[Federal Register Volume 88, Number 205 (Wednesday, October 25, 2023)]
[Proposed Rules]
[Pages 73298-73300]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23332]



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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 214

[Docket No. FR-6388-P-01]
RIN 2502-AJ70


Modernizing the Delivery of Housing Counseling Services

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, Department of Housing and Urban Development (HUD).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update HUD's regulations that require 
participating agencies to provide in-person counseling to clients that 
prefer this format to reflect advances in technology, align with client 
engagement preferences, and preserve consumer protections. The proposed 
rule would amend HUD's regulations to allow housing counseling agencies 
to use alternative communication methods, including virtual meeting 
tools, in lieu of providing in-person services. Participating agencies 
that choose not to provide in-person services would be required to 
refer clients to local providers that provide such services, when 
requested.

DATES: Comment Due Date: December 26, 2023.

ADDRESSES: There are two methods for submitting public comments. All 
submissions must refer to the above docket number and title.
    1. Electronic Submission of Comments. Comments may be submitted 
electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make comments immediately available 
to the public. Comments submitted electronically through 
www.regulations.gov can be viewed by other commenters and interested 
members of the public. Commenters should follow the instructions 
provided on that website to submit comments electronically.
    2. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500.

    Note: To receive consideration as a public comment, comments 
must be submitted through one of the two methods specified above.

    Public Inspection of Public Comments. HUD will make all properly 
submitted comments and communications available for public inspection 
and copying during regular business hours at the above address. Due to 
security measures at the HUD Headquarters building, you must schedule 
an appointment in advance to review the public comments by calling the 
Regulations Division at 202-708-3055 (this is not a toll-free number). 
HUD welcomes and is prepared to receive calls from individuals who are 
deaf or hard of hearing, as well as individuals with speech or 
communication disabilities. To learn more about how to make an 
accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. Copies of all comments 
submitted are available for inspection and downloading at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: David Valdez, Senior Housing Program 
Specialist, Department of Housing and Urban Development, 1331 Lamar 
St., Suite 550, Houston, TX 77002, telephone 713-718-3178 (this is not 
a toll-free number). HUD welcomes and is prepared to receive calls from 
individuals who are deaf or hard of hearing, as well as individuals 
with speech or communication disabilities. To learn more about how to 
make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 106 of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x) (Section 106) authorizes HUD's Housing Counseling 
program. Section 106(a)(1)(iii) authorizes HUD to provide or contract 
with organizations to provide ``counseling and advice to tenants and 
homeowners with respect to property maintenance, financial management 
and such other matters as may be appropriate to assist them in 
improving their housing conditions and in meeting the responsibilities 
of homeownership.'' Section 106(a)(2) authorizes HUD to provide 
counseling directly or to enter into contracts with, or make grants to, 
and provide other types of assistance to eligible private or public 
organizations (including grassroots, faith-based, and other community-
based organizations) with special competence and knowledge in providing 
housing counseling to low- and moderate-income families.
    On September 28, 2007, HUD published a final rule titled, ``Housing 
Counseling Program,'' at 72 FR 55637, which established regulations for 
HUD's Housing Counseling program, including 24 CFR 214.103(l), which 
governs requirements for housing counseling facilities, and 24 CFR 
214.300, which governs basic requirements for counseling services 
including the setting and format for their provision. HUD's Housing 
Counseling program regulations have not been amended since they were 
established in the 2007 final rule.
    Section 214.300(a)(3) requires agencies that provide housing 
counseling services to provide in-person counseling services at one of 
the agency's facilities or an alternate location to clients that prefer 
that format. When this requirement was adopted, housing counseling and 
education were primarily conducted locally, and the conventional wisdom 
was that in-person service was the most effective service delivery 
method. In 2020, due to ongoing public health concerns around the 
spread of Coronavirus Disease 2019 (COVID-19), a Temporary Partial 
Waiver of 24 CFR 214.300(a)(3), In-Person Housing Counseling 
Requirement, was issued and remains in effect through December 31, 
2023. The waiver allows housing counseling agencies to utilize 
alternative methods to conduct housing counseling and education with 
clients in lieu of meeting in-person. Based on feedback received during 
meetings with stakeholders such as the Housing Counseling Federal 
Advisory Committee, HUD has determined that these alternative methods 
are more practical, cost-effective, and accessible, and have not led to 
adverse compliance issues or negative financial impacts. When the 
waiver expires, absent rulemaking to amend HUD's regulations, 
participating agencies will continue to be required to provide in-
person counseling services to clients.
    Today, fewer clients choose in-person counseling. Consumer 
preference has shifted toward alternative, virtual methods of service 
delivery as clients often view in-person delivery as inconvenient and 
more burdensome when considering costs like childcare and 
transportation necessary to attend.\1\

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Almost two-thirds of research participants in a recent study conducted 
by HUD chose online education and telephonic counseling over in-person 
delivery.\2\ Even when clients express a preference for in-person 
services, they initiate those services at a lower rate than do people 
who prefer and subsequently take up remote services.\3\ Increasing 
virtual methods of delivery can increase accessibility for those who 
have difficulty accessing in-person services due to linguistic, 
physical, or other logistical barriers.\4\ Moreover, participating 
agencies that maintain multiple facilities incur greater burdens and 
costs even as demand for in-person counseling continues to decline.
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    \1\ Long Term Impact Report: The HUD First Time Homebuyer 
Education and Counseling Demonstration, June 2021, p. 64, available 
at: https://www.huduser.gov/portal//portal/sites/default/files/pdf/Long-Term-Impact-Report-HUD-First-Time-Homebuyer-Education-Counseling-Demonstration.pdf.
    \2\ Id. at p. 16.
    \3\ Id. at p. 86, footnote 86.
    \4\ Id. at p. 66.
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    This proposed rule aims to modernize the current regulations to 
reflect advances in technology, to align with client engagement 
preferences, and to preserve consumer protections. The existing 
regulations also contain guardrails that will continue to mitigate the 
risk that some participating agencies may want to use virtual tools to 
expand their geographic scope but be unfamiliar with an area and its 
resources, thereby failing to provide quality counseling and services. 
Regulations will continue to require that participating agencies must 
have functioned for at least a year in the geographical area set forth 
in the work plan. Further, housing counselors must possess a working 
knowledge of state and local housing programs available in the 
community. These provisions ensure that participating agencies 
demonstrate knowledge and a connection to the community they serve, 
whether they choose to do so by providing virtual, in-person, or hybrid 
services.

II. This Proposed Rule

    Currently, 24 CFR 214.300(a)(3) requires, among other things, 
participating agencies to provide in-person counseling to clients that 
prefer this format. HUD's proposed rule would allow housing counseling 
agencies to use alternative communication methods, including virtual 
meeting tools, in lieu of providing in-person services. Participating 
agencies that choose not to provide in-person services will be required 
to refer clients to local providers that provide such services, when 
requested.
    HUD's existing regulations at Sec.  214.103(l) require 
participating agencies to maintain facilities (i.e., physical office 
space) that have a clearly identified office, with space available for 
the provision of housing counseling services, and provide privacy for 
in-person counseling. The proposed rule would provide that the 
participating agencies may maintain one facility and may not provide 
in-person housing counseling. This would help to reduce the costs of 
providing in-person housing counseling, but would not modify the 
existing requirements that participating agencies possess knowledge of 
the local housing market, establish working relationships with private 
and public community resources, and have functioned for at least a year 
in the geographical areas set forth in the participating agencies' work 
plans, all of which serve to demonstrate the agency maintains a 
sufficient community base.
    A paragraph-by-paragraph summarized explanation and description of 
the proposed changes to 24 CFR part 214 are outlined immediately below.

Proposed 24 CFR 214.103(l)

    HUD proposes to revise the language of paragraph (l), to modernize 
the requirements for maintaining a facility. HUD's proposed paragraph 
(l) would provide that a participating agency maintain one or more 
facilities. All facilities must have an identified, private space 
available for the provision of counseling services, whether those 
services are in-person or virtual.

Proposed 24 CFR 214.300(a)(3)

    HUD proposes to revise the language of Sec.  214.300(a)(3) to 
modernize the way housing counseling agencies provide housing 
counseling services. Rather than requiring that counseling services 
take place in-person, under this proposal, they could take place at a 
facility or at an alternate location or could be done via telephone, or 
via collaborative online software. Paragraph (3) would specify that all 
housing counseling agencies that do not provide in-person counseling 
services must refer clients to agencies that provide in-person 
counseling services upon a client's request.

Proposed 24 CFR 214.300(a)(4)

    HUD proposes to add a new Sec.  214.300(a)(4) that provides cross-
references emphasizing that all housing counseling agencies must 
continue to meet requirements for approval as a counseling agency 
regardless of the setting or format of housing counseling services, 
including having functioned for at least one year in the geographical 
area(s) the agency identified in its housing counseling work plan, 
having sufficient resources to implement that proposed work plan, and 
being able to demonstrate knowledge of local housing markets and 
community resources.

III. Findings and Certifications

Regulatory Review--Executive Orders 12866, 13563, and 14094

    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. 
Executive Order 13563 (Improving Regulations and Regulatory Review) 
directs executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned. Executive Order 13563 also directs that, where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, agencies are to identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public. Executive Order 14094 entitled ``Modernizing 
Regulatory Review'' (hereinafter referred to as the ``Modernizing 
E.O.'') amends section 3(f) of Executive Order 12866 (Regulatory 
Planning and Review), among other things.
    The proposed rule allows counseling agencies to provide services 
through virtual methods of service delivery and to refer clients who 
prefer in-person counseling to other agencies that offer that service. 
HUD is not changing other requirements, for example the requirement 
that participating agencies demonstrate knowledge and a connection to 
the community they serve, and comply with state and local laws in each 
geographic area in which the participating agency operates. This rule 
was not subject to OMB review. This rule is not a ``significant 
regulatory action'' as defined in Section 3(f) of Executive Order 
12866, and is not an economically significant regulatory action.

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. 
The changes described in this proposed rule would modernize the 
regulations governing HUD's Housing Counseling Program to

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allow housing counseling agencies to use alternative communication 
methods, including virtual meeting tools, in lieu of providing in-
person services. Participating agencies that do not provide in-person 
services would be required to refer clients to local providers that 
provide such services, when requested. The proposed rule would help 
reduce the costs of maintaining multiple physical locations, instead 
shifting emphasis to demonstrating knowledge of the local housing 
market and community resources and whether a housing counseling agency 
has established a sufficient community base to operate in the area 
covered by its work plan. These revisions impose no significant 
economic impact on a substantial number of small entities. Therefore, 
the undersigned certifies that this rule will not have a significant 
impact on a substantial number of small entities.
    Notwithstanding HUD's view that this rule will not have a 
significant effect on a substantial number of small entities, HUD 
specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in the preamble to this rule.

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).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either: (i) imposes substantial direct compliance costs on State and 
local governments and is not required by statute, or (ii) preempts 
State law, unless the agency meets the consultation and funding 
requirements of section 6 of the Executive order. This proposed rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on State and local governments or preempt State 
law within the meaning of the Executive order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (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 proposed rule will 
not impose any Federal mandates on any State, local, or Tribal 
Governments, or on the private sector, within the meaning of the UMRA.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520), an agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information, unless the 
collection displays a currently valid Office of Management and Budget 
(OMB) control number. The information collection requirements contained 
in this proposed rule have been approved by OMB under the Paperwork 
Reduction Act and assigned OMB control numbers 2502-0574 and 2502-0614.

List of Subjects in 24 CFR Part 214

    Administrative practice and procedure; Grant programs-housing and 
community development; Loan program-housing and community development; 
Organization and functions (government agencies); Reporting and 
recordkeeping requirements.

    For the reasons stated above, HUD proposes to amend 24 CFR part 214 
as follows:

PART 214--HOUSING COUNSELING PROGRAM

0
1. The authority citation for part 214 continues to read as follows:

    Authority:  12 U.S.C. 1701x, 1701x-1; 42 U.S.C. 3535(d).

0
2. Revise Sec.  214.103(l) to read as follows:


Sec.  214.103   Approval Criteria.

* * * * *
    (l) Facilities. All participating agencies must maintain at least 
one facility. All facilities must meet the following criteria:
    (1) Have a clearly identified space available for the provision of 
housing counseling services;
    (2) Provide privacy for counseling services and confidentiality of 
client records; and
    (3) Provide accessibility features or make alternative 
accommodations for persons with disabilities, in accordance with 
section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), 24 CFR 
parts 8 and 9, and the Americans with Disabilities Act (42 U.S.C. 12101 
et seq.).
* * * * *
0
3. In Sec.  214.300:
0
a. Revise paragraph (a)(3);
0
b. Redesignate paragraphs (a)(4) through (9) as paragraphs (5) through 
(10); and
0
c. Add new paragraph (a)(4).
    The additions and revisions to read as follows:


Sec.  214.300   Counseling Services.

    (a) * * *
    (3) Counseling may take place at the housing counseling agency 
facility or at an alternate location, and may be conducted by 
telephone, or via collaborative online software. Agencies must ensure 
that any telephonic or collaborative online software, or any form of 
counseling, is accessible for persons with disabilities, in accordance 
with section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), 24 
CFR parts 8 and 9, and the Americans with Disabilities Act (42 U.S.C. 
12101 et seq.) All agencies participating in HUD's Housing Counseling 
program must, upon a client's request, refer clients to participating 
agencies that provide in-person counseling services in accordance with 
24 CFR 214.303(e).
    (4) Regardless of setting or format, all participating agencies 
must continue to meet the requirements of 24 CFR 214.103(d), 
214.103(g), and 214.103(h).
* * * * *

Julia R. Gordon,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2023-23332 Filed 10-24-23; 8:45 am]
BILLING CODE 4210-67-P