, or any other general purpose political
subdivision of a State.
0
7. In Sec. 214.100, revise paragraph (a) to read as follows:
Sec. 214.100 General.
* * * * *
(a) Approval. The approval of a housing counseling agency and the
certification of a HUD certified housing counselor does not create or
imply a warranty or endorsement by HUD of the approved agency, or its
employees, including counselors, to a prospective client or to any
other organization or individual, nor does it represent a warranty of
any housing counseling provided by the agency or a HUD certified
housing counselor working for an agency. Approval means only that the
agency has met the qualifications and conditions prescribed by HUD, and
a HUD certified housing counselor only means the housing counselor has
successfully passed an examination pursuant to these regulations and
works for a participating agency.
* * * * *
0
8. In Sec. 214.103, revise paragraph (g)(2) and add paragraph (n) to
read as follows:
Sec. 214.103 Approval criteria.
* * * * *
(g) * * *
(2) Staff. The agency must employ staff trained in housing
counseling. All staff providing housing counseling, including
homeownership counseling or rental housing counseling, must be HUD
certified housing counselors, and at least half the agency's counselors
must have at least 6 months of experience in the job they will perform
in the agency's housing counseling program.
* * * * *
(n) Certification of housing counselors. (1) In order for an agency
to participate in HUD's Housing Counseling Program, all individuals who
provide counseling, including homeownership and rental housing
counseling, must be HUD certified according to requirements in this
section.
(2) For an individual to become a HUD certified counselor, an
individual must pass a standardized written examination to demonstrate
competency in each of the following areas:
(i) Financial management;
(ii) Property maintenance;
(iii) Responsibilities of homeownership and tenancy;
(iv) Fair housing laws and requirements;
(v) Housing affordability; and
(vi) Avoidance of, and response to, rental or mortgage delinquency
and avoidance of eviction or mortgage default.
(3) HUD will certify an individual housing counselor who has met
the requirements of paragraph (n)(1) of this section upon verification
that the individual works for a participating agency.
(4) Participating agencies and housing counselors must be in
compliance with requirements of paragraph (n) of this section by 36
months after HUD commences the administration of the certification
examination by publication in the Federal Register.
0
9. In Sec. 214.300, add paragraphs (a)(7), (8) and (9) to read as
follows:
Sec. 214.300 Counseling services.
* * * * *
(a) * * *
(7) All participating agencies that provide homeownership
counseling, shall address the entire process of homeownership,
including, but not limited to, the decision to purchase a home, the
selection and purchase of a home, the home inspection process, issues
arising during or affecting the period of ownership of a home
(including, but not limited to, financing, refinancing, default, and
foreclosure, and other financial decisions), and the sale or other
disposition of a home.
(8) All participating agencies that provide rental housing
counseling shall address issues related to the rental of residential
property, which may include counseling regarding future homeownership
opportunities, the decision to rent, responsibilities of tenancy,
affordability of renting, and eviction prevention.
(9) As part of the homeownership counseling process, participating
agencies shall provide clients with such materials as HUD may require
regarding the availability and importance of obtaining an independent
home inspection.
* * * * *
0
10. In Sec. 214.311, revise the section heading and paragraph (a) and
add paragraphs (c) and (d) to read as follows:
Sec. 214.311 Housing counseling grant funds.
(a) HUD housing counseling grant funds. HUD approval or program
participation does not guarantee housing counseling grant funding.
Funding for the Housing Counseling Program depends on appropriations
from Congress, and are awarded
[[Page 90659]]
competitively under Federal and HUD regulations and policies governing
assistance programs, including the Department of Housing and Urban
Development Reform Act of 1989 (42 U.S.C. 3545 et seq.). If housing
counseling grant funds become available that are to be competitively
awarded, HUD will notify the public through a Notice of Funding
Availability (NOFA) in the Federal Register and by the Internet or
other electronic media.
* * * * *
(c) Limitation on distribution of funds. No housing counseling
funds made available under the Housing Counseling Program shall be
distributed to:
(1)(i) Any organization that has been convicted for a violation
under Federal law relating to an election for Federal office or any
organization that employs applicable individuals. For the purposes of
this section, applicable individual means an individual who is:
(A) Employed by the organization in a permanent or temporary
capacity;
(B) Contracted or retained by the organization; or
(C) Acting on behalf of, or with the express or apparent authority
of, the organization; and
(D) Has been convicted for a violation under Federal law relating
to an election for Federal office.
(ii) For the purposes of this paragraph (c)(1), a violation under
Federal law relating to an election for Federal office includes, but is
not limited to, a violation of one or more of the following statutory
provisions related to Federal election fraud, voter intimidation, and
voter suppression: 18 U.S.C. 241-242, 245(b)(1)(A), 592-611, and 42
U.S.C. 1973.
(2) A participating agency that provides housing counseling through
housing counselors who are not HUD certified housing counselors in
accordance with Sec. 214.103(n).
(d) Misuse of housing counseling grant funds. If any participating
agency that receives housing counseling grant funds under the Housing
Counseling Program is determined by HUD to have used those housing
counseling grant funds in a manner that constitutes a material
violation of applicable statutes and regulations, or any requirements
or conditions under which such funds were provided:
(1) HUD shall require that, within 12 months after the date of the
determination of such misuse, the agency shall reimburse HUD for such
misused amounts and return to HUD any such amounts that remain unused
or unobligated for use; and
(2) Such agency shall be ineligible, at any time after the date of
such determination of material misuse, to apply for or receive further
funds under the Housing Counseling Program.
(3) The remedies under paragraph (d) of this section are in
addition to any other remedies that may be available under law.
PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS
0
11. The authority citation for part 570 is revised to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and
5301-5320.
Sec. 570.201 [Amended]
0
12. In Sec. 570.201:
0
a. In paragraph (e) introductory text, after the first sentence, add
the sentence ``If housing counseling, as defined in 24 CFR 5.100, is
provided, it must be carried out in accordance with 24 CFR 5.111.'';
and
0
b. At the end of paragraph (k), add the sentence ``If housing
counseling, as defined in 24 CFR 5.100, is provided, it must be carried
out in accordance with 24 CFR 5.111.''
0
13. In Sec. 570.482, add paragraph (c)(4) to read as follows:
Sec. 570.482 Eligible activities.
* * * * *
(c) * * *
(4) Housing counseling, as defined in 24 CFR 5.100, that is funded
with or provided in connection with CDBG funds must be carried out in
accordance with 24 CFR 5.111.
* * * * *
0
14. Add Sec. 570.615 to read as follows:
Sec. 570.615 Housing counseling.
Housing counseling, as defined in 24 CFR 5.100, that is funded with
or provided in connection with CDBG funds must be carried out in
accordance with 24 CFR 5.111.
PART 574--HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS
0
15. The authority citation for part 574 is revised to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and
5301-5320.
0
16. In Sec. 574.300, revise paragraph (b)(1) to read as follows:
Sec. 574.300 Eligible activities.
* * * * *
(b) * * *
(1) Housing information services including, but not limited to,
counseling, information, and referral services to assist an eligible
person to locate, acquire, finance, and maintain housing. This may also
include fair housing guidance for eligible persons who may encounter
discrimination on the basis of race, color, religion, sex, age,
national origin, familial status, or handicap. Housing counseling, as
defined in Sec. 5.100, that is funded with or provided in connection
with HOPWA funds must be carried out in accordance with Sec. 5.111.
When grantees provide housing services to eligible persons (including
persons undergoing relocation) that are incidental to a larger set of
holistic case management services, these services do not meet the
definition of Housing counseling, as defined in Sec. 5.100, and
therefore are not required to be carried out in accordance with the
certification requirements of Sec. 5.111;
* * * * *
0
17. Add Sec. 574.600 to read as follows:
Sec. 574.660 Housing counseling.
Housing counseling, as defined in Sec. 5.100, that is funded with
or provided in connection with HOPWA funds must be carried out in
accordance with Sec. 5.111. When grantees provide housing services to
eligible persons (including persons undergoing relocation) that are
incidental to a larger set of holistic case management services, these
services do not meet the definition of housing counseling, as defined
in Sec. 5.100, and therefore are not required to be carried out in
accordance with the certification requirements of Sec. 5.111.
PART 576--EMERGENCY SOLUTIONS GRANTS PROGRAM
0
18. The authority citation for part 576 is revised to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 11371 et seq.,
42 U.S.C. 3535(d).
0
19. In Sec. 576.105, add paragraph (e) to read as follows:
Sec. 576.105 Housing relocation and stabilization services.
* * * * *
(e) Housing counseling. Housing counseling, as defined in Sec.
5.100, that is funded with or provided in connection with ESG funds
must be carried out in accordance with Sec. 5.111. When recipients or
subrecipients provide housing services to eligible persons that are
incidental to a larger set of holistic case management services, these
services do not meet the definition of housing counseling, as defined
in Sec. 5.100, and therefore are not required to be carried out in
accordance with the certification requirements of Sec. 5.111
[[Page 90660]]
Sec. 576.407 [Amended]
0
20. In Sec. 576.407, amend paragraph (a) by adding ``and the housing
counseling requirements at 24 CFR 5.111'' at the end of the first
sentence.
PART 578--CONTINUUM OF CARE PROGRAM
0
21. The authority citation for part 578 is revised to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 11381 et seq.,
42 U.S.C. 3535(d).
0
22. In Sec. 578.53, add paragraph (e)(8)(iii) to read as follows:
Sec. 578.53 Supportive services.
* * * * *
(e) * * *
(8) * * *
(iii) Housing counseling, as defined in Sec. 5.100, that is funded
with or provided in connection with grant funds must be carried out in
accordance with Sec. 5.111. When recipients or subrecipients provide
housing services to eligible persons that are incidental to a larger
set of holistic case management services, these services do not meet
the definition of Housing counseling, as defined in Sec. 5.100, and
therefore are not required to be carried out in accordance with the
certification requirements of Sec. 5.111
* * * * *
PART 1006--NATIVE HAWAIIAN HOUSING BLOCK GRANT PROGRAM
0
22. The authority citation for part 1006 is revised to read as follows:
Authority: 12 U.S.C. 1701x, 1701 x-1; 25 U.S.C. 4221 et seq.;
42 U.S.C. 3535(d).
0
23. In Sec. 1006.210, revise paragraph (a) to read as follows:
Sec. 1006.210 Housing services.
* * * * *
(a) Housing counseling, as defined in Sec. 5.100, in connection
with rental or homeownership assistance must be carried out in
accordance with 24 CFR 5.111;
* * * * *
0
24. In Sec. 1006.375, add paragraph (e) to read as follows:
Sec. 1006.375 Other Federal requirements.
* * * * *
(e) Housing counseling. Housing counseling, as defined in Sec.
5.100, that is funded with or provided in connection with NHHBG funds
must be carried out in accordance with 24 CFR 5.111.
Dated: December 7, 2016.
Edward L. Golding,
Principal Deputy Assistant, Secretary for Housing.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2016-29822 Filed 12-13-16; 8:45 am]
BILLING CODE 4210-67-P