HUD housing counselors face new performance reviews and decertification rules

What does this do?

HR 6726 updates federal rules for HUD-funded housing counseling programs by adding regular performance reviews for counselors and agencies, including the ability to compare a counselor's clients against similar local borrowers for default rates. Counselors who repeatedly underperform could face extra training, retesting, or permanent decertification, while failing agencies must receive at least 60 days' notice and the right to an informal meeting before losing HUD funding. The bill also requires lenders to offer foreclosure prevention counseling to borrowers who are 30 or more days late on FHA, VA, USDA, or Native American guaranteed loans.

Who does it affect?

Homeowners with government-backed mortgages who are at risk of foreclosure, first-time homebuyers using HUD-approved counseling, and the nonprofit agencies and individual counselors who provide those services are directly affected. The bill also changes how HUD distributes funding to reach both urban and rural areas rather than prioritizing high-foreclosure areas as current rules require.

Why does it matter?

Counselors and agencies that do not meet performance standards could lose their certification or federal funding, creating new accountability pressure across the HUD counseling network. Borrowers on government-backed loans who fall behind will have a formal right to access foreclosure prevention counseling that did not previously exist under federal law.

What does it cost, and who pays?

• FHA counseling cost covered by gov't fund
• Borrowers pay nothing out of pocket
• Non-FHA loan counseling cost not stated