What Is a HUD-Approved Housing Counselor?

A HUD-approved housing counselor is a counselor certified by the U.S. Department of Housing and Urban Development (HUD) who works for a nonprofit or government agency on HUD's approved list. If you are behind on your mortgage, a counselor can review your budget, explain the options your loan type offers, help you complete your servicer's application, and contact the servicer (the company that collects your mortgage payments) for you. HUD says foreclosure counseling at approved agencies is always free.

What does a housing counselor do if you are behind on payments?

Foreclosure prevention counseling, also called default or delinquency counseling, covers the steps between your first missed payment and a foreclosure sale. HUD says counselors can help you understand the law and your options, organize your finances, and represent you in negotiations with your lender if you need that help. In practice, a counselor will:

• Compare your income and expenses to see what payment you can afford.
• Explain which programs your loan qualifies for, such as an FHA partial claim (an interest-free loan secured by your home to cover missed payments) or a loan modification (a permanent change to the rate or term that may lower the payment, depending on the terms your servicer approves). You must repay the partial claim when you pay off the mortgage, sell or transfer the home, have someone take over the mortgage, or complete certain refinances, whichever happens first.
• Help you complete the servicer's application and gather the documents it asks for.
• Call or write to the servicer with you, follow up on missing paperwork, and review any offer before you sign.
• Explain the options for leaving the home, such as a short sale (selling for less than you owe, with the lender's approval), if keeping it is not affordable.

A counselor cannot force a servicer to approve a modification, and a counselor is not your lawyer. If you need to contest a foreclosure in court or file for bankruptcy, the counselor can refer you to legal aid or an attorney. The options a counselor will walk through are covered in the alternatives to foreclosure.

What makes a counselor "HUD-approved"?

HUD approves both the agency and the person counseling you:

1. The agency. HUD approves housing counseling agencies that are private or public nonprofits or units of state or local government. A for-profit company cannot be a HUD-approved agency.
2. The individual counselor. Since August 1, 2021, every person who provides housing counseling at a HUD-approved agency must be a HUD-certified housing counselor. Certification requires passing a standardized HUD exam that covers topics including money management, fair housing law, and preventing delinquency and default.

How much does it cost?

Nothing, if you are behind on your mortgage or facing foreclosure. HUD states that foreclosure, eviction, and homelessness counseling at approved agencies is always free, and mortgage delinquency and default help falls under foreclosure counseling.

Agencies may charge "reasonable and customary" fees for other services, such as homebuyer education classes. For those, an agency must post its fee schedule and tell you the fees before it starts, cannot charge for intake (the first conversation about your situation), and must serve anyone who cannot afford the fee for free. Agencies can also be paid by lenders for counseling, and they must disclose those arrangements to you. The one cost an agency may pass on is the direct cost of pulling your credit report, and only if that does not cause you hardship. If anyone asks you to pay for foreclosure counseling itself, call another agency on HUD's list.

How do you find one?

Use one of these official sources, which list only approved agencies:

• HUD's housing counselor search, linked from hud.gov, or HUD's toll-free line at (800) 569-4287 (TTY (800) 877-8339).
• The Consumer Financial Protection Bureau (CFPB) "Find a housing counselor" tool at consumerfinance.gov/find-a-housing-counselor, which searches HUD's list by ZIP code.
• Your servicer's notice. Federal rules require your servicer to send a written notice by the 45th day of a delinquency, and it must include the website for the CFPB or HUD list of counselors and HUD's toll-free number.

Not every agency offers foreclosure counseling, so check each listing's services. Call early. HUD's sample timeline shows a demand letter after the third missed payment and referral to the lender's attorneys after the fourth, with dates that vary by state and mortgage company, and HUD warns that the further behind you fall, the harder it is to bring the loan current. The order of notices is laid out in the steps in a pre-foreclosure procedure.

What should you bring to the first meeting?

Bring what your servicer will ask for, so the counselor can help you submit a complete application. The standard Fannie Mae and Freddie Mac mortgage assistance application (Form 710) asks for:

• Your most recent pay stub showing year-to-date earnings, or your two most recent bank statements showing income deposits.
• For self-employment income, one of these: two recent bank statements showing business income, a signed profit and loss statement, or your most recent signed business or individual tax return.
• Proof of other income, such as Social Security, pension, or rental income, usually through two recent bank statements. Alimony or child support needs proof only if you want it counted.
• A written explanation of the hardship if it does not fit the form's listed categories, such as job loss or higher housing costs.

Also bring your most recent mortgage statement, every letter from your servicer (especially any notice with a deadline or a sale date), and a list of your monthly expenses and other debts. Servicers for FHA, VA, and USDA loans use their own forms, but they ask for similar proof of income and hardship.

How do you tell a real counselor from a foreclosure rescue scam?

Companies that sell foreclosure help are barred by the federal Mortgage Assistance Relief Services rule (Regulation O, 12 CFR 1015.5) from collecting any fee until you have signed a written agreement with your lender or servicer that includes the relief they obtained. A licensed attorney may take payment in advance only under conditions the rule sets. The CFPB lists these warning signs of a scam:

To check a company, search for its name on HUD's or the CFPB's counselor list; if it is not listed, it is not a HUD-approved agency. Report a suspected scam to the CFPB at consumerfinance.gov/complaint or (855) 411-2372.

Where else can you get help if the servicer will not respond?

If a counselor cannot get a response, escalate by loan type. For an FHA loan, contact the FHA Resource Center at (800) 225-5342. For a VA loan, call VA at 877-827-3702, option 6. For any loan, you can file a complaint with the CFPB, which handles mortgage servicer complaints. If you decide to leave the home instead, ways to get out of a mortgage compares the exits. For the foreclosure process itself, see what foreclosure is and how it works.