So, What’s a HUD Counselor?

HUD counselors are certified and work for non-profit HUD housing counseling agencies. They offer guidance on homebuying, renting, reverse mortgages and post-mortgage services like default and foreclosure prevention and modifications. Many are also certified to assist with credit issues. Not all HUD agencies offer every housing counseling services A list of approximately 1600 approved HUD housing counseling agencies in all 50 states can be found here.

Making a Unique Connection With a Common Goal: Get More Clients into Homes

From the start of the program, it was apparent that though methods of MLOs, HUD counseling agencies and software companies may be different, the end goal was the same – to connect MLO’s with clients who need specific services to HUD counselors who were trained to get clients through issues to become mortgage ready.

✓ Here is how Freddie Mac has integrated HomeCoach into the HomePrep technology platform to support the growth of sustainable homeownership.

✓ HUD counselors have experience working with MLOs at banking institutions that often use Community Reinvestment Act (CRA) funds to pay for HUD counseling services.

✓ Let’s Make Home the Goal is in the HUD counselor DNA.

✓ Freddie Mac has provided HUD counselors HomeCoach that mirrors Loan Product Advisor but can be used with a soft pull credit.

✓ Fannie Mae mentions the use of HUD housing counseling in 40 places throughout their Equitable Housing Finance Plan 2023 and even mentions Indisoft LLC [1] as a technology service provider.

✓ IndiSoft counseling technology is certified by HUD facilitating regulatory compliance.

Client Paid Counseling Upfront

Though clients below a certain income level can get services for free from HUD counseling agencies, MLOs are often working with clients where income levels may be higher, or above low to moderate income (LMI) levels where a sliding scale or “Fee for Service [2]” cost is acceptable.

 While compensation for the HUD-approved mortgage readiness counseling services can take many forms, a “Fee for Service” Client Paid [3] option was decided upon for the HomePrep MLO version.

Here, the clients pay a fee for counseling services to get them mortgage ready.

However, the MLO provides a Memorandum of Understanding (MOU) [4] that promises a credit towards that clients closing costs if they return to the MLO for their mortgage.

Specific Services That Address Top Issues that Prevent a Mortgage Were Developed

Attention was given to the top issues that MLOs find prevent a client from proceeding with a mortgage. Those issues where help is most needed are:

1.    Credit: both short term (1-6 mos) and long term (7mos to 5 yrs) using CreditXpert tools and more

2.    Find down payment assistance available in all 50 states including additional programs available for independent mortgage loan originators!

3.    *Student loan repayment plans through Student Debt Solutions (SDS), whether for purchasing a home or just needed individually

HUD counseling agencies also provide these services included in HomePrep:

4.    Homebuyer education needed for down payment assistance and specific grants

5.    Budgeting for a home

6.    Freddie Mac HomeCoach: specifically for HUD counselors to use, works with a soft credit pull, and for conventional Affordable mortgages.

Costs

There is an MLO cost of $15/per submitted client and a yearly subscription of $150 to use the HomePrep platform.

The client pays a $99 cost for services 1, 2, 4, 5 and 6 and is connected with a HUD counselor who will assist the client through needed steps. There is an additional fee of $99 for the SDS student loan repayment plan services only if the client proceeds with a plan. If they choose to proceed, the client is guided through additional documents needed and how to finalize the plan by sending signed documents to the proper location.

MLO Benefits

The benefits for the MLO are numerous!

1. Frees up MLO time to originate more loans.
2. Client gets action plan and bi-monthly or monthly help from HUD counselor to get mortgage ready.
3. Client pays for help needed upfront which prompts seriousness to getting mortgage ready.
4. MLO gets updates from HUD counselor through HomePrep portal or phone call.
5. MLO has opportunity to stay in front of realtors who have referred clients with client progress.
6. Memorandum of Understanding (MOU) provides best possibility that client will return to MLO for mortgage once the client is mortgage ready.

Tips and Observations So Far!

I am on my second client that is soon graduating from HomePrep and another client is in the wings!

✓ It is not uncommon for clients to reconnect with you prior to services being completed, and their energy to move forward is palpable!

✓ Let your clients know they need to have the intake and budget done at least 4 days ahead of the initial call with the HUD counselor. The initial call can be 1 to 1.5 hours long and this will get clients onboard from the start!

✓ Yes, there have been hiccups, but lessons are being learned on all fronts and fine-tuning is ongoing to make the process better.

✓ The benefit of having a HUD counselor consistently helping non-mortgage ready clients to the mortgage ready finish line outweigh the dollar credit I decide on upfront on the MOU. I am forming a perpetual pipeline!

✓ Most importantly, I can concentrate on what I know how to do best. Originate loans!

Try HomePrep yourself. We will help you onboard your first client.

Pam Marron, NMLS#246438 Licensed Loan Originator | Innovative Mortgage Services, Inc., NMLS#250769

(727) 534-3445

Clients2Homeowners@gmail.com

[1]Indisoft LLC | Fannie Mae Equitable Housing Finance Plan 2023; pg 51, Technology service providers/fintech; https://www.fanniemae.com/media/document/pdf/2023-housing-finance-plan.pdf

[2] Fee for Service | Model Funding Agreements and Fee Structures -HUD; pgs 2, 4; https://www.hud.gov/sites/documents/ohc_mfa100612.pdf

[3] Client Paid | Model Funding Agreements and Fee Structures -HUD; pgs 3, 4, 5, 6; https://www.hud.gov/sites/documents/ohc_mfa100612.pdf

[4] Memorandum of Understanding | Model Funding Agreements and Fee Structures -HUD: pgs 5, 6, 10; https://www.hud.gov/sites/documents/ohc_mfa100612.pdf