The Role of the Housing Counselor

A housing counselor is someone who can help you through the process of working to save your home from foreclosure. While counselors will do all that they can to assist you, the process is a two-way street with the homeowner as a critical partner in the process. Below are some of the services that a housing counselor can offer.

The housing counselor will help determine the homeowner’s objectives and needs

The housing counselor will provide assistance once they understand what the client is trying to accomplish. That will require very specific information from the homeowner. The more information provided to the housing counselor, the easier it will be to assess the homeowner’s expectations and situation. Completing a personal profile intake form and a household budget form before you contact a housing counselor will save time in the process.

The housing counselor will help determine any time constraints

The housing counselor will need to identify any deadlines the homeowner faces, especially the foreclosure sale date. The homeowner needs to call a housing counselor immediately if mail comes regarding foreclosure. If the homeowner is not aware of a sale date the housing counselor can contact the lender.

The housing counselor will assist the homeowner in establishing reasons for default & help prepare a hardship letter

The homeowner will be partnering with the housing counselor to draft a hardship letter. The letter should be in the homeowner’s words. The hardship letter will include the borrower's reasons for falling behind on their mortgage payments and how the borrower plans to overcome those difficulties and what accommodations the borrower may need from the lender in order to become current on the loan.

The housing counselor will assist in preparing a spending plan

The homeowner should put a spending plan together themselves and take it to their housing counselor who will go over it line by line. Once it appears all debts have been identified, the housing counselor will use any surplus to start getting the mortgage payment up-to-date; however, if it appears there is a deficit, the homeowner will decide what can be removed from the spending plan, i.e., cable television. The homeowner must take ownership of the spending plan because they are the ones who have to follow the plan. Completing a budget worksheet will help the homeowner in completing a spending plan.

The housing counselor will help consider ways to increase homeowner’s income or available cash

The homeowner needs to work with the housing counselor to find other sources of money. Perhaps a family member in the house can bring in additional money with a part time job. Maybe family members can assist; or, perhaps the church has a fund that assists with family hardships. Perhaps there are assets that could be sold, i.e., jewelry or a second vehicle.

The housing counselor will assist the homeowner in reducing other debt

Other mortgages or liens associated with the house must be taken into consideration when it comes to foreclosure intervention. The housing counselor, along with the homeowner, will try to determine if: there are any property taxes unpaid; federal or state taxes due; homeowners insurance is paid; other liens on the home exist; utilities past due or cut-off; and, home repair needs.

• There are certain unpaid utilities that could make the house uninhabitable for all family members, water is one of them. The housing counselor will try to get any past due utilities on the smallest payment schedule possible.
  
  
• There are some needed home repairs which may make the house uninhabitable. It is in the best interest of the homeowner to make the housing counselor aware of these situations.
  
  
• The housing counselor will go over all debt and make suggestions. One such suggestion may be not to pay any credit card debt. While it will have a negative impact on the homeowner’s credit history, the credit more than likely has already been impacted by the late mortgage payments. Rather than paying the credit cards, that money could be used to bring the mortgage current. Once the critical needs are met, the housing counselor will revise the spending plan with the assistance of the homeowner.
  
  
• Student loans must be kept current since they are federal debt and any tax refund can be seized. The housing counselor may suggest to the homeowner to try to get a deferment of payment if possible.

The homeowner must adhere to the spending plan if their goal is to keep their home.

The housing counselor will ask the homeowner to set aside funds to prevent foreclosure

Once a realistic spending plan has been developed, the housing counselor will ask the homeowner to save the funds that have been set aside to pay the arrearages on the mortgage loan.

The housing counselor will help the homeowner decide if they want to try to keep their house. If the homeowner decides it isn't a realistic goal, then the money set aside can be used to make other housing arrangements.

The housing counselor will get exact totals on current payments, arrears, & loan balance

The housing counselor and homeowner will need this information in order to decide the best foreclosure avoidance plan. The information can be obtained from the lender or servicer. The servicer is the individual who works on behalf of the lender to collect and put payments in the homeowner’s account. In order for the housing counselor to get this information, the homeowner will be asked to sign an Authorization to Release Loan Information form.

The housing counselor will work with the homeowner to make realistic choices

Once the spending plan is complete and the past due amount of the mortgage has been determined, the housing counselor will again review if the homeowner’s goals are realistic. The housing counselor will review all options available to the homeowner. The homeowner should ask questions until they fully understand the decision they must make as well as the options available to them.

The housing counselor will start paperwork if the homeowner chooses to try to save the home from foreclosure

The housing counselor will provide the lender or servicer with the income and expense information they require. Income needs to be verified and the housing counselor will let the homeowner know what method the lender or servicer wants to use, income tax returns and/or most recent pay stubs. Expenses may need to be verified as well so the homeowner may be required to provide copies of bills.

The housing counselor will work with the homeowner to request a delay of foreclosure sale date

The housing counselor will be an advocate for the homeowner in getting a delay on the foreclosure sale date. The housing counselor will ensure that the homeowner receives it in writing and will help keep an eye on the sale process.

The housing counselor will assist the homeowner in determining appropriate options

Depending on the homeowner’s goals and resources, the housing counselor will help the homeowner make a final determination as to which workout plan should be submitted. The housing counselor will still go over options that do not require the lender’s consent. The homeowner may decide to file bankruptcy to protect their home. If the homeowner feels there has been an error in the past due amount, they may decide to go to court. Also, the homeowner may decide to stay in the house until they receive an eviction notice.

The housing counselor will keep the homeowner updated as things progress. If the workout option that was submitted to the lender or servicer is rejected, the homeowner will be updated and other options explored with the housing counselor.

The housing counselor and homeowner are partners

The housing counselor and homeowner work together for a satisfactory resolution. Each must do their part in order to make the process work.

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