Sponsors (3)
The bill expands access to counseling and can lower counseling costs for delinquent mortgage borrowers, but stricter performance oversight risks reducing local counseling capacity, penalizing counselors who serve high‑risk clients, and shifting resources toward compliance rather than direct assistance.
Homeowners with FHA, VA, USDA, or Section 184/184A loans who are 30+ days delinquent will be offered housing counseling, increasing their chance to avoid foreclosure.
Delinquent FHA borrowers can have counseling costs paid from the Mutual Mortgage Insurance Fund when statutory conditions are met, reducing out-of-pocket costs for struggling borrowers.
HUD-mandated performance reviews and on-site reviews can identify underperforming agencies and counselors, improving counseling quality and outcomes for borrowers who receive services.
Housing counseling agencies risk loss of assistance or non-renewal based on new performance reviews, which could shrink local counseling capacity and reduce access to help for distressed homeowners.
Individual counselors can face probation, retesting, or permanent suspension after two failed retests, potentially removing experienced counselors even when borrower defaults stem from factors outside the counselor's control.
Comparing counselor performance to default rates in 'comparable markets' may penalize counselors who serve higher-risk borrowers, creating incentives to avoid high-need clients and reducing equitable access to counseling.
Based on analysis of 2 sections of legislative text.
Creates HUD performance reviews tied to foreclosure rates, adds counselor certification penalties, requires counseling offers for 30+ day delinquent borrowers, and allows the FHA MMI Fund to pay counseling costs for eligible FHA delinquencies.
Official title: To amend the Housing and Urban Development Act of 1968 to provide reforms to housing counseling and financial literacy programs.
Introduced December 15, 2025 by David Scott · Last progress December 15, 2025
Amends HUD's housing counseling statute to measure counselor and program results by foreclosure/default outcomes, create on-site and performance review authority, and impose counselor certification consequences for poor performance. It lets HUD deny renewal of covered assistance based on those reviews and requires that delinquent borrowers holding certain federally backed mortgages be offered housing counseling, with the Mutual Mortgage Insurance Fund authorized to pay fair-market counseling costs for eligible FHA-insured loans. The changes add definitions of covered mortgage loans (FHA title II, section 184/184A, VA, and USDA), allow comparisons of counselor results with market defaults, set education/probation/retesting/possible suspension for counselors judged incompetent, and require at least 60 days' notice plus an informal conference before termination of assistance is finalized.