Homeowners behind in their mortgage payments, one or more months, must
be provided with a list of HUD-approved housing counseling agencies in
their state by the bank, mortgagee or mortgage servicing organization.
This action is required by Section 169 of the Housing and Community
Development Act of 1987.
There are no penalties in the Act. However, the homeowner may request
the Court to stop the foreclosure proceedings until such list is provided
and sufficient time is allowed for counseling. If foreclosure has
occurred, and the list of HUD-approved housing counseling agencies was not
provided, the homeowner can request the Court for reimbursement for all
losses sustained on account of the foreclosure by the bank, mortgagee or
mortgage servicing organization.
The intent of the Act is to provide homeowners with the opportunity of
contacting HUD-approved housing counseling agencies, obtain counseling
advice and assistance and become current in their monthly mortgage
payments.
HUD-approved housing counseling agencies provide a screening interview
for the delinquent or defaulting homeowner to determine and identify the
problems and solutions. This is immediately followed by an intake of the
family background, information on the family’s earnings, income from all
sources, assets, debts (including credit card balances past due), and
monthly installment payments. The homeowner will provide information on
the delinquency or default, and on family housing and living costs.
The agency or homeowner will contact each creditor and arrange a
repayment plan, thereby reducing the monthly payments and providing more
funds for the monthly mortgage payment and towards reducing the delinquency
or default. Additionally, food banks will be tapped to reduce the family’s
food costs. The utility companies will be contacted by the agency for
credits or grants towards reducing unpaid utility bills.