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HUD Home Ownership Grants

The U.S. Department of Housing and Urban Development (HUD) has announced it will provide $42 million in “housing counseling grants” to 468 national, regional and local organizations. The money will be used to help families become new homeowners as well as provide assistance to renters and the homeless in finding transitional housing as they move toward a permanent place to live. Some of the funds will also be used to offer financial literacy training to individuals and families.

The grant recipients will help new home buyers and existing homeowners to evaluate their readiness for a home purchase so they can understand their financing and down payment options. The agencies will also help fight predatory lending practices by helping borrowers review their loan documentation to avoid potential mortgage scams, bad interest rates, inflated appraisals and other situations that can result in the loss of equity, increased debt, default, and even foreclosure.

The Secretary of the U.S. Department of Housing and Urban Development, Shaun Donovan, said the agency fought hard to persuade Congress to restore funding for housing counseling in HUD’s budget and that “The HUD-approved counseling agencies this funding supports are crucial in helping struggling families on a one-to-one basis to manage their money, navigate the home buying process, and secure their financial futures.”

Over $36 million in grant funds is earmarked to support the counseling services provided by 27 national and regional organizations, 6 multi-state organizations, 16 State Housing Finance Agencies and 419 local housing counseling agencies. Additional counseling agencies will receive $4 million to help assist senior citizens seeking reverse mortgages or other home equity conversion mortgages that will allow elderly homeowners to convert the equity in their homes into income that can be used to pay for home improvements, medical costs, and other living expenses.

As soon as the ambitious new HUD grant plan was unveiled, critics pointed out that the way HUD money has been handed out to non-profit organizations in the past has proven ineffective because most of the money was used up simply to keep the various agencies in the black, instead of being used to help struggling homeowners. Alarmed by reports that some states and agencies might divert the mortgage settlement assistance money, HUD Secretary Shaun Donovan said he would be calling on state governors and attorneys general to do “the right thing” with the money, although he admitted that he had no direct control over what states do with the money after they receive it.

The various housing counseling agencies claim additional funding is badly needed because last year Congress eliminated about 500 different agencies' main source of federal funding along with an $88 million grant program administered by HUD. Even though Congress later restored $45 million to the program for 2012, Secretary Donovan said the allocation was not adequate and that the agency had requested $55 million going into 2013.