Washington, DC – June 4, 2010 – (RealEstateRama) — Congressman Dennis Kucinich (D-OH) today found a solution to problems regarding funding home foreclosure prevention counseling efforts. Despite the proven efficacy of counseling, commonly held interpretations of Treasury Department guidelines restricted the use of federal funds for counseling. This restriction would have denied non-profit counseling providers the seed money required to hire and train new people for counseling opportunities. Kucinich has been engaged in discussions with Treasury and housing officials to ensure that effective counseling can be paid for through federal funding. Kucinich today announced a path forward.
“Treasury’s new approach will allow Ohio to ramp up the number of housing counselors in the state, enable housing counseling agencies to operate in a more sustainable manner, and allow for a greater number of homeowners in need to be helped,” said Kucinich.
Congressman Kucinich has been at the forefront of addressing issues related to the foreclosure crisis, holding ten Congressional hearings on the subject, including two field hearings in Ohio. Following Treasury’s initial announcement of the Hardest Hit Fund–which excluded Ohio–Kucinich rallied the Ohio delegation and succeeded in securing $172 million for Ohio in a second round of funding. Further, Kucinich brought Assistant Secretary for Financial Stability, Herb Allison, to Cleveland to witness the foreclosure crisis and to hear from statewide housing experts. At that meeting, Treasury made a commitment to foreclosure prevention counseling, which has shown to be one of the most effective programs at keeping people in their homes.
Today’s agreement with Treasury will allow Ohio to forward fund foreclosure prevention counseling efforts. Ohio Housing Finance Agency will be able to give non-profit counseling providers access on a drawdown basis to an account to hire and train many new counselors.
“Treasury’s new approach involves forward-funding of counseling rather than funding on a reimbursement-only basis. Treasury agrees that this approach is consistent with its guidelines and Congressional mandate. Treasury also agreed, at our request, to contact Ohio housing agencies and explain the change in interpretation,” added Kucinich.
Research has demonstrated that borrowers are more likely to receive home loan modifications, and are more likely to stay current on their mortgages once they are modified, when foreclosure prevention counselors are involved in the loan modification process.
