PART 214—HOUSING COUNSELING PROGRAM Authority: 12 U.S.C. 1701x, 1701x-1; 42 U.S.C. 3535(d). Source: 72 FR 55648, Sept. 28, 2007, unless otherwise noted. Subpart A—General Program Requirements § 214.1 Purpose. This part implements the Housing Counseling Program authorized by section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x). Section 106 authorizes HUD to make grants to, or contract with, public or private organizations to provide a broad range of housing counseling services to homeowners and tenants to assist them in improving their housing conditions and in meeting the responsibilities of tenancy or homeownership. Section 106 also directs HUD to provide housing counseling services only through agencies or individuals that have been certified by HUD as competent to provide such services. The regulations contained in this part prescribe the procedures and requirements by which the Housing Counseling Program will be administered, including the process by which agencies are approved and individuals will be certified to provide the homeownership and rental counseling, as defined by section 106. These regulations apply to all agencies participating in HUD's Housing Counseling Program, and to all organizations or entities that deliver housing counseling, including homeownership counseling or rental housing counseling, required under or provided in connection with HUD programs. [81 FR 90657, Dec. 14, 2016] § 214.3 Definitions. The following definitions apply throughout this part: Action plan. Affiliate. (1) Duly organized and existing as a tax-exempt nonprofit organization; (2) In good standing under the laws of the state of the organization; and (3) Authorized to do business in the states where it proposes to provide housing counseling services. Branch or branch office. Clients. Counseling. Education. (1) Renter rights; (2) The homebuying process; (3) How to maintain a home; (4) Budgeting; (5) Fair housing; (6) Identifying and reporting predatory lending practices; (7) Rights for persons with disabilities; and (8) The importance of good credit. Homeownership counseling. Housing counseling. Housing counseling grant funds. Housing counseling work plan. Housing goal. HUD-approved housing counseling agency. HUD certified housing counselor. HUD-certified Tribal housing counselor. Intermediary. (1) National intermediary. (i) Housing counseling services through its branches or affiliates or both; and (ii) Administrative and supportive services to its network of affiliates or branches, including, but not limited to, pass-through funding, training, and technical assistance. (2) Regional intermediary. (i) Housing counseling services through its branches or affiliates or both; and (ii) Administrative and supportive services to its network of affiliates, or branches, including, but not limited to, pass-through funding, training, and technical assistance. Local housing counseling agency (LHCA). Multi-state organization (MSO). Nonprofit organization. Participating agency. Rental housing counseling. Reverse mortgage. State. State housing finance agency (SHFA). Subgrantee. Tribally designated housing entity. Unit of general local government. [72 FR 55648, Sept. 28, 2007, as amended at 81 FR 90658, Dec. 14, 2016; 89 FR 49807, June 12, 2024] Subpart B—Approval and Disapproval of Housing Counseling Agencies § 214.100 General. An organization may be approved by HUD as a HUD-approved housing counseling agency upon meeting the requirements of § 214.103 and upon completing the application procedures set forth in this subpart B. (a) Approval. (b) Effective date. [72 FR 55648, Sept. 28, 2007, as amended at 81 FR 90658, Dec. 14, 2016] § 214.103 Approval criteria. The following criteria for approval apply to all agencies, MSOs, and intermediaries, including all local housing counseling agencies, branches, and affiliates that are included in one application: (a) Nonprofit and tax-exempt status. (b) Experience. (c) Ineligible participants. (1) Suspended, debarred, or otherwise restricted under the Department's, or any other federal regulations; (2) Indicted for, or convicted of, a criminal offense that reflects upon the responsibility, integrity, or ability of the agency to participate in housing counseling activities. These offenses include criminal offenses that can be prosecuted at a local, state, or federal level; (3) Subject to unresolved findings as a result of HUD or other government audit or investigations. (d) Community base. (e) Recordkeeping and reporting. (f) Client management system. (g) Housing counseling resources. (1) Funding. (2) Staff. (3) Language skills. (h) Knowledge of HUD programs and local housing market. (i) Contracts or agreements to provide eligible housing counseling services. (1) In geographic areas where a need for housing counseling services is demonstrated and no HUD-approved housing counseling agency or its branches, affiliates, or subgrantees exists. Under this exception, the contract must delineate the respective Housing Counseling program responsibilities of the contracting parties, the agency providing services (contractor) must meet the HUD approval eligibility standards, and the contracting agency must receive prior written approval from HUD. (2) Intermediaries and SHFAs may enter into agreements with affiliates to provide housing counseling services. The agreements with affiliates may be in the form of an exchange of letters that delineate the respective Housing Counseling program responsibilities of the parties. Agreements must be sufficiently detailed to establish accountability and allow for adequate monitoring in accordance with 2 CFR part 200. (3) With prior approval from HUD, and at HUD's discretion, intermediary organizations may operate a Housing Counseling program with a network of affiliated counselors, rather than affiliated counseling agencies, if the structure is designed to meet a special housing counseling need identified by HUD. (j) Community resources. (k) State and local requirements. (l) Facilities. (1) Have a clearly identified space available for the provision of housing counseling services; (2) Provide privacy for counseling services and confidentiality of client records; and (3) Provide accessibility features or make alternative accommodations for persons with disabilities, in accordance with section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), 24 CFR parts 8 and 9, and the Americans with Disabilities Act (42 U.S.C. 12101 et seq. (m) Housing counseling work plan. (2) The plan must be periodically reviewed and, when changed or amended, the agency must notify and provide a copy to HUD. (3) The plan must meet the basic requirements described in § 214.300. (4) An agency's housing counseling work plan must also address, if appropriate, alternative settings and formats for the provision of housing counseling services. (n) Certification of housing counselors. (2) For an individual to become a HUD certified counselor, an individual must pass a standardized written examination to demonstrate competency in each of the following areas: (i) Financial management; (ii) Property maintenance; (iii) Responsibilities of homeownership and tenancy; (iv) Fair housing laws and requirements; (v) Housing affordability; and (vi) Avoidance of, and response to, rental or mortgage delinquency and avoidance of eviction or mortgage default. (3) HUD will certify an individual housing counselor who has met the requirements of paragraph (n)(1) of this section upon verification that the individual works for a participating agency. (4) Participating agencies and housing counselors must be in compliance with requirements of paragraph (n) of this section as of August 1, 2021. [72 FR 55648, Sept. 28, 2007, as amended at 80 FR 75936, Dec. 7, 2015; 81 FR 90658, Dec. 14, 2016; 85 FR 47303, Aug. 5, 2020; 89 FR 75501, Sept. 16, 2024] § 214.105 Preliminary application process. (a) Submission. (b) Notwithstanding paragraph (a), SHFAs are not required to submit an application for HUD approval. However, to participate in HUD's Housing Counseling program, SHFAs must either submit a request and provide HUD with a list of affiliates, if applicable, and assure that they meet all program requirements, or submit a request through such other application procedure as HUD may periodically announce in the Federal Register § 214.107 Approval by HUD. (a) Notice of approval. (b) Certificate of Approval. (c) Appearance on list of HUD-approved and participating housing counseling agencies. § 214.109 Disapproval by HUD. If an application package does not meet all requirements in § 214.103, HUD will provide the agency with the reasons for the denial in writing. Within 30 calendar days of the written notice of denial, the agency may submit a revised application, or appeal HUD's decision in writing to HUD, as provided in § 214.205. If an agency decides to submit a revised application, the agency may consult HUD, to determine the specific actions needed to resolve the deficiencies. Subpart C—Inactive Status, Termination, and Appeals § 214.200 Inactive status. (a) HUD may change a participating agency's status to inactive, in lieu of terminations of HUD-approved status or removals from the list of HUD-approved agencies, under certain circumstances that may temporarily impair an agency from complying with its housing counseling plan. An agency's status may be changed to inactive on a case-by-case basis for a period not to exceed 6 months, unless an extension is provided by HUD under paragraph (d) of this section. HUD may change an agency's status through either a request submitted to HUD or as a result of information obtained by the Department. Some of the conditions under which inactive status may be considered include, but are not limited to: (1) Loss of counselor(s); (2) Damage to facilities by natural disasters that renders the agency unable to function properly; (3) Loss of funds; (4) Relocation; (5) Other circumstances caused by reasons beyond the agency's control; or (6) Results of performance review. (b) Agencies that seek temporary inactive status must submit a request to HUD in writing. Documentation or evidence of the condition(s) that rendered the agency incapable of carrying out its housing counseling plan must be submitted along with the request, if possible. Upon receipt of the request, HUD will review and notify the agency of approval or rejection, in writing. If approved, the agency's name and contact information will be temporarily removed from the HUD-approved Web list of agencies and the telephone referral system. (c) The agency must notify HUD in writing and provide supporting documentation or evidence when it is ready to resume operation, or no later than the end of the inactive period. After review and acceptance by HUD, the agency's contact information may be restored to the Web list of HUD-approved and participating agencies and the telephone referral system. (d) At HUD's discretion, if the condition(s) still exists, an extension of the inactive period may be considered or the agency may be terminated or removed from the Housing Counseling program. HUD will notify the agency in writing of its decision. § 214.201 Termination of HUD-approved status and grant agreements. (a) Cause for termination by HUD. (1) Noncompliance with program requirements; (2) Failure to implement in whole or in part the agency's approved housing counseling work plan or failure to notify HUD of changes in the agency's housing counseling work plan; (3) Lack of the capacity to deliver the housing counseling activities described in its approved housing counseling work plan; (4) Failure to achieve outcomes described in the work plan; (5) Misuse of grant funds; or (6) HUD determines that there is good cause. (b) Agency withdrawal. (c) Post-termination, post-withdrawal requirements. § 214.203 Re-approval or removal as a result of a performance review. HUD may conduct a periodic performance review for all agencies participating in the Housing Counseling program. The performance review and the terms of re-approval or removal of a participating agency are described in § 214.307 and § 214.309. At the end of the approval period, and upon completion of a successful performance review, if conducted, HUD will reapprove agencies. § 214.205 Appeals. An agency making an application for approval, or an approved agency seeking reapproval, shall have the right to appeal any adverse decisions rendered by HUD under this part: (a) Appeal must be in writing. (b) Timeliness. (c) Other action. Subpart D—Program Administration § 214.300 Counseling services. (a) Basic requirements. (2) Except for reverse mortgage counseling, housing counselors and clients must establish an action plan for each counseling client. (3) Counseling may take place at the housing counseling agency facility or at an alternate location, and may be conducted by telephone, or via collaborative online software. Agencies must ensure that any telephonic or collaborative online software, or any form of counseling, is accessible for persons with disabilities, in accordance with section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), 24 CFR parts 8 and 9, and the Americans with Disabilities Act (42 U.S.C. 12101 et seq. (4) Regardless of setting or format, all participating agencies must continue to meet the requirements of § 214.103(d), 214.103(g), and 214.103(h). (5) Regardless of setting or format, counseling activities must be limited to the geographic area specified in the agency's approved housing counseling work plan. (6) With prior approval from HUD, a network of affiliated counselors or a HUD roster of counselors, designed to meet a special housing counseling need, may be permitted to provide specified types of counseling nationally. (7) All participating agencies that offer group educational sessions must also offer individual counseling on the same topics covered in the group educational sessions. (8) All participating agencies that provide homeownership counseling, shall address the entire process of homeownership, including, but not limited to, the decision to purchase a home, the selection and purchase of a home, the home inspection process, issues arising during or affecting the period of ownership of a home (including, but not limited to, financing, refinancing, default, and foreclosure, and other financial decisions), and the sale or other disposition of a home. (9) All participating agencies that provide rental housing counseling shall address issues related to the rental of residential property, which may include counseling regarding future homeownership opportunities, the decision to rent, responsibilities of tenancy, affordability of renting, and eviction prevention. (10) As part of the homeownership counseling process, participating agencies shall provide clients with such materials as HUD may require regarding the availability and importance of obtaining an independent home inspection. (b) Counseling services. (1) Housing counseling, on at least one of the topics described in paragraph (d) of this section, that enables a client to make informed and reasonable decisions to achieve his or her housing goal. (2) Referrals to local, state, and federal resources. (c) Follow-up. (d) Agency's housing counseling work plan. (2) Participating agencies may also conduct marketing and outreach, including, but not limited to, providing general information about housing opportunities, conducting information campaigns, and raising awareness about critical housing topics such as predatory lending and fair housing topics. (e) Approved housing counseling, education, and outreach topics. (1) Prepurchase/homebuying, including, but not limited to: Advice regarding readiness and preparation, Federal Housing Administration-insured financing, housing selection and mobility, search assistance, fair housing and predatory lending, budgeting and credit, loan product comparison, purchase procedures, and closing costs; (2) Resolving or preventing mortgage delinquency, including, but not limited to: Default and foreclosure, loss mitigation, budgeting, and credit; (3) Home maintenance and financial management for homeowners, including, but not limited to: Escrow funds, budgeting, refinancing, home equity, home improvement, utility costs, energy efficiency, rights and responsibilities of home owners, and reverse mortgages; (4) Rental topics, including, but not limited to: HUD rental and rent subsidy programs; other federal, state or local assistance; fair housing; housing search assistance; landlord tenant laws; lease terms; rent delinquency; and (5) Homeless assistance, including, but not limited to: Information regarding emergency shelter, other emergency services, and transitional housing. [72 FR 55648, Sept. 28, 2007, as amended at 81 FR 90658, Dec. 14, 2016; 89 FR 75502, Sept. 16, 2024] § 214.303 Performance criteria. To maintain HUD-approved status, a participating agency must meet the following requirements: (a) Approval status. (b) Workload. (c) Reporting. (d) Agency's housing counseling work plan. (e) Client referrals from HUD and other participating agencies. (f) Conflicts of interest. (2) A director, employee, officer, contractor, or agent of a participating agency shall not refer clients to mortgage lenders, brokers, builders, or real estate sales agents or brokers in which the officer, employee, director, his or her spouse, child, or general partner has a financial interest, neither may they acquire the client's property from the trustee in bankruptcy or accept a fee or any other consideration for referring a client to mortgage lenders, brokers, builders, or real estate sales agents or brokers. (3) A director, employee, officer, contractor, or agent of a participating agency or any member of his or her immediate family shall avoid any action that might result in, or create the appearance of, administering the housing counseling operation for personal or private gain; providing preferential treatment to any organization or person; or undertaking any action that might compromise the agency's ability to ensure compliance with the requirements of this part and to serve the best interests of its clients. (4) HUD may investigate agency practices and may take action to inactivate or terminate the agency's approval or participation in the Housing Counseling program. (5) Participating agencies must notify HUD of conflicts of interest not later than 15 calendar days after the conflict occurred and report to HUD on the corrective action taken to cure the immediate, and avoid future, conflicts. (g) Disclosure requirements. (h) Staff and supervision. (i) Funding. § 214.305 Agency profile changes. Participating agencies must notify HUD within 15 days when any of the following occurs: (a) The agency loses or changes its tax-exempt, nonprofit status. (b) The agency no longer complies with local and state requirements. (c) Changes occur in any of the items below: (1) Address(es) of the agency's main office and the address(es) of its branches and affiliates; (2) Staff personnel responsible for the Housing Counseling program, such as the housing counselors and management staff; (3) Telephone numbers of the main office, affiliates, and branches; or (4) Any other aspect of the agency's purpose or functions that may impair its ability to comply with these regulations or the applicable grant agreement (e.g., lack of qualified housing counselors). § 214.307 Performance review. (a) HUD may conduct periodic on-site or desk performance reviews of all participating agencies. (b) The performance review will consist of a review of the participating agency's compliance with all program requirements, including applicable civil rights requirements, and the agency's level of success in delivering counseling services. § 214.309 Reapproval and disapproval based on performance review. Based on the performance review, HUD may determine whether to renew the approval unconditionally or conditionally, temporarily change status to inactive, or terminate approval or participation of the agency. (a) Unconditional Reapproval. (b) Conditional Reapproval. (c) Inactive status. (d) Follow-up Review. (e) Termination of HUD Approval. (f) Appeal. § 214.311 Housing counseling grant funds. (a) HUD housing counseling grant funds. et seq. Federal Register (b) Local funding sources. (c) Limitation on distribution of funds. (1)(i) Any organization that has been convicted for a violation under Federal law relating to an election for Federal office or any organization that employs applicable individuals. For the purposes of this section, applicable individual means an individual who is: (A) Employed by the organization in a permanent or temporary capacity; (B) Contracted or retained by the organization; or (C) Acting on behalf of, or with the express or apparent authority of, the organization; and (D) Has been convicted for a violation under Federal law relating to an election for Federal office. (ii) For the purposes of this paragraph (c)(1), a violation under Federal law relating to an election for Federal office includes, but is not limited to, a violation of one or more of the following statutory provisions related to Federal election fraud, voter intimidation, and voter suppression: 18 U.S.C. 241-242, 245(b)(1)(A), 592-611, and 42 U.S.C. 1973. (2) A participating agency that provides housing counseling through housing counselors who are not HUD certified housing counselors in accordance with § 214.103(n). (d) Misuse of housing counseling grant funds. (1) HUD shall require that, within 12 months after the date of the determination of such misuse, the agency shall reimburse HUD for such misused amounts and return to HUD any such amounts that remain unused or unobligated for use; and (2) Such agency shall be ineligible, at any time after the date of such determination of material misuse, to apply for or receive further funds under the Housing Counseling Program. (3) The remedies under paragraph (d) of this section are in addition to any other remedies that may be available under law. [72 FR 55648, Sept. 28, 2007, as amended at 81 FR 90658, Dec. 14, 2016] § 214.313 Housing counseling fees. (a) Participating agencies may charge reasonable and customary fees for housing education and counseling services, as long as the cost does not create a financial hardship for the client. An agency's fee schedule must be posted in a prominent place that is easily viewed by clients, and be available to HUD for review. (b) Agencies must inform clients of the fee structure in advance of providing services. Clients cannot be charged for client intake. (c) If any agency chooses to charge fees, the agency must conform to the following guidelines: (1) Provide counseling without charge to persons who cannot afford the fees; (2) Fees must be commensurate with the level of services provided; (3) Agencies may not impose fees upon clients for the same portion of or for an entire service that is already funded with HUD grant funds. (d) The agency may also be reimbursed from clients for the direct cost of obtaining copies of clients' credit reports from credit reporting bureaus if this does not cause a hardship for the client. In cases where the participating agency receives a discount for the cost of credit reports, this discount must be passed on to the client. (e) Lenders may pay agencies for counseling services, through a lump sum or on a case-by-case basis, provided the level of payment does not exceed a level that is commensurate with the services provided, and is reasonable and customary for the area, and does not violate requirements under the Real Estate Settlement Procedures Act (12 U.S.C. 2601 et seq. § 214.315 Recordkeeping. (a) Recordkeeping system. (b) File retention requirements. (c) Grant activities. (d) Race, ethnicity, and income data. (e) Client file. (f) Group education file. (g) Confidentiality. et seq. (h) Termination of services. (1) The client meets his or her housing need or resolves the housing problem; (2) The agency determines that further housing counseling will not meet the client's housing need or resolve the client's housing problem; (3) The agency attempts to, but is unable to, locate the client; (4) The client does not follow the agreed-upon action plan; (5) The client otherwise terminates housing counseling; or (6) The client fails to appear for housing counseling appointments. [72 FR 55648, Sept. 28, 2007, as amended at 80 FR 75936, Dec. 7, 2015] § 214.317 Reporting. All participating agencies shall submit to HUD activity reports, which may be required up to quarterly. The reports must be submitted in the format, by the deadline, and in the manner prescribed by HUD. Participating agencies that are also recipients of HUD grants or subgrants may be required to submit additional reports, as described in their grant agreements and prescribed by HUD. Subpart E—Other Federal Requirements § 214.500 Audit. Housing counseling grant recipients and subrecipients shall be subject to the audit requirements contained in 2 CFR part 200, subpart F. HUD must be provided a copy of the audit report within 30 days of completion. [72 FR 55648, Sept. 28, 2007, as amended at 80 FR 75936, Dec. 7, 2015] § 214.503 Other requirements. In addition to the requirements of this part, the Housing Counseling program is subject to applicable federal requirements in 24 CFR 5.105. Subpart F—Certification of Tribal Housing Counselors Source: 89 FR 49807, June 12, 2024, unless otherwise noted. § 214.600 Tribal housing counselor certification. (a) This subpart applies only to housing counseling required under or provided in connection with the Indian Housing Block Grant (IHBG) program or the Indian Community Development Block Grant (ICDBG) program. Indian Tribes, tribally designated housing entities (TDHEs), and other tribal entities funding housing counseling required under or provided in connection with IHBG or ICDBG programs shall not be subject to the requirements of this part, except as otherwise provided in this subpart. (b) Housing counseling required under or provided in connection with IHBG or ICDBG programs must be provided by a HUD-certified housing counselor or a HUD-certified Tribal housing counselor. (c) HUD will certify an individual housing counselor to provide housing counseling required under or provided in connection with IHBG or ICDBG programs upon verification that the person: (1) Passes a standardized written examination to demonstrate competency in each of the following areas: (i) Financial management; (ii) Property maintenance; (iii) Responsibilities of homeownership and tenancy; (iv) Fair housing laws and requirements; (v) Housing affordability; and (vi) Avoidance of, and response to, rental or mortgage delinquency and avoidance of eviction or mortgage default; and (2) Works for an Indian Tribe, TDHE, or other Tribal entity. (d) To provide housing counseling required under or provided in connection with HUD programs other than the IHBG and ICDBG programs, an individual working for an Indian Tribe, TDHE, or other Tribal entity must meet the housing counseling certification requirement under § 214.103(n), including the standardized written examination required under § 214.103(n)(2), and the Indian Tribe, TDHE, or other Tribal entity must be a participating agency). (e) Entities and individuals providing housing counseling under this subpart must be certified by the Office of Housing Counseling by 48 months from the effective date of this rule or 30 days after HUD makes the Tribal certification examination available, whichever is later. HUD will publish a document in the Federal Register § 214.601 [Reserved]