Certification Requirements Final Rule

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DATES:

DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Parts 5, 92, 93, 214, 570, 574,
576, 578, and 1006
[Docket No. FR 5339–F–03]
RIN 2502–AI94

Housing Counseling: New Certification
Requirements
Office of the Secretary, HUD.
Final rule.

AGENCY:
ACTION:

HUD’s housing counseling
program provides housing counseling to
consumers seeking information about
financing, maintaining, renting, or
owning a home. The housing counseling
statute was amended to improve the
effectiveness of housing counseling in
HUD programs by, among other things:
establishing the Office of Housing
Counseling and giving this office the
authority over the establishment,
coordination, and administration of all
regulations, requirements, standards,
and performance measures under
programs and laws administered by
HUD that relate to housing counseling;
requiring that organizations providing
housing counseling required under or in
connection with HUD programs be
approved to participate in the Housing
Counseling Program (Housing
Counseling Agencies, or HCAs) and
have all individuals providing such
housing counseling certified by HUD as
competent to provide such services;
prohibiting the distribution of housing
counseling grant funds awarded to
agencies participating in HUD’s Housing
Counseling Program that are found in
violation of Federal election laws or that
have employees found in violation of
Federal election laws; and requiring the
reimbursement to HUD of housing
counseling grant funds that HUD finds
were misused. HUD issued a proposed
rule on September 13, 2013, to establish
in regulation the statutory changes made
to the housing counseling program and
solicited public comment. This final
rule revises HUD’s Housing Counseling
Program regulations to adopt the new
requirements established in the housing
counseling statute. Additionally, this
rule amends HUD’s general and other
program regulations to clarify for
grantees the requirement that housing
counseling under Other HUD Programs
must be provided by HCAs.
HUD will issue a separate Federal
Register notice to announce the start of
the testing and certification process, and
entities and individuals providing
housing counseling will have 36 months
to be approved or certified by the Office
of Housing Counseling.

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SUMMARY:

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Effective Date: January 13, 2017.

FOR FURTHER INFORMATION CONTACT:

William McKee, Office of Housing
Counseling, at housing.counseling@
hud.gov. Please include ‘‘Housing
Counseling Program: New Certification
Requirements’’ in the subject line of the
email. Requests can also be sent by mail
to William McKee at Office of Housing
Counseling, Office of Housing,
Department of Housing and Urban
Development, Santa Ana Federal
Building, 34 Civic Center Plaza, Room
7015, Santa Ana, CA 92701; telephone
number 702–366–2126 (this is not a tollfree number). Persons with hearing or
speech challenges may access this
number through TTY by calling the
Federal Relay Service at 800–877–8339
(this is not a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose of the Regulatory Action
Section 106 of the Housing and Urban
Development Act of 1968 (12 U.S.C.
1701x) (Section 106) was amended by
Subtitle D of title XIV of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (Pub. L. 111–203, 124
Stat. 1376, approved July 21, 2010) to
strengthen and improve the
effectiveness of housing counseling that
is required under or provided in
connection with HUD programs (Section
106 amendments). Specifically, the
Section 106 amendments were enacted
for the purpose of improving, by the
following, the quality, consistency, and
effectiveness of housing counseling
delivered to consumers: (1) Establishing
within HUD the Office of Housing
Counseling and vesting in that office
responsibility for all activities and
matters related to housing counseling
under all programs and laws
administered by HUD; (2) defining
certain terms related to housing
counseling for purposes of clarity and
consistency; (3) requiring that the
individuals providing housing
counseling required under or provided
in connection with HUD programs be
certified by taking and passing an
examination administered by HUD’s
Office of Housing Counseling (HUD
certified housing counselors); (4)
requiring that all housing counseling
required under or provided in
connection with HUD programs (Other
HUD Programs) be provided by agencies
approved to participate in HUD’s
Housing Counseling program, referred
to as housing counseling agencies
(HCAs); 1 and (5) placing new
1 The Housing Counseling regulations at 24 CFR
part 214 identify agencies approved to participate

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requirements on the distribution and
use of housing counseling grant funds
awarded to HCAs. This final rule
implements the Section 106
amendments by requiring that, within
36 months of the issuance of the
certification examination, ‘‘housing
counseling,’’ as defined in this final rule
and that is ‘‘required by or in
connection with’’ HUD programs, may
only be provided by HUD certified
housing counselors working for HCAs
that are approved to provide such
housing counseling by HUD’s Office of
Housing Counseling.
This rule codifies the Section 106
amendments in HUD’s General HUD
Program Requirements, in 24 CFR part
5, and in HUD’s Housing Counseling
Program regulations in 24 CFR part 214.
While this rule focuses on updating
HUD’s Housing Counseling Program
regulations, the rule makes limited
conforming regulatory changes to some
of the HUD programs covered by these
new requirements. HUD program offices
administering Other HUD Programs may
also issue future conforming regulations
or guidance, as applicable, and advise of
any procedures unique to their
programs,2 to ensure that participants in
all HUD programs are fully aware of the
statutory requirement to use certified
housing counselors employed by HCAs.
B. Summary of the Major Provisions of
the Regulatory Action
This final rule adopts the new Section
106 definitions for ‘‘homeownership
counseling,’’ and ‘‘rental housing
counseling,’’ and incorporates these
definitions in the new definition of
‘‘housing counseling.’’ The new
definition of ‘‘housing counseling’’
clarifies that homeownership
counseling and rental counseling are
types of housing counseling and
consolidates these definitions with the
existing standards of housing
counseling under the Housing
Counseling Program in terms of both the
content of housing counseling and the
process used to ensure housing
counseling is effective, independent,
and helpful to the consumer or
household seeking to purchase or rent,
in HUD’s Housing Counseling program as
participating agencies. An approved agency must
meet HUD’s requirements in 24 CFR part 214, and
is considered certified for purposes of 12 U.S.C.
1701x. While the preamble for clarity refers to
HUD-approved Housing Counseling Agencies as
HCAs, the regulatory text maintains the
participating agency language, which is defined
already in the existing Housing Counseling
regulations.
2 Regulations for HUD’s Native American Housing
programs will be undertaken following consultation
pursuant to HUD’s Tribal Consultation Policy.

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Federal Register / Vol. 81, No. 240 / Wednesday, December 14, 2016 / Rules and Regulations
or seeking assistance in areas related to
effective homeownership or tenancy.
This preamble clarifies that routine
administrative activities (e.g., program
eligibility determinations, intake, case
management, property management, the
payment of rental assistance on behalf
of a client, and the collection of rent or
loans) have never been categorized as
housing counseling and that neither the
Section 106 amendments nor HUD’s
regulations make these activities
housing counseling. In addition, the
final rule defines a ‘‘HUD certified
housing counselor’’ as an individual
who works for an HCA and who has
passed a certification examination
administered by HUD.
This rule implements the requirement
that homeownership counseling and
rental housing counseling required
under or provided in connection with
HUD programs be provided only by
organizations approved by HUD under
HUD’s Housing Counseling Program. In
addition, this final rule implements the
statutory requirement that, for an
organization to be approved by HUD to
participate in HUD’s Housing
Counseling Program, all counselors
employed by the organization that
provide homeownership counseling and
rental housing counseling must pass the
certification examination and become a
HUD certified housing counselor within
36 months of HUD’s announcement of
the availability of the examination. The
certification requires that individuals
demonstrate competency by passing a
standardized written examination
covering six major areas of counseling
that are primarily provided to
prospective homeowners or tenants or
existing homeowners or tenants. These
areas include: (1) Financial
management; (2) property maintenance;
(3) responsibilities of homeownership
and tenancy; (4) fair housing laws and
requirements; (5) housing affordability;
and (6) avoidance of, and responses to,
rental and mortgage delinquency and
avoidance of eviction and mortgage
default. In addition to passing the
certification examination, HUD requires
that individuals must also work for an
HCA in order to be a HUD certified
housing counselor.
However, if the services provided by
the individual are limited to overseeing
or administering the provision of
housing counseling, but do not include
the provision of housing counseling
services directly to the consumer, then
the individual is not required to become
a HUD certified housing counselor and
the individual’s employer is not

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required to be an HCA.3 Within 36
months of the date that HUD begins
administering the certification
examination, entities that offer housing
counseling covered by this rule will
have to either become HUD-approved
housing counseling agencies that
employ HUD certified housing
counselors, create partnerships with
HCAs using certified housing
counselors to deliver housing
counseling services on their behalf, stop
providing housing counseling services,
or otherwise modify their program to
comply with this rule.
Lastly, this final rule prohibits the
distribution of Comprehensive Housing
Counseling or Housing Counseling
Training funding authorized by Section
106 to any HCA that has been convicted
for a violation under Federal law
relating to an election for Federal office,
or any HCA that employs an individual
who has been convicted for a violation
under Federal law relating to an election
of a Federal office. In addition, this final
rule requires an HCA that has been
found to have used Housing Counseling
Program funds in a material violation of
the regulations, statutes or other
conditions associated with the Housing
Counseling Program funds to reimburse
HUD for the misused Housing
Counseling Program funds through nonFederal funds and return any unused or
unobligated grant funds. This final rule
prohibits such an agency from receiving
housing counseling grant funds in the
future.
C. Costs and Benefits
The compliance cost of the rule will
be borne to a large degree by the
individual housing counselors who will
be required to take and pass the Housing
Counseling Certification Examination to
be administered by HUD’s Office of
Housing Counseling. HUD is providing
training for the Housing Counseling
Certification Examination through its
training grantees and also for free at
www.hudhousingcounselors.com. The
examination is anticipated to cost $100
for online testing at the examinee’s
location and $140 for an on-site
proctoring center examination, and an
estimated average cost of $120 per
housing counselor to take the
certification examination. The cost to
individuals would be incurred only
once if the individual passes the
examination. For those that use HUD’s
free training materials, the time it takes
to review the material will be
3 An entity that participates in HUD’s Housing
Counseling Program must comply with 24 CFR part
214 requirements regardless of whether there are
individuals performing only administration or
oversight.

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approximately 11 hours, which is $396
of lost wages based on the average wage
of a housing counselor. With an
estimated 8,433 housing counselors that
work for HCAs or currently provide
housing counseling for or in connection
with Other HUD Programs that will
need to be certified, the initial
nationwide cost of the examination and
training would total approximately
$3,936,340.4
In addition, some of the entities that
are not currently HCAs but deliver
housing counseling services now
covered by this rule may choose to
become HCAs, incurring a cost to the
entity to bring their programs into
compliance with Housing Counseling
Program requirements and regulations.
These entities may also choose to
partner with existing HCAs to deliver
services, modify their programs to
comply with this rule, or eliminate the
activities they perform that would be
considered housing counseling from
their programs. Because these entities
are already delivering housing
counseling services, the cost to become
an HCA will primarily be in time to
develop systems and train staff in HUD
Housing Counseling Program
requirements. They may choose to
become an HCA either by applying
directly to HUD, or by affiliating with a
HUD-approved intermediary or state
housing finance agency that participates
in the Housing Counseling Program.
Given the options provided to these
entities that have been administering
housing counseling services in Other
HUD Programs and the benefits that
these entities would receive if they
participate in HUD’s Housing
Counseling Program, HUD only includes
the cost of the certification exam for the
employees of these entities that might
pursue the certification.
There are significant benefits to
implementing the final rule, especially
the certification requirement. The
benefits to the renter, the prospective
homebuyer, or the existing homeowner
are increased assurance, as a result of
the certification requirements, of a more
knowledgeable housing counselor
providing more effective housing
counseling services to the consumer.
HUD expects that more knowledgeable
housing counselors will lead to better
identification of issues, more
knowledgeable referrals, and resolution
of barriers. HUD also expects that
consumers will recognize the value of
housing counseling delivered by
4 This includes a retest rate of 20 percent for those
that do not pass on the first time, and cost of loss
wages for hours spent training for 80 percent of test
takers

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certified housing counselors, with
greater ability to avoid scams, and HCAs
will benefit from the greater visibility
that certification and HUD approval is
expected to bring to the programs. The
certification will be a valuable
credential to housing counselors who
are seeking employment from HCAs and
will help consumers avoid fraudulent
offers to solve housing problems.
Housing counseling helps a borrower
make an informed decision when
obtaining an affordable purchase loan or
an affordable loan modification and
avoid foreclosure, and this type of
assistance provides a net benefit to the
borrower and the market. In 2014, a
total of 108,875 homeowners avoided
foreclosure after seeking assistance from
a HUD Housing Counselor.5
Statistically, borrowers who received
loan modifications after receiving postpurchase housing counseling had an
average savings of $4,980 annually.6 In
addition, foreclosures prevented as a
result of housing counseling have an
estimated social benefit of $40,730.7
Consequently, if 140 loan modifications
are made and 125 foreclosures are
avoided over a period of 5 years as a
result of this rule, the benefits of this
rule will exceed the projected
compliance costs.

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II. Background
HUD’s Housing Counseling Program,
established pursuant to Section 106,
authorizes HUD, through HUDapproved organizations,
intermediaries,8 multistate
organizations, state housing finance
agencies, and their branches and
affiliates (collectively referred to as
Housing Counseling Agencies, or HCAs)
to provide housing counseling services
to potential homebuyers, homeowners,
homeowners at risk of default, renters,
and the homeless. Section 106 also
authorizes HUD to provide housing
counseling directly or to enter into
contracts with, or make grants to,
eligible private or public organizations
5 HUD Form 9902 Data for Fiscal Year 2014,
http://portal.hud.gov/hudportal/documents/
huddoc?id=OHC_2014Q49902020615.pdf.
6 National Foreclosure Mitigation Counseling
Program Evaluation, Final Report, Rounds 3
Through 5, Prepared by Kenneth M. Temkin Neil
S. Mayer Charles A. Calhoun Peter A. Tatian with
Taz George, Prepared for NeighborWorks® America
(Urban Institute: September 2014).
7 HUD’s Office of Policy Development and
Research found that the total ‘‘deadweight’’ loss per
foreclosure prevention cost is approximately
$40,730. (See http://www.huduser.org/periodicals/
cityscpe/vol14num3/Cityscape_Nov2012_impact_
lim_sellers.pdf, at page 219.)
8 Intermediaries provide housing counseling
services through a network of affiliates or branches.
See http://portal.hud.gov/hudportal/HUD?src=/
ohc_nint.

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with special competence and knowledge
in providing housing counseling to lowand moderate-income families. Section
106 was amended to strengthen and
improve the effectiveness of HUD’s
Housing Counseling Program.
Sections 1441, 1442, 1443, 1444,
1445, and 1448 of the Dodd-Frank Act
amended Section 106 and revised
HUD’s Housing Counseling Program by,
among other things: (1) Defining certain
terms in the program; (2) establishing
the Office of Housing Counseling and
giving it authority over all requirements,
standards, and performance measures
under programs and laws administered
by HUD that relate to housing
counseling; (3) ensuring that HUD
certified housing counselors provide
housing counseling covering the entire
process of homeownership, from the
purchase of a home to its disposition;
(4) ensuring that rental or
homeownership counseling, as defined
by the Dodd-Frank Act, is administered
in accordance with procedures
established by HUD; and (5) requiring
that all homeownership counseling and
rental housing counseling 9 is delivered
through HUD certified housing
counselors.
III. The Proposed Rule
On September 13, 2013 (78 FR 56625),
HUD published a proposed rule that set
out regulations describing how HUD
would implement the changes to
Section 106 made by the Dodd-Frank
Act. The following presents a brief
summary of the key regulatory revisions
proposed. A detailed description of the
proposed amendments can be found in
this preamble to the proposed rule at 78
FR 56625, available at http://
www.gpo.gov/fdsys/pkg/FR-2013-09-13/
pdf/2013-22229.pdf.
Definitions § 214.3
The September 2013 rule proposed to
add and revise existing definitions for
consistency with the definitions in
Section 106. Of particular note, the
proposed rule sought to revise the
definitions of ‘‘HUD-approved housing
counseling agency,’’ and added new
definitions for ‘‘homeownership
counseling,’’ ‘‘HUD certified housing
counselor,’’ and ‘‘rental housing
counseling.’’ Section 1443 of the DoddFrank Act amended Section 106(e)(3)
and added Section 106(g)(1)(A) to
9 Section 1443 of the Dodd-Frank Act amended
Section 106(e)(3) and added Section 106(g)(1)(A) to
require that homeownership counseling or rental
housing counseling provided in connection with
any program administered by HUD must be
provided only by organizations or counselors
certified by the Secretary as competent to provide
such counseling.

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require that homeownership counseling
or rental housing counseling provided
in connection with any program
administered by HUD must be provided
only by organizations or counselors
certified by the Secretary under this
subsection as competent to provide such
housing counseling.
Counseling That Covers the Entire
Process of Homeownership § 214.300
The September 2013 rule proposed to
amend § 214.300 to reflect the new
statutory requirement that
homeownership counseling address the
entire process of homeownership and
require, as part of the home purchase
counseling, that information regarding
home inspections be provided to clients
considering whether to purchase a
home. The entire process of
homeownership includes the decision
to purchase a home, the selection and
purchase of a home, issues arising
during or affecting the period of
ownership of a home (including
refinancing, default, and foreclosure,
and other financial decisions), and the
sale or other disposition of a home.
Certification To Provide Counseling
§ 214.101
The September 2013 rule proposed to
amend the approval criteria to require
that any individual providing
homeownership or rental housing
counseling related to HUD programs
must be a HUD certified housing
counselor. In addition, the rule
proposed to add a new paragraph (n) to
§ 214.103 to provide the certification
criteria for housing counselors and
HCAs. The proposed paragraph (n) also
provided that HCAs and individual
counselors must be in compliance with
the certification requirements no later
than one year after the effective date of
the final rule that would follow the
proposed rule.
The September 2013 rule also
proposed to require that organizations
providing housing counseling, and
individuals providing housing
counseling through such organizations,
in connection with any HUD program,
be certified by HUD as competent to
provide housing counseling. For an
organization to participate in HUD’s
Housing Counseling Program and be
eligible for HUD certification under
Section 106(e), all individuals through
which the organization provides
housing counseling under HUD’s
Housing Counseling Program must be
certified to provide such counseling.
The proposed rule would require that in
order for an individual to become HUD
certified, that individual must work for
an HCA and must demonstrate

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competency by passing a standardized
written examination covering six major
areas of housing counseling. These areas
are included: (1) Financial management;
(2) property maintenance; (3)
responsibilities of homeownership and
tenancy; (4) fair housing laws and
requirements; (5) housing affordability;
and (6) avoidance of, and responses to,
rental and mortgage delinquency and
avoidance of eviction and mortgage
default.

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Requirements Relating to Housing Grant
Funds § 214.311.
The September 2013 proposed rule
would prohibit the distribution of grants
awarded under HUD’s Housing
Counseling Program to any agency that
has been convicted for a violation under
Federal law relating to an election for
Federal office, or any agency that
employs an ‘‘applicable individual’’
who has been convicted for a violation
under Federal law relating to an election
of a Federal office. The rule also
proposed to require that an HCA that
was found by HUD to have used
Housing Counseling Program grant
funds in a material violation of the
regulations, statutes, or other conditions
associated with the funds, to reimburse
HUD for the misused Housing
Counseling Program funds and return
any unused or unobligated grant funds,
and that such HCA would be ineligible
to receive housing counseling grant
funds in the future. Lastly, the proposed
rule prohibited the distribution of
assistance for counseling activities to an
HCA unless the agency has been
certified by HUD as competent to
provide counseling.
IV. Final Rule
This final rule follows publication of
the September 2013 proposed rule and
takes into consideration the public
comments received on the proposed
rule. The final rule does not
substantively revise the proposed rule;
however, in response to public
comments, HUD has clarified policies
regarding the housing counseling
certification examination, amended
several provisions for consistency and
clarity, and clarified the application of
this rule to Other HUD Programs.
Definitions. This final rule
incorporates the statutory definitions
‘‘homeownership counseling’’ and
‘‘rental counseling’’ and adds clarifying
definitions for ‘‘housing counseling’’ in
HUD’s General part 5 requirements at
§ 5.100 and cross-references the
definitions in § 214.3. The final rule
incorporates these definitions in § 5.100,
because they apply to all of HUD’s
programs, and includes cross-references

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in some other programs for clarification.
The final rule is also adding a definition
of ‘‘housing counseling grant funds’’
and the other definitions provided in
the Section 106 amendments to § 214.3.
The definition of rental housing
counseling is amended from the
proposed rule by including a list of
items (decision to rent, responsibilities
of tenancy, affordability of renting, and
eviction prevention) that may be
included in rental housing counseling,
similar to the homeownership
counseling definition.
A new ‘‘housing counseling’’
definition is added at this final rule
stage, which consolidates existing
statute, regulation and handbook
definitions, and incorporates the
requirement that the housing counseling
activity must meet both the content and
process standards that are set by 24 CFR
part 214 and by guidance issued by the
Office of Housing Counseling. This
clarification provides the framework for
making clear that homeownership
counseling and rental counseling are
subsets of housing counseling, and what
activities trigger the certification
requirements under Section 106.
HUD includes a definition of
‘‘required under or provided in
connection with any program
administered by HUD’’ in § 5.111 to
clarify for grantees whether ‘‘housing
counseling,’’ as defined in this
regulation, is subject to the new Section
106 requirements. This requirement is
also incorporated by cross-reference,
into some HUD programs.
HUD is also adding the definition of
‘‘housing counseling grant funds’’ and
adopting the term through the Housing
Counseling Program regulations to
clarify when the provisions of the rule
apply solely to grant funds awarded
under HUD’s Housing Counseling
Program.
Lastly, HUD is removing ‘‘the Trust
Territories of the Pacific’’ from the
definition of ‘‘State,’’ given the United
States ended its administration over the
Trust Territories of the Pacific on
October 21, 1986.
• Extension of timeframe for
certification. The final rule changes the
September 2013 rule’s proposed
requirement for Other HUD Programs,
HCAs, and individual counselors to be
in compliance with the certification
requirements to no later than 36 months
(rather than 12 months as was stated in
the proposed rule) after the date that
HUD announces the availability of the
certification examination, in order to
address concerns raised by commenters.
The date that is 36 months after the date
that HUD announces the availability of
the certification examination is referred

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to as the final compliance date. The
final rule outlines some of the activities
that HUD, entities affected by the final
rule, and individual housing counselors
will undertake during the period
between the publication of this rule and
the final compliance date.
• Delayed certification examination
availability. There are two requirements
for housing counselor certification: (1)
Passing the examination and (2)
working for an HCA. Both requirements
are necessary to ensure that the
consumer receives knowledgeable,
independent, and effective housing
counseling following standards
established by the Office of Housing
Counseling. HUD is working to
implement a new housing counselor
certification structure that will link
several systems—FHA Connection,
HUD’s online system for FHA lenders
and business partners; the current HUD
system for tracking housing counseling
program activities (Housing Counseling
System); HUD’s list of approved HCAs
(also supported by Housing Counseling
System); and housing counselor
certification examination results—in a
new database. The systems’ linkages
will validate that the individual works
for an HCA and, thus, provide HUD
with the evidence required to validate
the individual’s eligibility for
certification. The system will also
maintain the database of HUD certified
housing counselors and will allow users
to issue certificates that confirm to
consumers, lenders, and other
stakeholders that homeless, rental,
homeownership (prepurchase, postpurchase, and mortgage default), or
reverse mortgage housing counseling
meeting HUD standards has occurred.
To ensure that the counselor
certification database will be available
when individuals take the certification
examination, HUD will first publish a
notice in the Federal Register
announcing the date when the
certification examination will become
available and that date will start the 36month timeframe for individuals to
become HUD certified housing
counselors.
• Individual HUD Certified Housing
Counselor. The certificate that HUD
issues to an individual who has passed
the certification examination and whom
HUD has verified works for an HCA as
a housing counselor will be called a
‘‘HUD Certified Housing Counselor’’
certificate. This is a name change from
the term ‘‘Certification of Competency’’
that was used in the proposed rule, and
the change in terminology was adopted
in §§ 214.103 and 214.311. The
terminology better aligns with the
purpose of the statute to improve the

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quality, consistency, and effectiveness
of housing counseling by providing
housing counselors with a credential
that confirms a level of expertise and
provides consumers and stakeholders
with a way to distinguish the housing
counseling services of trustworthy
professionals from those who are
unqualified or perpetrating scams and
fraud.
• Other HUD Programs. The Section
106 amendments require that HUD
certify or approve organizations that
provide housing counseling required
under or provided in connection with
HUD programs. Furthermore, all
individuals providing housing
counseling for an HCA must be certified
housing counselors. HUD is
implementing the new requirement that
all housing counseling required under
or provided in connection with HUD
programs meet the regulations,
requirements, standards, and
performance measures set by the Office
of Housing Counseling, including
requirements relating to the certification
of organizations and individuals. To
clarify that these requirements apply to
all HUD programs under which housing
counseling is provided, this rule
includes a new provision in § 5.111 that
incorporates the statutory language into
HUD’s General Requirements, and crossreferences to the requirements of HUD’s
Housing Counseling Program in part
214. This section also defines the phrase
‘‘required under or provided in
connection with any program
administered by HUD’’.
The discussion of the public
comments in this final rule preamble
adds guidance for Other HUD Programs
covered by the rule that are not
currently delivering housing counseling
through HCAs. Entities covered by the
rule will have the opportunity to choose
among a number of alternatives to bring
their housing counseling services into
compliance prior to the Final
Compliance Date, including (i) applying
to HUD or to a HUD-approved
intermediary or state housing finance
agency in order to become HCAs and
ensuring that their housing counselors
become certified prior to the Final
Compliance Date; (ii) partnering with an
existing HCA to deliver housing
counseling, homeownership counseling
or rental counseling services; (iii)
modifying the program in order to
become compliant with this rule; or (iv)
choosing to stop delivering housing
counseling services before the Final
Compliance Date.
The final rule clarifies that entities
that provide funding or otherwise
authorize housing counseling that is
required under or provided in

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connection with Other HUD Programs,
and that do not provide housing
counseling services directly to
consumers, do not have to become
HCAs, and their employees do not have
to become HUD certified housing
counselors. These entities will
nevertheless have the responsibility to
ensure that housing counseling
conducted with their funding or
provided under their authority through
recipients, subrecipients, grantees, or
contractors complies with the statutory
requirements. They may choose to apply
to become HUD-approved housing
counseling intermediaries, becoming
eligible to participate in the Housing
Counseling Grant Program and
providing greater programmatic support
to the housing counseling delivered
under their auspices. However, they
may also choose to require that housing
counseling under their programs is
delivered by HCAs without becoming
HUD-approved housing counseling
intermediaries themselves.
Many counseling services are
provided in HUD-funded programs but
every reference to counseling does not
automatically make these services
‘‘housing counseling’’ as defined in
§ 5.100. It is important to note that the
Section 106 amendments do not alter
the meaning of ‘‘counseling’’ services as
has been applied to date in these
programs and not all activities that may
be labeled as counseling services equate
to housing counseling as defined by
Section 106 and this final rule. HCAs
and certified housing counselors may
elect to provide any of the services
listed below as part of their housing
counseling program. However, entities
that provide the services listed below, in
the absence of providing housing
counseling as defined by § 5.100, do not
have to become HCAs and do not have
to use certified housing counselors in
order to be compliant with this final
rule. The following are examples of
counseling that do not constitute
housing counseling:
1. Services that provide housing
information, or placement or referral
services, (for example, mobility-related
services for the Housing Choice Voucher
(HCV) program), do not constitute
housing counseling and would not
necessitate an individual providing
these services to become a HUD
certified housing counselor working for
an HCA under this rule.
2. Routine administrative activities
(e.g., program eligibility determinations,
intake, case management, property
management, payment of rental
assistance on behalf of a client, and the
collection of rent or loans) have never
been categorized as housing counseling.

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Neither the Section 106 amendments
nor HUD’s Housing Counseling Program
regulations make these activities
housing counseling.
3. Holistic case management for
persons with special needs, for persons
undergoing relocation in the course of a
HUD program (including relocation and
other advisory services provided
pursuant to the Uniform Relocation
Assistance and Real Property
Acquisition Policies Act of 1970 and
other Federal laws), or for social
services programs that also provide
housing services as incidental to a larger
case management program, are not
housing counseling. Thus, the Housing
Opportunities for Persons With HIV/
AIDS (HOPWA) program, Emergency
Solutions Grants (ESG) program, and
Continuum of Care (CoC) program
permit various housing and support
services as eligible uses of funds. If
these housing services are part of a
larger set of case management services,
they do not trigger the certification
requirements of this rule. However, in
these programs, there may be instances
where housing counseling, as defined in
this rule, is being provided. For
example, if a participant in these
program is receiving housing
counseling, as defined in § 5.100, as a
separate specialized service, the housing
counseling has to be provided by a
certified housing counselor working for
an HCA.
4. Fair housing advice and advocacy
offered in isolation from housing
counseling as defined in § 5.100 (i.e.,
without providing for an intake);
financial and housing affordability
analysis; an action plan to address other
housing needs or goals; and follow-up.
HUD will maintain, in four categories,
a list of ‘‘Other HUD Programs’’ that this
rule covers consistent with the
definition added to § 5.111 that defines
‘‘required under or provided in
connection with.’’ In this rule, HUD
used the programs named in Section
106 as a guide to the HUD programs that
may be providing housing counseling as
defined in this final rule, but removed
obsolete programs or those that do not
cover ‘‘housing counseling.’’ HUD has
included additional programs that
provide housing counseling to the list of
programs consistent with § 5.111. In the
future, the list of HUD programs for
which housing counseling must be
provided by a HUD certified housing
counselor working at an HCA will be
posted on HUD’s Housing Counseling
Web site and will be updated as
appropriate to add or remove HUD
programs.
The following list of programs
provide housing counseling as defined

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in this final rule under the four
categories in § 5.111. Therefore,
‘‘housing counseling’’ provided by these
programs must be provided by certified
individual housing counselors that work
for HCAs as of the final compliance
date:
1. HUD programs where housing
counseling is required by statute,
regulation, Notice of Funding
Availability (NOFA), or is otherwise
required by HUD. The current list of
programs that universally require
housing counseling or may require
housing counseling in part of the
program, as identified by HUD, include
the Housing Counseling Program (12
U.S.C. 1701x); Housing Choice Voucher
Homeownership Option (42 U.S.C.
1437f(y)); HOME Investment
Partnership—Homeownership only (42
U.S.C. 12701 et seq.); Housing Trust
Fund—Homeownership Only (12 U.S.C.
4568(c)); FHA Single Family Mortgage
Insurance Program (12 U.S.C. 1707 et
seq.); and Home Equity Conversion
Mortgage Program (12 U.S.C. 1715z–20).
2. HUD programs where housing
counseling is funded under the HUD
program. The current HUD programs
that include ‘‘housing counseling’’ as an
eligible funding activity or project cost,
include: The Community Development
Block Grant Program (42 U.S.C. 5301, et
seq.), including Disaster Recovery;
Displacement Due to Demolition and
Disposition of Public Housing (42 U.S.C.
1437p(a)(4)(D)); Conversion of
Distressed Public Housing to TenantBased Assistance (42 U.S.C 1437z–
5(d)(2)(B) and 42 U.S.C. 1437t); HOME
Investment Partnership Program (42
U.S.C. 12701 et seq.); Housing Trust
Fund (12 U.S.C. 4568(c)); Housing
Opportunities for Persons With AIDS
(42 U.S.C. 12906); Emergency Solutions
Grant (42 U.S.C. 11371, et seq.); the
Continuum of Care program (42 U.S.C.
11381, et seq.); Indian Housing Block
Grants and Native Hawaiian Housing
Block Grants (25 U.S.C. 4132(3), 25
U.S.C. 4229(b)(2)(A)); 10 Indian
Community Development Block Grant
program (42 U.S.C. 5301, et seq.); 11
Rural Housing Stability Assistance
Program (Pub.L. 111–22); Housing
Choice Voucher program (42 U.S.C.
1437f(o)); and Public Housing Operating
Fund (42 U.S.C. 1437g(e)).
3. HUD Programs where housing
counseling is required by a grantee or
subgrantee of a HUD program as a
condition of receiving assistance under
10 Application of Section 106 amendments to the
Indian Housing Block Grant program will undergo
tribal consultation before applying.
11 Application of Section 106 amendments to the
Indian Community Block Grant program will
undergo tribal consultation before applying.

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the HUD program. Any HUD program
where a grantee or subgrantee elects to
require housing counseling as a
condition of receiving assistance under
a HUD program must provide ‘‘housing
counseling’’ consistent with § 5.111. An
example of such a program would be the
Public Housing Resident
Homeownership Program (42 U.S.C.
1437z–4), where Public Housing
Agencies may elect to require
participants in the program to
participate in housing counseling as a
condition of participating in the Public
Housing Resident Homeownership
Program. Such housing counseling
would be considered ‘‘required under or
provided in connection with a HUD
program’’ and the ‘‘housing counseling’’
must be provided by a certified
individual housing counselors working
for HCAs as of the final compliance date
of the final rule. Another example of
such a program would be a State
Housing Finance Agency that has
elected to require consumers to obtain
‘‘housing counseling’’ as a condition of
eligibility for its downpayment program
funded by Community Development
Block Grant (CDBG). Because the
downpayment program is funded by
CDBG funds, the ‘‘housing counseling’’
must be provided by certified individual
housing counselors working for HCAs as
of the final compliance date of the final
rule.
4. HUD programs where housing
counseling referrals are made by a
grantee or subgrantee of the program for
use by a family assisted under the
program. Any HUD program where a
grantee or subgrantee makes a housing
counseling referral to a family assisted
under the HUD program must make the
referral to an HCA consistent with
§ 5.111. Examples include the Family
Self-Sufficiency Program (FSS); and
Resident Opportunity and SelfSufficiency Program (ROSS). In these
programs, HUD funding provides for the
salaries of coordinators who may refer
participants to housing counseling
services. While these housing
counseling services are not funded
through the FSS or ROSS programs and
are provided by a third party, the third
party must be a certified individual
housing counselor working for an HCA
as of the final compliance date of the
final rule.
This final rule also includes language
clarifying the application of this rule to
a number of programs, including ESG,
COC, HOPWA, CDBG, and the Native
Hawaiian Housing Block Grant program.
HUD program offices administering
Other HUD Programs may also issue
future conforming regulations or
guidance, as applicable, and advise of

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any procedures unique to their
programs to ensure that participants in
all HUD programs are fully aware of the
statutory requirement to use certified
housing counselors employed by HCAs.
• Housing Counseling Agency
certification of competency. HUD will
not issue a separate agency ‘‘Certificate
of Competency’’ as originally stated in
the proposed rule. For a housing
counseling agency to be HUD-approved
or maintain status as an HCA under
HUD’s Housing Counseling Program,
each individual providing housing
counseling for the HCA must be a HUD
certified housing counselor. This
requirement will be implemented
through this final rule by amending
existing HUD Housing Counseling
Program regulations at 24 CFR part 214
that determine if an entity is eligible to
be an HCA.
HUD will notify HCAs on the OHC
Web site, after publication of the final
rule, of the timing and process for
identifying that the housing counselors
who work for them are HUD certified
housing counselors. The removal of the
agency certification is reflected in
amendments to § 214.103(n), and the
requirement for HUD certified housing
counselors is clarified in §§ 214.101,
214.103(n), and 214.311(c)(2).
The discussion of public comments
explains the transition process for
entities that are providing housing
counseling under Other HUD Programs
and choose to become HUD-approved
HCAs by the final compliance date.
Information about the current
application process for entity approval
under the Housing Counseling Program
may be found here: http://
portal.hud.gov/hudportal/documents/
huddoc?id=OHC_9900FAQS011415.pdf.
• Who must be certified. The final
rule applies to the individuals that
provide ‘‘housing counseling’’ services
to consumers under HUD programs,
including Home Equity Conversion
Mortgage (HECM) counselors. The
certification requirement applies to all
HCAs, whether grantees or nongrantees,
and whether directly approved by HUD
or participating in HUD’s Housing
Counseling Program as an affiliate or
branch of an intermediary, multi-state
organization, or state housing financing
agency. Individuals whose roles are
limited to overseeing or administering a
housing counseling program are not
required to become HUD certified
housing counselors. The final rule
clarifies that an individual providing
housing counseling under Other HUD
Programs, regardless of employment
status (i.e., a contractor, volunteer, parttime employee, etc.), must be certified.
(See §§ 5.111, 214.103(g).) In addition,

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the final rule retains language in the
current regulation at § 214.103(g), which
required the agency to employ staff
trained in housing counseling, and that
at least half the agency’s counselors
must have at least 6 months of
experience from significantly
comparable work to the job that the
counselor will be performing. A
clarification is also made in § 214.103,
paragraph (n).
The final rule also clarifies that all
individual housing counseling activity
reported by HCAs on form HUD–9902,12
whether attributed to a HUD Housing
Counseling Grant or not, must be
performed by HUD certified housing
counselors. Lastly, while not all group
education presenters are required to be
certified, all group education offered by
an HCA as part of its Housing
Counseling Program must be overseen
by a HUD certified housing counselor
and all group education reported by
HCAs to form HUD–9902, whether
attributed to a HUD Housing Counseling
Grant or not, must be overseen by a
HUD certified housing counselor.
• Housing counseling certification
examination training. Section 106
requires that HUD contract with an
appropriate entity to provide training
and administer the housing counselor
certification. HUD’s Contracting Office,
therefore, published a market research
notice in FedBizOpps on June 18, 2013,
seeking an entity to administer the
housing counselor certification and
training. The Office of Housing
Counseling identified a qualified
certified 8(a) small business entity
registered with the Small Business
Administration (SBA) to conduct
business with the Federal Government
and awarded a contract to Bixal
Solutions, Inc. (Bixal) on September 30,
2013, to develop the housing counselor
certification training, examination, and
to host the Web site. Information on the
requisition and award is located on
FedBizOpps.gov.
The Housing Counseling Certification
Examination training was developed by
Bixal, using experienced instructional
designer and technology specialists,
adult learning specialists, and subject
matter experts in housing counseling,
lending, and fair housing. Free training
has been made available to the public.
The training course is currently
available online in an interactive format,
and is also offered in a portable
document format (PDF) format for those
who prefer text-based instruction. The
study guide is available for download
onto multiple types of electronic
12 See http://portal.hud.gov/hudportal/
documents/huddoc?id=9902.pdf.

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devices. The training Web site can be
accessed at
www.hudhousingcounselors.com.
• Housing counseling certification
examination. Bixal was also selected to
administer the Housing Counseling
Certification Examination. A Federal
Register notice will be issued
announcing when the certification
examination will be available and at
that time individuals interested in
becoming HUD certified housing
counselors can register for the
examination. The administration of the
examination will be made available
through video conferencing at an
examinee’s location or at a commercial
proctoring site identified by HUD’s
contractor. Those choosing to use video
conferencing must have equipment
available. Additional information on
test locations and online proctoring will
be available on HUD’s Office of Housing
Counseling Web site,
www.hudhousingcounselors.com, and
also at www.hud.gov/
housingcounseling.
HUD originally estimated the training
and certification examination would be
approximately $500. Since the issuance
of the proposed rule, HUD took into
account a number of public comments
expressing concern that the cost was too
high. With the contractor employed by
HUD, HUD has been able to
significantly reduce that cost through
value engineering the examination,
through free training, and by adding
flexibility in the administration of the
certification exam. HUD has determined
the cost of the examination at a
commercial proctoring site will be $140
and online at the examinee’s location it
will be $100. This cost is based on the
actual cost to administer the
examination in Fiscal 2016, and changes
to the cost after Fiscal 2016 will be
published in the Federal Register.
HUD will also offer the examination
in English and Spanish, and will
continue to review options to add other
languages. For those test takers that
need a reasonable accommodation
pursuant to the Americans with
Disabilities Act (ADA) and subsequent
amendments to the act, HUD’s
contractor will arrange for
accommodations. Individuals who do
not pass the examination will receive an
email notifying them of results and
indicating the subject areas that should
be reviewed before retesting, and can reregister for the exam. There is no limit
to the number of attempts an individual
can make to pass the examination.
• Individual housing counselor
certification. A person taking the
Housing Counseling Certification
Examination who successfully passes

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the examination will receive
notification of passage by email. HUD
will track the examination results, and
an individual HUD certified Housing
Counselor Certificate will be issued for
a housing counselor that has passed the
examination when HUD verifies that the
counselor works for an HCA.
• Content Standards. At the proposed
rule stage, HUD provided in paragraph
(b) of § 214.300 a requirement that an
HCA must offer homeownership
counseling, which was more extensive
than that required by the Section 106
amendments. Therefore, this final rule
removes the requirement that an HCA is
required to provide homeownership
counseling and instead clarifies in
paragraph (a) of § 214.300, which covers
the basic requirements for housing
counseling, that if an HCA offers
homeownership counseling the HCA
must do so as defined in § 214.3. This
final rule also adds the same
requirement for the content of rental
housing counseling if an HCA offers
rental counseling. This final rule also
moves the home inspection requirement
from paragraph (b) to paragraph (a) of
§ 214.300.
V. Discussion of Public Comments and
HUD’s Responses
This section of the preamble discusses
the key issues raised by the comments
submitted in response to the September
13, 2013, proposed rule. The public
comment period on the proposed rule
closed on December 12, 2013, and 215
public comments were received in
response. All public comments can be
viewed at the following Web site,
www.regulations.gov, under docket
number HUD–2013–0083. (See http://
www.regulations.gov/
#!docketDetail;D=HUD-2013-0083).
Comments were submitted by advocacy
groups, service providers, state and
local government agencies, nonprofit
organizations, private companies, and
individuals. The following represents
the significant issues and questions
related to the proposed rule raised by
the commenters.
HUD also received comments in
support of the proposed rule that do not
require a response. These comments
expressed support for the certification
process, writing that the proposed
certification provided a less expensive,
clearer, and less cumbersome process
than the current process in which
housing counselors obtained
certifications from multiple agencies.
Commenters also supported the
introduction of training from HUD to
aid counselors in learning the
examination topics. A few commenters
also stated that this rule will provide

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additional consumer protection for
homebuyers and the public. Lastly,
commenters stated that certification will
improve the integrity of the housing
counseling profession and the quality
and value of housing counseling.
Comment: Opposition. Some
commenters generally opposed the
proposed rule, writing that the
certification requirement is
unnecessary, redundant, and costly
given that housing counselors are
already required by HUD (and their
agencies) to receive continuing
education and training. One commenter
added that certification will not
supplement housing counselors’
experience or improve the services that
they provide to clients. A few
commenters wrote that certification
punishes housing counselors and HCAs
by requiring them to pay for and pass
the certification. In addition, a few
commenters wrote that this industry did
not cause the financial crisis and
applying this certification to the
industry will compound the problem by
causing agencies to leave the field,
resulting in fewer agencies to serve
clients. Lastly, a few commenters
worried about the certification
displacing long-standing high quality
certification programs.
HUD Response: HUD understands
that many housing counselors believe
that the current requirements to
participate in HUD’s Housing
Counseling Program are sufficient.
Nevertheless, the Section 106
amendments require housing counselors
to pass an examination that covers the
following six areas of housing
counseling: Financial management;
property maintenance; responsibilities
of homeownership and tenancy; fair
housing laws and requirements; housing
affordability; and avoidance of, and
responses to, rental and mortgage
delinquency and avoidance of eviction
and mortgage default. HUD recognizes
that the Housing Counseling Program
currently requires counselors to fulfill
education and training obligations for
successful participation in the program.
The intent of the new certification and
testing requirements is not redundancy
but to establish a single, national
baseline certification that covers the
broad spectrum of housing issues
required under the statute.
As noted, HUD is striving to present
the housing counseling certification
examination, including training and
study materials, in the most costefficient way feasible. HUD is using
online testing in its Housing Counseling
Certification Examination as an
economical and convenient approach.
Subject to available appropriations HUD

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intends to allow housing counseling
agencies to use HUD’s Comprehensive
Housing Counseling Program Grant
funds to pay for the costs associated
with training, testing, and certification
of counselors. The housing counseling
certification requirements, as were
outlined in the proposed rule, are
intended to benefit clients who will be
assisted by housing counselors who are
tested and certified in six areas of
housing counseling. Consumers can, as
a result, be further confident in the
quality and consistency of the housing
counseling services and referrals they
receive.
The statutory mandate, as reflected in
this final rule, is not placing
responsibility for the financial crisis on
the counseling agencies or discrediting
existing housing counseling training
programs. The new certification is
designed to assure baseline housing
knowledge by housing counselors,
consistent service delivery by a network
of HCAs, and increased consumer
confidence in housing counselors
through a single, government-issued
national credential.
HUD recognizes that numerous
training and certification programs have
provided housing counselors with the
instruction and information that HUD
has long required for participation in
HUD’s Housing Counseling Program.
HUD supports many training and
certification programs and, while the
final rule does not address existing
certification programs, HUD supports
and expects that housing counselors
will continue to seek training and
certification opportunities in areas that
will complement the required HUD
individual housing counselor
certification.
A. New Definitions § 214.3
Comment: Definition of HUDApproved Counseling Agency. Several
commenters requested confirmation as
to whether the definition of ‘‘non-profit
organizations’’ found in the proposed
rule includes organizations exempt from
taxation under section 501(c)(4) of the
Internal Revenue Code (IRC) of 1996.
HUD Response: Private or public
nonprofit organizations described in IRC
section 501(c) and exempt from taxation
under IRC section 501(a) including
section 501(c)(4) organizations, are
eligible to participate in HUD’s Housing
Counseling Program. To be a HUDapproved housing counseling agency,
however, an eligible nonprofit
organization must also comply with the
approval requirements in § 214.103 and
all other eligibility requirements.
Comment: Definition of HUD Certified
Housing Counselor, Counseling,

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Education, and Housing Counseling.
Several commenters recommended HUD
expand on the definition of a housing
counselor to indicate what a housing
counselor does and to distinguish
counseling activities from education
activities. One commenter asked HUD to
distinguish between activities that must
be performed by HUD certified housing
counselors and activities that can be
performed by noncertified personnel. In
addition, a commenter recommended
that only housing counseling reported
on the form HUD–9902 be required to be
performed by a certified housing
counselor. Commenters requested
clarification of the definition of housing
counseling required under or provided
by Other HUD Programs.
HUD Response: The proposed rule
added a definition of ‘‘HUD certified
housing counselor’’ in § 214.3 as a
housing counselor who has passed the
requisite examination, provides housing
counseling services for an HCA and is
certified by HUD as competent to
provide housing counseling services
pursuant to 24 CFR part 214. HUD
clarifies in the final rule that this can
include paid workers or volunteers that
provide housing counseling on a full or
part time basis by removing the word
‘‘employed by’’ and focusing on the
provision of housing counseling
services. The existing regulations
provide a definition of counseling (in
contrast to education) under the
Housing Counseling Program, and the
HUD Handbook 7610.1 13 also clarifies
what constitutes housing counseling
and what constitutes education
activities.
In the final rule at § 5.100 and crossreferenced at § 214.3, HUD has
consolidated existing definitions of
‘‘housing counseling’’ in response to
comments seeking clarification of
activities in Other HUD Programs that
are subject to the final rule. HUD
believes that the language in § 5.100, as
augmented by current descriptions of
counseling and education activities in
the HUD Handbook, and the new
definitions of ‘‘housing counseling,’’
‘‘homeownership counseling’’ and
‘‘rental housing counseling’’ in the
regulations, are sufficient. HUD further
clarifies that an activity conducted in
connection with administering a
program—such as intake, loan
application, and eligibility assessment—
that is limited in scope and that is not
part of process that focuses on ways of
overcoming specific obstacles to
achieving a housing goal, may not be in
13 See http://portal.hud.gov/hudportal/
HUD?src=/program_offices/administration/
hudclips/handbooks/hsgh/7610.1.

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and of itself housing counseling,
homeownership or rental counseling.
As addressed in Section IV of this
preamble, HUD clarifies in this final
rule that all individual providing
housing counseling under HUD’s
Housing Counseling Program must be
performed by HUD certified housing
counselors, and all individual housing
counseling reported by HCAs to the
Office of Housing Counseling on Form
HUD 9902, whether attributed to a HUD
housing counseling grant or not, must
be performed by HUD certified housing
counselors. HUD recognizes that
agencies may use other agency staff and
industry professionals such as real
estate agents, home inspectors and loan
officers as presenters at home buyer
education and other group workshops as
long as the education is in compliance
with HUD requirements. This final rule
does not require that all group
education presenters obtain individual
HUD housing counselor certification.
However, HUD believes it is important
that housing counselors overseeing
group education be tested and certified
in the six areas of counseling so they
can provide consumers with consistent
quality education. Therefore, HUD is
requiring that all group education under
the HUD housing counseling program
must be overseen by a HUD certified
housing counselor. In addition, group
education reported by HCAs to the
Office of Housing Counseling on Form
HUD 9902, whether attributed to a HUD
housing counseling grant or not, must
be overseen by a HUD certified housing
counselor.
B. Counseling That Covers the Entire
Process of Homeownership § 214.300
Comment: Home Inspection Materials.
A commenter requested that the
requirement to provide home inspection
information in § 214.300 should include
the specific home inspection
requirements in section 1451 of the
Dodd-Frank Act. The same commenter
requested that HUD issue a mortgagee
letter clarifying the section 1451(b)
requirement that lenders provide
prospective homebuyers, at first contact,
the home inspection materials specified
in section 1451(a). The commenter
suggested HUD include how the
information should be delivered and
include specific documents to be
provided by the agencies as prescribed
in the statute in this final rule. The
commenter also requested that HUD
disclose a timetable for developing the
documents required under section
1451(a), noting progress was being made
in early 2012 but has since ceased.
HUD Response: The new language in
§ 214.300 requires housing counseling

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agencies to address the home inspection
process as part of home purchase
counseling and provide clients with
such materials as HUD may require
regarding the availability and
importance of obtaining an independent
home inspection. In addition, the
proposed rule states that HUD may
periodically update and revise the home
inspection materials, as HUD deems
appropriate. In order to maintain
flexibility in revising the home
inspection materials and training
elements, HUD retains the proposed
language in the final rule. HUD is
continuing to develop the required
publications under section 1451(a) of
the Dodd-Frank Act.
C. Certification To Provide Counseling
§ 214.103
Comment: Programs Covered. Several
commenters had questions concerning
the applicability of HUD’s rule to
agencies, including Tribally Designated
Housing Entities, that provide
counseling or administrative services
incidental to such programs as Family
Self Sufficiency, HOME Investment
Partnerships, Housing Choice Vouchers
(HCV), and Indian Housing Community
Development Block Grants, but that are
not directly approved by HUD as
Housing Counseling Agencies or
participating in HUD’s Housing
Counseling Program through an
intermediary or state housing finance
agency. One commenter questioned the
breadth of the definitions of
homeownership counseling and rental
housing counseling, to include
counseling related to topics pursuant to
programs such as the Public Housing
Operating Fund and rental assistance
under Section 8. The commenters
expressed concern that the definition of
rental housing counseling goes so far as
to include providing referrals for renters
and prospective renters to entities
providing housing counseling, and that
by using broad definitions, their
members provide some degree of
‘‘counseling’’ as part and parcel of
administering these HUD programs. The
commenter requested explicit
clarification that the certification
requirements apply only to agencies
receiving housing counseling funds
and/or voluntarily seeking HUD
approval as a housing counseling
agency, and was concerned that the rule
could be misconstrued to require that
housing authorities must become
approved housing counseling agencies,
with frontline housing authority staff
required to be certified housing
counselors, in order to perform basic
program functions such as explaining
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determinations or even simply to
provide a referral to a HUD-funded
housing counseling agency.
HUD Response: As discussed in
Section IV of this preamble, the Section
106 amendments added a requirement
that all homeownership and rental
housing counseling required under or
provided in connection with all HUD
programs must be provided only by
HUD certified organizations and
individuals, under Section 106(e).
Section 106 also requires that for HUD
to certify organizations, all individuals
through whom the organization
provides housing counseling must be
certified. This final rule implements this
requirement using the existing service
delivery structure that housing
counseling be provided by HCAs.
Therefore, only HCAs that have HUD
certified housing counselors can
provide homeownership and rental
housing counseling that is required by
or provided in connection with Other
HUD Programs.
HUD has expanded this preamble to
elaborate upon which entities and
which activities will require the use of
a HUD certified housing counselor
working for an HCA. HUD has also
provided additional definitions in order
to clarify which entities, individuals,
and activities will be affected by the
final rule, and adopted those definitions
in § 5.111. As noted earlier in this
preamble, housing counseling includes
‘‘Housing Counseling’’: (1) Required by
statute, regulation, NOFA, or otherwise
required by HUD; (2) funded under a
HUD program; (3) required by a grantee
or subgrantee of a HUD program as a
condition of receiving assistance under
the HUD program; or (4) to which a
family assisted under a HUD program is
referred, by a grantee or subgrantee of
the HUD program.
HUD programs that require or provide
for homeownership and rental housing
counseling activities will be required to
use HUD certified housing counselors
that work for an HCA after the final
compliance period as defined in this
preamble. An activity conducted in
connection with administering a
program—such as intake, loan
application, and eligibility assessment—
that is limited in scope, and that is not
customized to the individualized need
of the consumer to address his or her
housing barriers and achieve housing
goals, is not in and of itself
homeownership or rental housing
counseling. HUD has added crossreferences to the new definitions in
§ 5.100 and new Section 106
requirements in § 5.111 to a number of
programs for additional clarity for those

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grantees, including the ESG program,
the CoC program, and CDBG.
As for tribes, however, the application
will only apply after HUD undergoes
tribal consultation and addresses the
participation of tribes in HUD’s Housing
Counseling Program in future
rulemaking or guidance, as appropriate.
Comment: Section heading. A
commenter recommended that HUD
change the heading of paragraph (n) of
§ 214.103 to include the definition of
the term ‘‘participating agency.’’ The
commenter wrote that inclusion of this
term would clarify that the requirement
applies to HUD-approved
intermediaries, multi-state
organizations, and state housing finance
agencies.
HUD Response: The definition of
‘‘participating agency’’, as provided in
§ 214.3, includes the list the commenter
seeks to be added to the heading of
paragraph (n). HUD believes amending
the heading to include the definition
would be confusing. Therefore, HUD in
the final rule retains the § 214.103(n)
heading as proposed. HUD has added to
this preamble the term HCA to represent
all HUD-approved and HUD
participating agencies, including
intermediaries, state housing finance
agencies, multi-state organizations, local
housing counseling agencies, affiliates
and branches.
Comment: Consultation in
Development of Housing Counseling
Certification Examination. Many
commenters recommended that HUD
consult with subject matter experts on
all areas covered by the test to provide
input on test question development,
including leaders and long-term
experienced housing counselors, real
estate professionals, national housing
counselor trainers, and existing training
providers such as NeighborWorks
America. Several commenters requested
that HUD create subject matter expert
workgroups that would convene and
help manage the test. A commenter
recommended that experts represent the
diversity of the trade organizations,
including National Association of Real
Estate Brokers, Inc.; National
Association of Realtors®; National
Association of Hispanic Real Estate
Professionals; and Asian Real Estate
Association of America. One commenter
recommended that HUD use formal
criteria established by national housing
counseling training organizations to
establish the requirements for
credentials as a ‘‘HUD certified Housing
Counselor.’’
Several commenters asked if there
will be an opportunity for existing
certification programs to provide input
on the new examination. Another

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commenter recommended that leaders
and long-term housing counselors be
required to administer the test prior to
implementation of the final rule to make
sure the questions are relevant to real
life situations. Other commenters
recommended the curriculum and
examination should be reviewed by
experienced counselors and allow for
feedback on format and content to
ensure that the examination will
accurately gauge a housing counselor’s
competency. Commenters also
recommended HUD allow for feedback
to ensure that training meets the needs
of housing counselors. One commenter
suggested HUD withhold the
examination requirements, material, and
other items without notice and fair
opportunity for public comment.
Another commenter recommended an
18-month timeframe for testing
development to evaluate the quality of
the questions.
HUD Response: In order to preserve
the integrity and fairness of the
rulemaking process and testing, HUD
was unable to share information with
select groups on the certification
process, including the training and
examination. HUD agrees with
commenters that the use of subject
matter experts is critical for developing
the housing counselor certification
training and testing. Therefore, HUD
selected a contractor that utilized
subject matter experts in adult learning,
housing counseling, lending, and fair
housing to develop the housing
counselor certification training, online
study guide, and examination.
HUD does not believe an 18-month
timeframe for the development of the
test to evaluate the quality of the
certification examination questions is
necessary. Instead, HUD will welcome
feedback from all sources, including the
housing counseling and real estate
industries, regarding the certification
training and examination after
publication of the final rule and after
implementation of the Housing
Counselor Certification examination.
The existing training Web site,
www.hudhousingcounselors.com,
provides the opportunity for comments
and feedback on the content of the
training materials. Those taking the
examination will be encouraged to
provide immediate feedback after
completing the test. Anyone interested
in submitting comments regarding the
training and examination may write to
[email protected] and
include Certification in the subject line.
After the examination is initiated, HUD
and the contractor will evaluate test
questions quarterly, and both the

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training and testing will be updated as
needed.
Comment: Content of Housing
Counselor Certification Examination.
Commenters submitted numerous
suggestions and questions regarding the
content of the Housing Counselor
Certification Examination. Commenters
asked that HUD be more specific about
the six areas to be tested and more
clearly define how competency will be
determined in each subject area. A
commenter stated that knowing the
level of expertise and knowledge
required to pass the examination is
critical. Another commenter
recommended HUD provide more
details regarding the test itself as soon
as possible, prior to any deadlines
beginning to run. Commenters requested
HUD provide a sample curriculum so
that national education and training
providers can adjust the curriculum to
provide training to new and
experienced counselors.
Commenters also recommended that
the test be general enough to allow
housing counselors who specialize in
certain types of counseling to take an
alternative approach to learn the
information through training, while
being sufficiently stringent and
comprehensive. Other commenters
suggested that the test focus on general
knowledge, and additional professional
qualifications should be earned in
specialized areas. Commenters stated
that testing must be appropriate as a
meaningful measurement; that is, that
the test should be reasonable and
passable and reflect the comprehension
of material relevant to housing
counseling services.
Commenters recommended specific
topics to be included in the Housing
Counselor Certification Examination.
These topics included testing on
knowledge of: Qualified mortgage
standards; mortgage products,
homeownership programs and
regulations; financial management; loss
mitigation; local, state, and regional
programs; laws and conditions
including rental laws; State eviction
laws; home inspection documents;
rental readiness; finding affordable
housing; applying for Section 8
vouchers; housing for people with
disabilities; finding cooperative
housing; downpayment assistance;
types of loan programs; foreclosures
prevention; budgeting income and
expenses; the bankruptcy process; and
Social Security disability income. Other
recommendations were that the
examination should include a statespecific portion, in addition to a HUD
basic portion of the examination; and
that there should be optional testing on

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reverse mortgage counseling areas as a
possible component under the financial
management subject area. Some
commenters asked how a broad set of
national standards can be developed in
a subject area in which the rules and
practices vary by locality. Other
commenters asked if the examination
will vary from state to state.
Commenters also stated that the
examination should be tailored to meet
only the areas of counseling offered by
the HUD-approved housing counseling
agency, and recommended that housing
counselors be trained to make referrals
as appropriate.
Commenters also addressed the
current HECM certification
examination, recommending that the
Housing Counselor Certification
Examination mirror HUD’s HECM
certification test. Other commenters,
however, recommended that the new
test not be modeled after the original
HECM examination as many counselors
found it difficult to pass and the
stringency and inconsistencies of the
HECM examination resulted in a
decrease in the availability of reverse
mortgage counseling.
Several commenters mentioned
existing certifications, and
recommended that the certification
process align with the standards for
existing certification programs such as
those offered by NeighborWorks®
America.14 Other commenters
recommended that HUD integrate
existing third-party counselorcertification exams into HUD’s
certification examination, and that
HUD’s housing counselor training not
be duplicative of existing trainings or
preempt existing specialized trainings.
Several commenters asked whether
HUD would allow housing counselors to
continue to complete other certifications
in addition to the HUD Housing
Counselor Certification. A commenter
asked if a housing counseling agency
should hold off either recertifying using
other housing counselor certifications or
having housing counselors receive new
certifications from other entities before
the final rule is published. Another
commenter asked how often the
examination will be updated to reflect
current trends and issues.
HUD Response: To address concerns
and questions put forward by
commenters, HUD provided access to
the online training materials at
www.hudhousingcounselors.com prior
to releasing the final rule. HUD’s
training is designed to provide basic
14 See http://www.neighborworks.org/TrainingServices/Training-Professional-Development/
Courses-Certifications.

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knowledge on the six counseling areas,
required by Section 106, that are
specific to the certification examination.
Under the six counseling topics
required by Section 106, HUD’s
contractor developed content
information for the training and
examination after reviewing HUD’s
statute, regulations, and handbooks, as
well as National Industry Standards for
Homeownership Education and
Counseling,15 and training provided by
HUD’s housing counseling training
NOFA grantees. The examination will
focus on the knowledge base needed by
a housing counselor to address basic
issues related to the six areas specified
in Section 106. Many of the topics
suggested by commenters are addressed
in the training and certification
examination, such as loss mitigation,
mortgages, and budgeting. However, it is
HUD’s view that other topics suggested
by commenters are subjects that do not
fall within the scope of a national
examination designed to test basic
knowledge related to the six counseling
topics required by Section 106.
HUD will also continue to require the
separate HECM Counselor Roster
examination and certification pursuant
to the statutory requirements of National
Housing Act sections 255(d) and (f) and
the HECM Roster regulations at 24 CFR
part 206, subpart E. HECM counselors
must, however, also pass the
certification examination required by
Section 106, which is applicable to all
counselors. In response to comments
regarding the administration of the HUD
HECM Roster examination, HUD has
taken prior experience with the HECM
Roster examination into consideration
when developing the Housing
Counselor Certification Examination.
HUD intends to evaluate the
examination questions quarterly and
update where necessary to reflect
current regulatory and policy changes.
HUD also intends to evaluate the
Housing Counselor Certification
Examination, utilizing analyses of test
results and stakeholder feedback.
The training and examination will not
focus on specific state and local laws
and regulations but the training will
address ways to access local and state
information. The training offered by
HUD may include topics similar to
those found in classes offered by HUD
housing counseling training grant
recipients such as NeighborWorks®
America, National Council of La Raza,
and the National Community
Reinvestment Coalition. However,
HUD’s training is specifically designed
15 See http://www.homeownershipstandards.com/
Home/Home.aspx.

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to prepare housing counselors for the
Housing Counselor Certification
Examination. The learning objectives
identified for each topic may be
different than those offered by other
entities. HUD’s training is not designed
to replace other training offered. HUD’s
training is designed to provide general
knowledge on the six topics.
HUD has not changed the existing
requirement that an HCA must employ
staff trained in housing counseling, and
that the HCA’s staff must possess a
working knowledge of HUD’s housing
and single-family mortgage insurance
programs, other state and local housing
programs available in the community,
consolidated plans, and the local
housing market. The staff should be
familiar with housing programs offered
by conventional mortgage lenders and
other housing or related programs that
may assist their clients. Existing training
opportunities may be used to meet
HUD’s ongoing knowledge requirements
and may be helpful to gain mastery of
housing counseling related topics or to
gain additional credentials. HUD will
continue to provide funding for such
activities and encourage housing
counselors to take continuing education
courses. HUD recommends that housing
counselors continue to seek other
housing counseling certifications.
Comment: Drafting of Housing
Counseling Certification Examination,
Format and Scoring. Commenters
offered recommendations about the
format of the exam, including the
number of questions; that the
examination require no more than 2
hours for successful completion; the
possibility of taking components of the
examination allowing each component
area to be tested separately; and that
counselors with five or more years of
experience take a shorter examination.
Commenters questioned how the test
will be scored, and one recommended a
70 percent passage rate, while others
recommended 80 percent, the same as
the National Industry Standards.
Commenters also questioned whether
graders will consider relative knowledge
of subjects and if there is a way to
compensate for areas where the
counselor may test lower in one area but
test higher in another. Commenters
recommended that HUD require a
minimum overall score rather than a
minimum score in each subject area,
and that the scoring methodology of the
examination be transparent, and results
be given instantaneously and reveal
correct answers for any items that were
not answered correctly. Another
commenter recommended that the
examination have controls or proctors to
validate counselors. Another commenter

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asked whether scoring will
accommodate certification in one or two
of the subject areas. A commenter
suggested that scoring give partial or full
credit for existing certifications and
recommended framing the test to
housing counselors based on the
specialized areas of counseling offered
by their agencies.
HUD Response: The Housing
Counselor Certification Examination has
approximately 90 multiple-choice
questions. The test is administered
online by a proctor either by web-cam
or at a proctoring location, and the
proctoring service verifies the identity
of individuals taking the examination.
The test is designed to be completed in
two hours, and accommodations will be
made for those with disabilities.
Guidance on requesting
accommodations will be provided by
the certification examination contractor.
The examination score will be scaled
based on a range from 200 to 800. The
test will not have individual sections.
The examination cannot be divided into
topic areas, nor taken by topic area.
Many examination questions relate to
multiple topics, which precludes
dividing up the examination ‘‘by topic.’’
Further, each examination goes through
an industry standard certification
review process and is considered as a
whole, and scored as a whole. To pass
the examination, the individual must
achieve a scaled score of 500 or more.
The scaled score does not represent the
percentage of items correct, but is a
numeric score for the overall
examination.
Test takers will be notified by email
whether they pass or fail the
examination. If a test taker does not pass
the examination, the email notification
will include feedback on the learning
objectives that the test taker should
review before retaking the examination.
The test will not be customized for each
individual counselor as that would be
inconsistent with the requirement that
each counselor pass an examination in
all six areas.
Comment: Scope of Certification; Six
Testing Areas. One commenter stated it
is unclear whether a housing counselor
is required to be certified in all six
subject areas. Another commenter
recommended framing the test to
counselors based on what areas their
agencies specialize in.
Some commenters noted that
obtaining working knowledge in the six
specified areas of expertise, but not
specializing in those areas, seems to be
in keeping with the intent of Section
106 amendments. Another commenter
stated that HUD’s certification standard
should assess a baseline of skills and

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knowledge across the range of
counseling services covered by the rule,
while acknowledging that individual
counselors and counseling agencies
often focus on specific aspects of the
homeownership or rental process.
Several commenters wrote that the
proposed testing is unrealistic,
impractical, and that specialization is
important to the industry. Commenters
stated that having different types of
housing counselors provides for a
greater level of competence in the
counselors. A commenter expressed
concern about how general knowledge
can impact a counselor’s effectiveness
within a specialized area. Commenters
suggested changing the requirement that
all six subject areas should be tested,
and instead allow for each subject to be
tested separately. Several commenters
also recommended restructuring a
change in the organization of the six
competency areas to better reflect the
various types of counseling services
performed.
Commenters recommended that there
be one certification system, either
HUD’s or the NeighborWorks Center for
Homeownership Education and
Counseling (NCHEC) 16 certification
program, which allows for
specialization. Generally, commenters
suggested that HUD administer separate
tests and certifications based on each
subject area.
Commenters wrote that a uniform
approach to rental and housing
counseling ignores the uniqueness of
each area, and requested that the
training and examination reflect these
differences. The commenters submitted
that separate training and examination
would be appropriate so that where the
statute requires examination in the
‘responsibilities of homeownership and
tenancy’ the homeownership counselor
could be trained and tested on the
former, while the rental housing
counselor could be trained and tested
on the latter.
HUD Response: Section 106 requires
a general knowledge in each of the six
competency areas. All counselors are
required to take the certification
examination on the six competency
areas and the test will not be
customized based on the specialization
of each individual counselor. The
intended goal of this requirement is to
increase the breadth of individual
housing counselors’ knowledge in an
effort to better assist clients with varied
needs. This broad knowledge will
benefit housing counselors and clients,
and should not diminish the
effectiveness of current specializations.
16 See

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Agencies can continue to determine the
areas of specialization for each
individual counselor, and for the agency
itself, based on the workload of the
agency and the needs of its client base.
The Housing Counselor Certification
Examination is a single comprehensive
test that covers all six competency areas.
The Section 106 amendments mandate
that housing counselors demonstrate
competency for both rental and
homeownership topics. The statutory
requirement reflects a basic principle
that housing counselors participating in
HUD’s Housing Counseling Program
should have general knowledge on both
topics to help clients determine whether
they are more suited for renting or
owning, based on their circumstances,
and to prepare for the eventuality that
owners may become renters in the
future and vice versa.
Comment: Cost; Funding for Cost of
Housing Counselor Certification
Examination. Commenters stated that
HUD’s Housing Counseling Grant
Program should continue to include
funding for the certification
requirements. Commenters also wrote
that funding is subject to available
appropriations. Recommendations from
commenters included: reducing other
monitoring and compliance
requirements to help small nonprofits
using HUD funding; HUD assisting
nonprofit organizations through added
funding and capacity building to help
them achieve maximum results; and
providing separate or outside funds (for
example, funds received from banks in
settlement of certain mortgage-related
lawsuits) to assist in certification so that
existing annual HUD housing
counseling funding does not need to be
used to cover these expenses. Another
commenter requested that HUD increase
scholarship availability specifically for
small nonprofits, stating that the current
limitation of one scholarship per
organization makes it difficult for
organizations to afford expensive
training and certifications.
Commenters expressed concerns that
housing counseling agencies would lack
the funds necessary to pay for training
to prepare for the examination, and
requested more funds for training, travel
to training, lodging, and technical
upgrades for organizations that do not
have technical capacity needed for
training.
Commenters stated that as grant funds
continue to decrease, small community
based nonprofits are unable to cover
these new costs while continuing to
subsidize general operation costs. A
commenter stated that smaller agencies
should have input determining the
financial support necessary to comply

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with the final standards, and another
commenter claimed that the new
requirement is an unfunded mandate.
HUD Response: HUD recognizes that
costs will be incurred as a result of the
certification requirement. HUD’s Fiscal
Years 2014 and 2015 Comprehensive
Housing Counseling Grant Program
NOFA allowed as eligible expenses
costs associated with HUD housing
counseling training, testing and
certification requirements. In future
NOFAs, HUD intends to treat costs
associated with certification as an
eligible Housing Counseling
Comprehensive Grant program expense,
subject to statutory authorization and
appropriations.
HUD is providing training for the
certification examination online at no
cost. In addition, HUD has strived to
make certification and examination
costs as minimal as possible, but cannot
provide scholarships for the
examination fee.
HUD cannot reduce the program
requirements based on the size of an
agency to help small agencies reduce
costs in other areas. HUD’s Housing
Counseling Program requirements apply
to all HCAs. HUD allows for agencies to
develop revenue sources through
charitable grants, lender-funded
agreements, or client payment sources.
HUD encourages agencies to consider
these options and others to help offset
the costs associated with housing
counselor certification.
While several governmental entities
have received settlement funds arising
from national mortgage servicing
settlements, and have designated a
portion of those funds for housing
counseling services, each entity is
authorized to administer its own
settlement funds. HUD has no authority
over the use or distribution of these
funds. Therefore, agencies should
consult their State attorney general’s
office to determine whether settlement
funds can be used for the Housing
Counselor Certification Examination in
their particular state.
This rule is not an unfunded mandate.
The new certification does not require
individuals, states, tribal governments,
and the private sector to undertake any
new requirements. Participation in
HUD’s housing counseling program and
Other HUD Programs is voluntary.
Comment: Cost: Responsibility to Pay
for Cost of Certification. Commenters
wrote that HUD or another Federal
agency should pay for the certification
examination. A commenter wrote that
HUD should be responsible for paying
the costs of certification because
certification does not provide one with
a business opportunity like a

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professional degree does. Another
recommended that HUD refund the cost
of training and testing after successful
passage, which will reduce impact on
awards consistent, with Executive Order
13563, entitled Improving Regulation
and Regulatory Review.17 Another
commenter recommended HUD mitigate
the costs of the certification process,
especially for agencies with small staff
and budgets, by including subsidized
trainings and scholarships.
Commenters stated both agencies and
housing counselors will bear the cost
because they are interconnected. Other
commenters, however, wrote that the
cost of counseling will fall on the
housing counseling agency because: (1)
Counselors do not control their income
and are not paid on commission; (2)
they do not make professional salaries;
and (3) they lack mobility because of the
limited job opportunities, which will
cause agencies’ costs to dramatically
rise. Commenters wrote that the
agencies will pay for the cost to
maintain their certification, but the
result will be that the agency will pay
for less specialized training for topics
such as foreclosure mitigation or other
professional development training that
would ultimately benefit the
organizations’ clients. Another
commenter said that although the
counseling agency will end up paying
for the certification, the counseling
agency cannot guarantee that a housing
counselor will stay with that agency for
any length of time.
Commenters recommended that the
final rule be clear that the compliance
costs of the rule may be borne by the
individual housing counselor or by the
individual counselor’s sponsoring
agency.
HUD Response: Individual housing
counselors are responsible for paying for
the examination when payment is
required. The housing counseling
agency, however, has the option of
paying for the examination for its
counselors. Passing the certification
examination serves as a marketable
credential for individuals seeking work
at an HCA as a housing counselor. HUD
recognizes that agencies are concerned
about the cost of training for and taking
the Housing Counselor Certification
Examination and, therefore, is providing
free training. HUD has determined that
the cost of taking the examination will
be significantly less than the cost
estimated in the proposed rule. Lastly,
while it is true that an agency cannot
guarantee that a counselor will remain
17 Signed by the President on January 18, 2011,
and published in the Federal Register on January
21, 2011, at 76 FR 3821.

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with the agency if the agency pays for
the examination, such a scenario is
always a possibility for any employee
who receives training paid for by an
employer, and employers can create
incentives to retain their employees
consistent with agency policies and
applicable laws.
Comment: Cost: Testing Cost. Some
commenters requested that the
examination should be administered
free of charge stating that a free
examination would allow retesting
without concern of costs for nonprofit
agencies. A commenter proposed that
existing counselors have 2 to 3 months
to take the test one time for free. Others
recommended waiving the cost for
existing certified counselors, and having
a reasonable cost for new counselors
entering the field; allowing approved
agencies that do not receive funds to be
charged only $100 for the certification;
or charging a fee for the agency instead
of a fee per counselor.
Commenters requested the fee be as
low as possible; that HUD keep the cost
reasonable, especially for housing
counselors who are serving
communities of color and other
underserved communities. A
commenter recommended a low cost for
small local practitioners providing a low
volume of housing counseling annually.
Another commenter wrote that HUD
should consider the costs of existing
continuing education in determining the
cost for training and certification.
Another commenter recommended a fee
for training and no fee for the
examination. Commenters also
requested free training, or permitting
training to be charged separately so it
could be done in house or limited to
certain subjects.
Several commenters wrote that $500
is too high a fee to pay, and requested
that HUD provide information on how
HUD plans to implement the testing for
$500. Some commenters requested that
the cost of the certification be limited to
a range of $100 to $200. A commenter
stated that the estimated cost is
reasonable only if it includes the cost of
trainings.
HUD Response: The fee charged each
time an individual takes the
certification examination is based on the
cost of administering the examination.
The cost of the examination is well
below the $500 estimate. The cost is
$100 for testing online at the examinee’s
location and $140 at a proctoring site.
Any changes to the cost of the
certification examination will be
published in the Federal Register.
Comment: Cost: Consequences of
Cost, Secondary Costs. Some
commenters stated that certification and

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training are overly burdensome and
costly and will take away from client
services. Commenters also stated that
this would result in fewer low-income
people receiving counseling and will
result in higher homelessness, and that
HUD should seek ways to minimize
costs to ensure that the work of housing
counselors in assisting vulnerable
households is not inadvertently hurt in
the process.
Other commenters wrote that costs
associated with certification will result
in agencies leaving the business of
housing counseling, counselors leaving
agencies, or individuals never joining
the industry. Commenters stated that
the cost is high for a new housing
counselor, because an agency would not
want to hire someone without the
certification and risk losing its agency
certification. Another commenter wrote
that given many counselors come from
other industries and their entry is
limited, a housing counseling position
will be less financially attractive with
the additional compliance cost, and
agencies might as a result see a
reduction in current staff-to-client
ratios. Commenters also wrote that the
cost could interfere with other
specialized trainings, or that agencies
will be unable to afford to send their
counselors to training, which will
impact passage rates and the number of
agencies with HUD-approved status.
Commenters also wrote that HUD
should consider the cost in the context
of the amount of time it will take for
counselors to prepare, travel, and take
the examination, and some stated that
opportunity costs and HUD’s cost of
monitoring compliance are incurred but
not included. Commenters wrote that
the cost associated with compliance for
entities offering housing counseling
programs that are not HCAs should be
disaggregated in the cost-benefit
analysis.
HUD Response: The certification
examination is mandated by statute. As
stated previously in this preamble, HUD
strived to make certification costs as
minimal as feasible by providing free
training and allowing for web-based
testing which removes the need for
individuals to travel. HUD is providing
36 months for individual counselors to
become certified so that they have time
to budget the cost of taking the
examination. In addition, if an
organization decides to help pay for
certification the entity also has time to
budget for the cost of ensuring their
counselors are certified. Entities that are
not HCAs may choose among four
different options in order to become
compliant, and the cost-benefit analysis

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includes a discussion of the costs of
each option.
Comment: Difficulty of Certification
for Small Rural Agencies. Commenters
requested that HUD consider rule
changes that help rural organizations
gain certification and meet the stringent
reporting requirements. Commenters
wrote that requiring individual
counselors and agencies to be certified
is a significant burden on small rural
counseling agencies already facing
financial strain. Commenters stated that
some agencies in urban areas have many
counselors to get through the process
and those agencies in rural areas with
potentially fewer resources will need
more time to allocate the expense of
obtaining the certification.
HUD Response: HUD is keenly aware
of the vital role of rural agencies in
providing housing counseling. However,
HUD is responsible for implementing
the Section 106 certification
requirement in the same manner for all
agencies and the statute did not provide
an exemption for smaller or rural
agencies. HUD recognizes that the
examination must be accessible to
housing counselors in rural areas. HUD
has provided two testing options: online
and on-site. On-site testing is an option
for those agencies and individuals with
limited internet access. HUD has also
worked to minimize certification costs
for individuals and agencies, and
delayed implementation for all entities
to become compliant.
Comment: Online Testing. Several
commenters requested the test be
available online, stating that online
testing expedites test delivery, grading,
and recordation. These commenters
recommended that: The test could be
exclusively online which will expedite
compliance and increase efficiency; the
testing be offered at the convenience of
the agency and a list of examination
topics, study materials, and practice
examinations all be made available
online; and that web-cam equipment be
used similar to the HECM exam.
Commenters stated an online system
will make it easier for HUD or the
administering entity to offer reexaminations at a reduced cost, and that
almost all certification programs
provide for online testing, and stated it
is critically important this option is
provided for the certification program.
A commenter suggested that the test be
offered in person, once a month, to
supplement online testing, increasing
ease of access and the ability for an
examinee to choose an examination
format of their preference. Another
commenter expressed opposition to the
idea of on-line testing, except for
counselors in more rural areas who may

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have a hardship getting to a testing
facility.
HUD Response: HUD will be
providing the Housing Counselor
Certification Examination using online
testing through video conferencing at
the test-taker’s location, or at a
commercial proctoring site identified by
HUD’s contractor. Those choosing to use
video conferencing must have
equipment available at the location
where they plan to take the
examination. This option offers choices
for test takers depending on their
circumstances.
Comment: Testing Accommodations.
Several commenters requested that HUD
offer the certification examination in
multiple languages. A few commenters
recommended the examination be
offered in Spanish in addition to
English. Another commenter
recommended the language available
should be based on languages spoken by
the counselors participating in the HUD
Housing Counseling Program, which
would provide an equal opportunity to
the bi-lingual counselors. Other
commenters stated that not providing
the certification examination in
multiple languages, will result in an
adverse impact on counselors where
English is their second language. These
commenters wrote that it would be
unfair for HUD to impose a hardship on
those whose second language is English
and provide no alternative vendor to
provide the examination in Spanish.
Other commenters recommended that
additional time be provided for nonnative English speakers to complete the
certification test, and the test
accommodate different learning styles
and take into consideration cultural and
linguistic diversity. Another commenter
asked if accommodations would be
available for special needs such as
learning disabilities. Commenters
recommended making materials
culturally sensitive.
HUD Response: HUD understands
commenters’ concerns for test-takers
with English as a second language. HUD
reviewed data in the HUD Housing
Counseling System (HCS) to identify the
most frequently offered languages other
than English for housing counseling
services, and found 1,249 HCAs offered
counseling services in Spanish. The
next most frequently offered languages
were American Sign Language at 78 and
French at 78, followed by Creole at 58
and Vietnamese at 55. Based on this
data, HUD will offer the study guide and
the Housing Counselor Certification
Examination in both English and
Spanish. HUD, based upon available
appropriations, may offer additional

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translations of the study guide in other
languages.
HUD conferred with its contractor
concerning how the test could
accommodate different learning styles
and considered cultural and linguistic
diversity when creating the test. The
training course has also been designed
to accommodate different learning
styles. It is presented in an online,
interactive format, and is also offered in
a PDF format for those who prefer textbased instruction. The certification
examination was developed according
to professional standards recognized to
the testing industry. The examination
was designed to be free from bias and
measure only approved examination
content. Examination writers and
reviewers, under the guidance of a
psychometrician,18 were made aware of
potential bias, including cultural and
linguistic bias, and ways to avoid it.
The contractor will identify
procedures to address reasonable
accommodation requests of test-takers
with disabilities under applicable
sections of the ADA 19 and subsequent
amendments to the act. The Web site
will also offer training in a format that
is compliant with section 508 of the
Rehabilitation Act.20
Comment: Testing Schedule and
Sites. There were several comments
regarding who HUD should use to
administer the certification
examination. Commenters
recommended the administration and
management of the examination by
national trainers. Other commenters
suggested award of contracts to
suppliers with a strong diversity policy.
A commenter requested that
organizations other than national
training organizations like
NeighborWorks and National Council of
La Raza be afforded opportunity to
receive grant funds to administer the
certification and training. The
commenter stated that HUD should also
allow organizations that administer
certification programs to serve as
examination preparation sites or
compete to contract for administering
the new certification examination.
Conversely another commenter stated
concern that a sole training and
certification entity that is also a
counseling agency would be a clear
18 The term psychometrics refers to the
measurement of an individual’s psychological
attributes, including the knowledge, skills, and
abilities a professional might need to work in a
particular job or profession.
19 42 U.S.C. 12101 et seq.
20 Section 508 of the Rehabilitation Act (29
U.S.C.794d) requires Federal agencies’ electronic
and information technology to be accessible to
persons with disabilities. See http://
www.section508.gov.

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conflict of interest. Other commenters
recommended that HUD use multiple
test administrators to facilitate
accessibility of taking the examination
for thousands of counselors to comply
in one year. A commenter expressed
concern about whether HUD could
handle the volume of test takers
registering at the same time. Another
commenter recommended the
examination be easy to administer.
Other commenters asked who will
administer the testing.
Commenters offered several
suggestions about where the HUD
examination should be offered
including HUD offices, HUD training
grantee locations, offices of state
housing finance agencies, or regional
testing sites. One commenter suggested
that NeighborWorks proctor
examinations be at NeighborWorks
training institutes or place-based
training locations because
NeighborWorks offers scholarships to
attend such trainings. Other
commenters wrote that HUD should
provide regional testing sites, which
would be closer to the counselors. A
commenter suggested testing be
available whenever the counseling
agency and counselor feel the housing
counselor is ready to take the
certification examination.
HUD Response: Under Section 106,
the Office of Housing Counseling was
required to contract with one entity to
develop training and certification
testing for housing counselors. As
discussed in Section IV of this
preamble, HUD awarded a contract to
Bixal to develop the housing counselor
certification training, the housing
counselor certification examination, and
to host a Web site for the training and
examination. HUD and its certification
contractor will select the proctoring
service(s) and determine whether
offering the training at locations such as
a national training institute is a viable
option.
Housing counselors will now have 36
months from when HUD begins
administering the examination to pass
the certification examination. This
change should address concerns about
access to the examination for the
volume of individuals seeking
certification after the publication date of
this final rule. Housing counselors may
determine when they are ready to take
the certification examination. However,
testing schedules will depend on the
availability of proctors.
Comment: Period Allowed for Passing
Housing Counselor Certification
Examination. Commenters indicated
that HUD provide a 12-month period in
which to pass the test, and that during

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the period experienced counselors
should be allowed to continue
counseling as if they were HUD
certified, and agencies should be able to
provide counseling through experienced
counselors who are not HUD certified.
Commenters wrote that HUD should tie
the start date of the 1-year period
allowed for passing the test to the date
of the first time the test is administered,
to provide time for all entities to take
the test. A commenter wrote that if the
test is not administered promptly
counselors could not become certified
and entities could not receive funding.
The commenter also wrote that this
could take into consideration any
potential problems that happen with
test administration.
Another commenter wrote that small
counseling agencies should be allowed
additional time to comply with the
certification and to provide input as to
how much time should be considered.
Several commenters wrote that the
National Industry Standards for
Homeownership Education and
Counseling’s current benchmark for
training and certification is ‘‘as soon as
reasonably possible, but not later than
18 months from the start of
employment,’’ and HUD should also
consider the 18-month period and that
would allow HUD time to evaluate and
revise the test if first implementation
doesn’t meet meaningful measurements.
Another commenter wrote that timing of
the rule should consider the needs of
agencies that have to consider quarterly
training for NeighborWorks
organizations and the burdens of
sending counselors out for training and
testing.
Commenters recommended
expanding the timeframe to allow for
adequate preparation time and ability to
take the examination while counselors
continue to maintain their workloads—
ensuring that clients do not suffer any
ill effects from implementation of the
ruling. Several commenters
recommended that the deadline be
extended beyond 12 months to 18
months, 24 months, and other
commenters recommended 36 months.
A commenter recommended that
counselors should have 24 months to be
certified, thus allowing agencies to
determine when more experienced
versus less experienced employees
should be certified and continue to
provide counseling. The commenter
also wrote that 24 months will allow
agencies to spread the cost over 24
months to have lesser financial impacts
on organizations. Another commenter
wrote that extending the period to 36
months would ensure compliance and
alleviate administrative burdens and

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that some agencies in urban areas have
many counselors to get through the
process and those agencies in rural areas
with potentially fewer resources will
need more time to allocate the expense
of obtaining the certification.
HUD Response: In response to
concerns raised by commenters,
individuals, and agencies will now have
36 months from when HUD begins
administering the examination to be in
compliance with the certification
requirements. The examination will
become available upon publication of a
Federal Register notice. Until the 36month period for becoming certified
expires, individuals who have not yet
been HUD certified may still continue to
provide housing counseling services.
However, after the expiration of the 36month period, only those individuals
who have met HUD’s certification
requirements may provide housing
counseling services under HUD
programs, including HUD’s housing
counseling program. In addition, no
housing counseling required by or
provided in connection with all HUD
programs may be provided after the 36
months unless it is delivered by a HUD
certified housing counselor.
The 36-month period will provide
sufficient time for housing counselors to
study for and pass the examination.
Prior to the date of publication of this
final rule, the materials specific to the
certification examination, including a
sample test, will be available. The
certification test will become available
upon publication of a notice in the
Federal Register.
Comment: Grace Period for Agencies
with Staffing Changes. Several
commenters wrote that the certification
requirement will have detrimental
impact on agencies when staff changes,
especially for smaller agencies with
only one or two counselors. The
commenters asked that a reasonable
grace period be implemented to allow
new staff to become certified without
agencies losing their approval or their
ability to draw down grant funds, and
many commenters recommended a 12month grace period. A few suggested
that 6months would be sufficient to
allow uncertified counselors to see
clients and perform day-to-day tasks to
enhance learning and productivity.
Another commenter suggested allowing
for a grace period will provide time for
agencies to hire HUD certified staff or
allow their current counselor time to
gain 6 months of experience and pass
the examination.
Commenters stated HUD should
clarify the process to ensure that
agencies can continue to operate and
not lose certification status or be placed

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on probation if counselors do not pass
the housing counseling certification
examination, and agencies should get at
least a 90-day grace period to cure the
situation. A commenter recommended a
temporary inactive agency list for those
that are HUD-approved but do not have
a HUD certified housing counselor at
the time, so they do not have to go
through the difficult work of being
approved again.
Commenters recommended that,
under proper supervision, new housing
counselors should be exempted from the
requirement that all staff providing
homeownership or rental counseling
required under or in connection with
Other HUD Programs must be certified
by HUD. Alternatively, many
commenters stated that the final rule
should encourage the entry of potential
housing counselors into the field and
allow new hires to work as apprentices
or trainees under the supervision of a
HUD certified housing counselor. A
commenter stated that a trial period
allows for practical implementation of
providing services when faced with staff
turnover or expansions given it is
unlikely that applicants for positions
will already be certified. Commenters
recommended HUD provide new
housing counselors time to develop
knowledge before taking the written
examination. Some commenters
recommended that this timeframe for
new counselors be a minimum of 60
days to 90 days, while others
recommended 6 months to 1 year to
gain experiential knowledge before
requiring them to take the examination
without risk of de-certification of the
agency. Some commenters believe 12 to
24 months is needed.
Other commenters wrote that the
organization may not be able to afford
the cost of maintaining an employee
during the time it will take for them to
become certified. A commenter
recommended that the same standards
be adopted as the National Industry
Standards for Homeownership
Education and Counseling (NISHEC),
and HUD should allow 18 months for a
new counselor to be fully certified.
A few commenters stated that new
counselors in their agency need a
NeighborWorks® Center for
Homeownership Education and
Counseling (NCHEC) certification prior
to taking the HUD examination to
understand housing counseling
concepts, but NeighborWorks® Training
Institutes are only held every quarter.
HUD Response: HUD is implementing
a statutory requirement, which requires
that all counselors providing
homeownership or rental counseling
required under or provided in

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connection of HUD programs must be
certified. New counselors are also
subject to this requirement. A non-HUD
certified housing counselor may
continue to provide counseling services
up to 36 months following the start of
HUD administering the certification
examination. After the expiration of the
36-month period, only those individuals
who meet HUD’s certification
requirements may provide housing
counseling services under HUD’s
Housing Counseling Programs and for
HUD’s programs. An individual who
has not passed the certification
examination may work for an HCA and
assist certified housing counselors but
may not provide housing counseling or
oversee the group education sessions.
For an HCA to remain compliant with
the HUD Housing Counseling Program,
all housing counseling must be
provided by a HUD certified housing
counselor. If a situation occurs in which
an HCA’s only certified housing
counselor is no longer employed with
the agency, HUD will allow the agency
to be placed in inactive status,
consistent with § 214.200, for a period
of up to 6 months or such longer time
as may be approved by HUD, to allow
the agency to hire a certified housing
counselor. This rule does not change
HUD’s existing requirement that at least
half the counselors must have at least 6
months of experience in the job they
will perform in the agency’s housing
counseling program. The experience
requirement for housing counselors can
be met by previous relevant housing
counseling employment and experience.
If an agency does not meet this
requirement, HUD may change the
agency’s status to inactive, consistent
with § 214.200, for a period of time,
pursuant to that section, until the
agency again meets the requirement that
at least half the counselors must have at
least 6 months of experience. Placing an
HCA in inactive status will give the
HCA an opportunity, while on inactive
status, to hire a new housing counselor
that meets the certification and
experience requirements or to ensure
that an existing staff person meets the
requirements.
To address the question of an agency’s
ability to draw down funds if an agency
no longer has a HUD certified housing
counselor, HUD will allow the agency to
submit grant reports that support
eligible costs under the applicable grant
agreement, incurred during the period
of time that housing counseling services
were provided by a certified housing
counselor, or for other eligible Housing
Counseling Program expenses as
determined by HUD.

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Comment: Agency Certification.
Commenters questioned the
requirement that the agency itself must
be certified, instead of just the
counselors being required to be
certified. A commenter recommended
that the certification for agencies and
counselors should be separate, because
otherwise an agency’s status will change
any time a counselor leaves the agency,
or alternatively that the rule allow for a
dual certification system—a licensure
for an agency, and a separate licensure
for individual counselors. Another
commenter recommended that in place
of the ‘‘Certification of Competency’’ to
the agency, HUD provide a ‘‘Counseling
Agency Certification of Competency’’
when all counselors are certified.
Commenters asked for clarification on
whether an agency can only achieve
certification once there are counselors
on staff who are certified and have 6
months of experience.
Commenters questioned whether the
definition for being an approved
housing counseling agency is limited to
agencies that have only HUD certified
housing counselors who have at least 6
months experience or if HUD is
allowing more flexibility in this
definition. Some commenters asked if
the 6 months of experience could be
waived if a counselor passes the
certification examination. They
recommended that a counselor should
still be required to follow the 6 month
experience requirement because the
general information on the test is not
necessarily sufficient to train the
counselor to do full counseling services.
Other commenters asked HUD to clarify
that at least 6 months of experience for
a counselor can be from another housing
counseling agency certified by HUD.
Other commenters recommended that
such certification should be made as a
self-certification by the agency.
Commenters suggested that HUD should
reconsider the restriction that agencies
have a HUD certified housing counselor
on staff and at least half of their
counseling staff must have 6 months of
experience
Commenters also asked if all the
counselors employed by the agency had
to be certified in order for the agency to
be certified, and what would happen if
one of their counselors was not
certified. Commenters asked for
clarification on the proposed rule
requirement that all HUD certified
agencies employ ‘‘at least one’’ HUD
certified housing counselor at all times
to maintain organizational certification.
A commenter recommended HUD make
reasonable allowances for small and
existing housing counseling agencies
with strong track records to comply

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with the requirement to employ at least
one HUD certified housing counselor at
all times.
Commenters expressed concern that
HUD certified housing counselors will
be much sought after by counseling
agencies that find themselves with a
vacancy and the laws of supply and
demand will result in the poaching of
counselors among agencies and that the
agencies will have a harder time finding
a HUD certified housing counselor to fill
a vacancy. Commenters requested that
HUD clarify how an independent
agency demonstrates that every
counselor is certified. A commenter
wrote that having to develop a database
or report to HUD regularly could be
difficult with high counselor turnover.
A commenter recommended a
temporary inactive agency list for those
that are HUD-approved but do not have
a HUD certified housing counselor at
the time, so they do not have to go
through the difficult work of being
approved again. Another commenter
stated that any decision regarding
recertification should wait until there
has been an opportunity to assess the
first rounds of individual certification.
Commenters asked if a new agency
applying for HUD certification will need
to have all housing counseling staff
certified at the time of application. An
agency commenter asked about
opportunities that may be available for
new agencies to gain HUD approval.
Several commenters asked whether the
same standards for HUD approval for an
agency will continue to exist so as to
ensure that scam artists cannot pass the
HUD counselor exam, throw up a
shingle and call the entity a HUDapproved or -certified counseling
agency in order to prey upon
consumers.
A commenter asked whether an
agency that does not have its own HUDapproved housing counseling status but
is a subgrantee of a HUD Intermediary
is considered a HUD-approved housing
counseling agency for the purposes of
housing counselor certification as long
as: (1) The agency remains a subgrantee;
and (2) is subject to the same
requirements as a HUD-approved
housing counseling agency.
Commenters wrote that HUD should
further clarify compliance and oversight
procedures, and any possible financial
penalties for noncompliance. The
commenter stated that the current rule
only addresses retraction of housing
counseling funds, which will not apply
to all organizations.
HUD Response: The proposed rule
provided that, in order to maintain or
obtain HUD approval, a housing
counseling agency must demonstrate

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that all counselors who provide
counseling services for the agency are
HUD certified and that upon
demonstrating this the housing
counseling agency would be issued an
agency ‘‘Certification of Competency.’’
HUD carefully reviewed the comments
that questioned the separate agency
certification. Based on these comments,
the final rule will not require that HUD
issue a separate agency ‘‘Certification of
Competency.’’ However, the final rule
still requires that all counseling,
including homeownership and rental
counseling, performed under all HUD
programs, including the Other HUD
Programs and HUD’s Housing
Counseling Program, must be provided
by counselors who are HUD certified
and who also work for an HCA, and this
requirement must now be met 36
months after the examination becomes
available. This final rule also maintains
the requirement that, to participate in
HUD’s Housing Counseling Program, an
agency must meet HUD’s approval
requirements at § 214.103, as amended
by this rule, as evidenced either by (1)
direct approval from HUD as a local
housing counseling agency, multi-state
organization, state housing finance
agency, or national or regional
intermediary, or (2) participation as an
affiliate, branch, or subgrantee of a local
housing counseling agency, multi-state
organization, state housing finance
agency or national or regional
intermediary.
Beginning 36 months after the
certification examination becomes
available all individuals who provide
homeownership and rental housing
counseling required under or provided
in connection with any HUD program
and all individuals providing housing
counseling, including homeownership
and rental housing counseling, under
HUD’s Housing Counseling Program
must be HUD certified. Because all
housing counselors who provide
counseling services for an HCA must be
HUD certified, if an HCA no longer has
at least one certified housing counselor
such agency will no longer meet HUD
requirements. To participate in the HUD
Housing Counseling Program, an HCA
must meet all of the approval
requirements at § 214.103, as amended
by this rule. If an entity applies for HUD
approval, the individuals providing
housing counseling as part of the
agency’s housing counseling work plan
must have passed the certification
examination as a condition to HUD
approving the agency. If the agency is
approved, the housing counselors who
have passed the examination would be

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eligible for a HUD certified Housing
Counselor Certificate.
An agency that is a subgrantee or
affiliate of a HUD-approved
intermediary or state housing finance
agency is also an HCA. Any housing
counseling provided by an HCA must be
performed by a certified housing
counselor. Individuals who work for an
HCA who pass the examination will be
eligible for certification. This rule does
not change HUD’s existing requirement
that at least half the counselors must
have at least 6 months of experience in
the job they will perform in the agency’s
housing counseling program. The
experience requirement for housing
counselors can be met by previous
relevant housing counseling
employment and experience. The
experience requirement may have been
met by working as a housing counselor
or by on-the-job training assisting a
housing counselor for an agency that
provides housing counseling services.
If an agency no longer has at least one
certified housing counselor and
therefore cannot meet the requirement
that all housing counselors who provide
counseling services for an HCA be HUD
certified, the agency must notify HUD.
HUD may change the agency’s status to
inactive, consistent with § 214.200, for a
period until the agency again meets
these requirements. If the agency fails to
hire a HUD certified housing counselor
within the initial 6 months of inactive
status, HUD may at its discretion extend
the period of inactive status, or HUD
may move forward with terminating the
agency’s approval, pursuant to
§ 214.201.
If an agency needs to hire an
individual to conduct housing
counseling, the agency need not hire
only an individual who was already
certified. The agency may hire an
individual who has passed the
certification examination and, upon
being employed by the HCA, can
become HUD certified and can conduct
housing counseling for the agency. HUD
is not restricting individuals who can
take the examination to only those
counselors who work for an HCA. The
absence of such a restriction will allow
for agencies to hire individuals who
have taken and passed the examination
on their own initiative, or individuals
that were previously certified at another
agency, in addition to those individuals
who have never taken the examination.
However, an individual who has not yet
passed the examination may not
conduct housing counseling until he or
she has passed the examination and has
become HUD certified.
HUD will maintain an internal
database of individuals who have

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passed the examination along with its
current HCA list. An HCA will be
required to validate employment of their
housing counselors who have passed
the certification examination.
Comment: Post Examination Tracking
and Recognition. Several commenters
requested information on how HUD
plans to track the certification of
individual counselors so that agencies
can determine that HCAs are certified
agencies. Another commenter suggested
HUD use national housing counseling
training organizations to track the
certification process nationwide.
Several commenters suggested that
HUD provide a list of HUD certified
housing counselors on its Web site, and
several suggested that the list be
available to consumers. Some
commenters recommended that HUD
keep a list of HUD certified housing
counselors and agencies so consumers
can confirm certification, and that each
counselor have a unique identification
number to track examination results,
training, and possible recertification.
Several commenters asked whether
intermediaries will be responsible for
monitoring certifications of subgrantees.
Commenters asked whether the
certification would be portable and how
long the certification will last. A
commenter recommended that
counselors should be able to take their
certification with them from one
housing counseling agency to another
agency. Some commenters requested
that HUD certified housing counselors
only be considered certified when they
are employed by a HUD-approved
agency.
HUD Response: If an individual
passes the examination, the individual
will be notified. HUD will keep track of
the individuals who have passed the
examination. However, the list of
individuals who passed the examination
will not be published on HUD’s Web
site for access by the general public, as
the requirements for certification are
that the individual has both passed the
examination and works for an HCA.
HUD is concerned that if it publishes
the names of individuals who have
passed the test, but may not work for an
HCA, consumers may think that an
individual on the Web site list is
certified to provide housing counseling
in connection with HUD programs even
if the individual is not working for an
HCA.
HUD will continue to maintain the
list of HCAs on its Web site, and
consumers will still be able to visit the
HUD Web site to verify that the agency
is an HCA. HCAs will be notified by
HUD, after publication of the final rule,
of the process for identifying housing

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counselors who work for them and have
passed the examination, and when such
information will be required. HUD will
issue certificates that indicate the
name(s) of individual(s) that have
passed the examination and that also
work for an HCA. The HUD Housing
Counselor Certificate will have the
name of the housing counselor and the
name of the HCA.
The HUD certified Housing Counselor
Certificate will be valid only while the
counselor works for an HCA. The HCA
will verify with HUD that a housing
counselor works for the agency, in order
for the certificate to be issued. If a HUD
certified housing counselor leaves the
HCA, the individual will no longer be
deemed ‘‘Certified,’’ until the individual
once again works for an HCA. HCAs
will be responsible for reporting to HUD
when counselors have left their
employment and when new counselors
are hired. HUD anticipates that this
reporting will occur electronically and
will provide further instructions outside
of this final rule as to how such
reporting will be implemented.
Although passing the certification
examination is a one-time requirement
regardless of employment status, a
housing counselor will not be
considered HUD certified when the
counselor is no longer working for an
HCA. Intermediaries and state housing
finance agencies are responsible for
ensuring that their subgrantees and
affiliates follow all HUD requirements,
including the requirement that all
housing counseling required under or
provided in connection with HUD
programs be conducted by HUD
certified housing counselors, as well as
the requirement that the subgrantee or
affiliate report to HUD if a HUD certified
housing counselor is no longer in their
employment.
Comment: Retaking the Examination.
Several commenters inquired about the
course of action to be taken if a housing
counselor fails the initial examination,
and how many re–examinations will be
permitted and the cost associated with
the re-examination. Several commenters
recommended that housing counselors
who do not pass the examination be
allowed to limit re-examination to the
area(s) of the examination the housing
counselor did not initially pass. A few
commenters stated limiting reexamination to the deficient scored
examination subject areas will reduce
the expense associated with retaking the
examination and reduce counselor
examination time. Commenters
indicated that housing counselors be
provided an unlimited number of times
to take the examination. One commenter
addressed the frequency of the

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examination, requesting that the
examination be offered on a reasonably
frequent basis, be easily accessible to
provide for more opportunities for
certifications, and be offered on a
continuous schedule. Commenters
requested that housing counselor reexamination be offered within a short
time period. Commenters also requested
a grace period to permit the
continuation of client counseling during
that time period.
Commenters recommended that: reexaminations be offered at no fee; there
be two and up to a maximum of three
re-examinations without additional
financial costs; HUD waive the fees or
provide a one-time fee reduction for
persons who retake the examination a
second time; offer training and testing at
a fee. A few commenters indicated the
need for clarity in determining reexamination fees.
HUD Response: HUD has made
provisions for immediate reexamination in the event the housing
counselor fails the examination.
However, testing schedules will depend
on the availability of proctors. HUD has
determined that housing counselors will
need to retake the entire examination
because the examination is not
separated into six areas. As noted in a
prior response to commenter questions,
the examination cannot be divided into
topic areas, nor taken by topic area.
However, no restrictions or limitations
will be placed on the number of times
the examination can be taken or on the
frequency of re-examination. If an
individual fails the examination, the
individual will be notified of general
subject deficiencies and topic areas to
help focus their studies in preparation
for retesting. Results of individual
examination questions will not be
provided. Because the compliance
period has been extended to 36 months,
HUD determined that a grace period is
not necessary for housing counselors
who fail the examination.
HUD is offering free online training,
study guides, and practice exams, which
HUD encourages individuals to use.
While the preparatory training is highly
recommended, the training is not
mandatory.
HUD must charge a fee to cover the
costs of administering the examination,
but as noted earlier in this preamble,
HUD is providing the study materials
for free. The fee charged each time an
individual takes the certification
examination will be based on the cost of
administering the examination. The
initial cost of the examination and
training is below the proposed rule’s
$500 estimate. The cost for taking the
examination is $100 for online testing at

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the examinee’s location and $140 at a
proctoring site, and the training is
provided for free. If it is necessary for
an individual to retake the examination,
a fee of $100 for online testing at the
examinee’s location and $140 at a
proctoring site will be required each
time the examination is retaken. Any
changes to the cost of the certification
examination will be published in the
Federal Register.
Comment: Retesting after Passing the
Test/Continuing Education. Some
commenters stated that re-examination
should not be required after a housing
counselor has passed the test. A
commenter stated that adding a
recertification component at a later date
will create yet another cycle of expense
and delays in service delivery.
Commenters stated that they already
have to track training for state and
national certifications, now it would be
necessary to employ someone to just
track the certifications and expiration
dates. Commenters recommended that a
housing counselor could be inactive for
a certain amount of time but after that
reinstatement would require retesting.
Some commenters questioned why
retesting is not required and stated that
it should become a requirement.
Another commenter asked for clarity
about recertification after the 3-year
period ends.
Commenters suggested that instead of
retesting, HUD should implement
continuing education requirements
consistent with National Industry
Standards (NIS). A commenter
recommended a specific time frame for
certification with additional annual
continuing education credits. Another
commenter recommended that to
maintain the HUD certification a
housing counselor should be allowed to
complete continuing education and on
the job training. One commenter
recommended that HUD implement a
continuing education requirement to
ensure HUD certified housing
counselors remain able to serve clients.
Commenters recommended that new
requirements incorporate continuing
education training for housing
counselors with local community
colleges and technical training centers;
and several versions of continuing
education, from a minimum of 30 hours
of classroom time every 3 years to 15
hours every 2 years, to every year, as a
continuing education requirement for
counselor recertification. Another
commenter wrote that HUD should
require continuing education that is
relevant to services identified in the
form HUD–9902, while another
commenter recommended that

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continuing education should include
ethics.
Commenters stated that agencies
should keep track of educational credits,
and HUD should develop a portal for
tracking purposes and certifying inhouse continuing education programs.
Commenters stated that HUD should
require approved agencies to provide
their own continuing education and that
HUD should create a portal to track
whether agencies are providing
continuing education. Another
commenter encouraged HUD to offer
continuing education online.
Commenters also recommended that
HUD wait to require continuing
education until the certification has
rolled out and can be evaluated, and
such requirements should be subject to
formal notice and comment.
HUD Response: Section 106 does not
require retesting or continuing
education as a requirement for a HUD
certified housing counselor to maintain
certification. Neither concept was
included in the proposed rule because
the proposed rule was meant to only
implement the new Section 106
requirements. Therefore, adding
retesting or a continuing education
component at this point would be
outside the scope of this rulemaking.
HUD may take this into consideration
for future rulemaking.
HUD has not changed the existing
requirement at § 214.103(h) that the
agency’s housing counseling staff must
possess a working knowledge of HUD’s
housing and single-family mortgage
insurance programs, other state and
local housing programs available in the
community, consolidated plans, and the
local housing market. The staff should
be familiar with housing programs
offered by conventional mortgage
lenders and other housing or related
programs that may assist their clients.
Existing training opportunities may be
used to meet HUD’s ongoing knowledge
requirements and may be helpful to gain
mastery of housing-counseling related
topics or to gain additional credentials.
HUD intends to continue to provide,
subject to available appropriations,
funding for such activities and
encourages housing counselors to take
continuing education courses. HUD
does not currently have the resources to
create a portal to track housing
counselor training and will continue to
expect the HCA to ensure that housing
counselor knowledge and training
requirements are met.
Comment: Grandfathering Prior
Certifications, Experience, or Training
as Alternatives to the Examination.
Commenters recommended
grandfathering currently certified

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housing counselors who meet certain
criteria, such as length of certification
and level of knowledge. A commenter
stated that many counselors have
already attended trainings to develop
specific skills (such as those of
NeighborWorks® Training Institutes)
and requested further guidance on
whether credit from previously acquired
certifications can be applied toward
HUD certifications.
Several commenters asked whether
HUD would recognize certifications
such as those offered by NeighborWorks
Training Institute, National Foundation
for Credit Counseling (NFCC),
Association of Independent Consumer
Credit Counseling Agencies (AICCCA),
National Council of La Raza
Homeownership Network Learning
Alliance (NHNLA), NeighborWorks
Center for Homeownership Education
and Counseling (NCHEC), HomeFree
USA, and National Community
Reinvestment Coalition (NCRC). A
commenter wrote that NeighborWorks
training is so comprehensive and
requires continuing education, not
recognizing such training, in lieu of
certification, is a waste of time and
resources. Another requested that HUD
recognize the Homebuyer Training
certification for meeting the certification
requirements because it tests on the
same six topics. A commenter wrote
that, by HUD not accepting other
trainings, HUD is making the new
requirement overly burdensome for
small rural and poverty stricken areas.
A few commenters recommended that
HUD should accept existing housing
counselor certification in specific areas
and only require the counselor to test in
areas where they are not already
certified, at a reduced cost. Commenters
also stated that if grandfathering-in
previous certifications is impossible,
then have an extended grace period for
housing counselors who have previous,
unexpired certifications. In contrast to
these commenters, some commenters
opposed grandfathering in housing
counselors, stating that it would destroy
the uniformity that would be provided
for the clients the counselors are being
certified to serve.
Commenters requested that HUD give
experience (2–10 plus years working in
a HUD certified agency) some
consideration or exempt those with
experience from the new requirement.
Another wrote that for very experienced
housing counselors it would be
consistent with the Section 106
requirements to provide a waiver of the
testing requirements rather than have
the most experienced counselor fail a
well-meaning test. A commenter
recommended allowing existing,

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experienced housing counselors to take
an examination to demonstrate their
current competencies and be certified.
Several commenters asked whether
HUD would allow housing counselors to
continue to complete other certifications
in addition to the HUD Housing
Counselor Certification. Another
commenter asked if a housing
counseling agency should hold off
either recertifying other housing
counselor certifications or having
housing counselors receive new
certifications from other entities before
the final rule is published.
HUD Response: Under this final rule,
HUD defines a HUD certified housing
counselor as a housing counselor
working for an HCA and certified by
HUD as competent to provide housing
counseling services pursuant to this
part. HUD appreciates the work and
training provided by all of the agencies
providing training and national
certifications. HUD also appreciates the
years of experience many housing
counselors have. However, Section 106
requirements are clear that HUD provide
its own training and a certification
examination to certify all housing
counselors providing housing
counseling for HUD’s programs. The
statute provides no exemptions or
‘‘grandfathering’’ of counselors for
certification purposes. Thus, every
housing counselor must take and pass
the written examination in order to be
certified. HUD cannot permit non-HUD
certified housing counselors to provide
counseling that must, by statute, be
provided by certified housing
counselors.
Housing counselor training and
certification in other areas enhances
knowledge and skills and improves the
quality of counseling. HUD recommends
that housing counselors continue to
seek other training and certifications.
Existing training opportunities may be
used to meet HUD’s ongoing knowledge
requirements and may be helpful to gain
mastery of housing counseling related
topics or to gain additional credentials.
Housing counselors are not required
to take HUD’s training before taking the
certification examination. However,
HUD does recommend that all
counselors, regardless of experience,
complete the training for the
examination, as that will contribute to
the counselors’ understanding of what is
required by the Housing Counselor
Certification Examination.
Comment: Test Preparation. A
commenter stated there should be early,
ongoing online training for housing
counseling certification to reduce costs.
Commenters wrote that the test
preparation should be free, voluntary,

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easily accessible, and readily available;
include practice tests, online study
guides, an education track, and elearning courses, and be offered in a
variety of methods and languages,
including in-person and online. A few
commenters asked for an opportunity to
provide public comment on the training
materials to ensure the topics are
applicable to housing counseling
services on the ground. Commenters
also requested that HUD provide
detailed curriculum and training
resources by the effective date so
counselors could have the entire year to
prepare for the examination.
Commenters also wrote that the HECM
test guide is not a good model because
the HECM test guide does not reflect the
materials on the test nor was it relevant
to the current HECM test.
A commenter requested that HUD
publish frequently asked questions
(FAQs) on the examination and the
content. Other commenters
recommended HUD provide a space for
counselors to share information on
topics that will be on the test for those
who may not take the training classes to
help assist in studying for the
examination.
HUD Response: HUD has created
extensive training for the Housing
Counselor Certification Examination,
which is currently available. The
training includes a no-cost interactive
online training course and a
downloadable study guide. A practice
test, to help housing counselors prepare
for and pass the examination, will be
made available prior to the availability
of the certification examination. The
materials will meet the Rehabilitation
Act’s Section 508 accessibility
guidelines. The study guide is also
available for download onto multiple
types of electronic devices.
The rulemaking process did not allow
for HUD to consult with stakeholders as
to the content of the training and the
examination prior to publication of the
final rule. However, after publication of
this rule, HUD welcomes feedback
regarding the training and the
examination, which may be submitted
to the housing counseling certification
Web site or by sending an email to
[email protected] and
including Certification in the subject
line.
HUD plans on providing a list of
FAQs on the HUD Web site and on the
examination Web site.
Comment: Administering Training.
Commenters recommended that local
trainings be provided, and webinars
should not take the place of group
training. Commenters asked about
qualifications of trainers and who will

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provide the training. Several
commenters provided recommendations
for trainers including housing
counselors from across the nation,
housing counseling training entities,
and training vendors. One commenter
recommended utilizing regional and
local agencies to help train on different
state and local regulations and
conditions. Another commenter
suggested that the training coincide
with national conferences of HUD’s
approved intermediaries. A commenter
recommended that, as with the mortgage
lending industry, it is best practice to
have more than one approved training
provider to help prepare counselors for
the test.
A few commenters requested that
HUD provide additional funds to state
housing finance agencies, major
metropolitan cities, or existing training
institutes, including NeighborWorks,
National Council of La Raza (NCLR),
and National Reinvestment Coalition
(NCRC), to provide training for
certification in the areas identified by
HUD.
HUD Response: Under Section 106,
the Office of Housing Counseling must
contract with one entity to develop
training specifically for the housing
counseling certification. HUD selected a
qualified entity to administer and
prepare the training, as described in
section IV. HUD has determined that the
most effective and accessible option to
housing counselors for examination
preparation is through a free online,
interactive, and self-paced training. For
those individuals that prefer a textbook
style of learning, HUD is also offering a
downloadable study guide. HUD will
not be providing in-person training for
the examination.
HUD provides funding for housing
counselor training through the Housing
Counseling Program’s training grants.
Training grantees used funds in the
2013 and the 2014 and 2015 grant cycles
to provide general training on the six
topic areas stated in Section 106, in
addition to other training for housing
counselors. Subject to need and to
available appropriations, HUD may
continue to provide funding through
training grants for this purpose.
Comments: Who needs to be Certified:
Several commenters had questions
concerning the applicability of HUD’s
certification rule to state housing
finance agency staff overseeing a
Housing Counseling Program or
providing direct housing counseling
services or both. Additional commenters
had questions about who should be
taking the housing counseling
certification test. A commenter asked if
home buyer education must be provided

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by a HUD certified housing counselor,
and another sought clarification on
whether educators must be certified to
offer group counseling.
Other commenters recommended
exempting from the certification
requirement agencies whose housing
counselors provide only reverse
mortgage counseling or another single
area of recognized housing counseling.
Some commenters sought clarification
on whether HECM counselors will need
to be tested.
A commenter requested that attorneys
with separate standardized certifications
be allowed to provide housing
counseling services without being
required to separately qualify under
HUD’s rule. One commenter requested
that HUD add a limited provision in the
certification rule that provides that
housing counseling funds may be
available for legal services attorneys
who meet certain requirements and
work with HUD certified housing
counselors. Other commenters asked
whether applicability of HUD’s rule was
limited to agencies receiving HUD
funding for housing counseling services
or only counseling funded by HUD
grants. In addition, a commenter
recommended that only housing
counseling reported on the Housing
Counseling Activity Report Form 9902
be required to be performed by a
certified housing counselor.
HUD Response: HUD reiterates that
all staff of entities providing housing
counseling to clients, including HCAs
participating in HUD’s Housing
Counseling Program and staff of state
housing finance agencies, must be
certified. Staff of entities who deliver
housing counseling services required
under or provided in connection with
Other HUD Programs, will also have to
be certified and as a result their
employers will have to become HCAs
before the final compliance date. Staff of
entities whose roles are limited to
funding, overseeing or administering a
housing counseling program and who
do not provide housing counseling
services directly to clients are not
required to become HUD certified
housing counselors, and these entities
are not required to become HCAs.
Section 106 does not authorize HUD
to exempt housing counselors who
provide a single type of housing
counseling, or counselors who provide
HECM or other types of reverse
mortgage counseling exclusively, from
the housing counselor certification
requirements of this final rule. As
discussed earlier in this preamble, all
HECM Roster requirements continue to
apply, pursuant to the statutory
requirements of sections 255(d) and (f)

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of the National Housing Act and
regulatory requirements at 24 CFR part
206, subpart E. All HECM counselors
must meet the certification requirements
of this final rule. Housing counselors
and housing counseling agencies
successfully meeting HUD certification
requirements may still limit the
counseling they provide to a single type
of counseling, such as reverse mortgage
counseling or rental counseling.
HUD cannot exempt attorneys who
provide housing counseling under
HUD’s Housing Counseling program
from the certification requirements.
Comment: Delay Implementation.
Commenters wrote that HUD should
delay implementation to determine
whether the language in the President’s
budget will be enacted so experience
can be substituted for the examination
and other entities could provide the
examination. Commenters wrote that by
waiting it would save potential costs in
time and dollars.
HUD Response: Section 106, as
amended, is the law until changed. HUD
cannot delay implementation of this
rule based on the possibility that a
change to that law could be enacted at
a future date.
Comment: New Requirement for
Broader Counseling. Other commenters
wrote that agencies should have
discretion based on capacity and
mission to provide services in specific
areas rather than have HUD dilute
counseling that is currently being
provided by masters (i.e., subject matter
experts) in a specific area. Another
commenter requested that HUD clarify
whether the new rule requires
counseling agencies to offer all broadbased services if outside their chosen
scope of work. The commenter wrote
that this requirement could be an undue
hardship and force critical smaller
nonprofits out of the industry and that
such smaller nonprofits offer geographic
specific information necessary for
foreclosure prevention and rental
assistance through in-person
counseling, unlike some larger
nonprofits that offer only national
phone counseling.
Commenters also stated that agencies
should and are making referrals to other
qualified HUD-approved agencies to
address a consumer need that the
agency currently does not cover.
HUD Response: This final rule does
not require that a housing counseling
agency provide services in all areas or
that housing counselors change their
specializations. The new certification
assures baseline housing knowledge
through a single, government-issued
national credential. The requirement
that all housing counselors have this

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base of knowledge in the six areas will
ensure that counselors that specialize
will have the knowledge to make
appropriate referrals for clients that
have housing issues beyond the scope of
the services that a housing counselor is
providing.
Comment: What is a Housing
Counseling Session. Commenters
requested that HUD clarify what
constitutes a session with regard to
providing counseling, in contrast to
education, and emphasized the
innovative ways the industry is
growing. In addition, the commenters
wrote that HUD should take into
consideration that the most important
aspect to effective housing counseling is
a one-on-one engagement.
HUD Response: The existing
regulation at § 214.3 defines counseling
with a Housing Counseling Program as
counselor-to-client assistance that
addresses unique financial
circumstances or housing issues and
focuses on ways of overcoming specific
obstacles to achieving a housing goal
such as repairing credit, addressing a
rental dispute, purchasing a home,
locating cash for a downpayment, being
informed of fair housing and fair
lending requirements of the Fair
Housing Act, finding units accessible to
persons with disabilities, avoiding
foreclosure, or resolving a financial
crisis. Except for reverse mortgage
counseling, all housing counseling shall
involve the creation of an action plan.
HUD agrees that one-on-one engagement
is important, and the definition
specifies that it involves counselor-toclient assistance that addresses unique
financial circumstances or housing
issues.
D. Requirements Relating to Housing
Counseling Grant Funds § 214.311
Comment: Misuse of Housing
Counseling Grant Funds. Some
commenters requested that HUD define
the terms ‘‘material violation’’ or
‘‘misuse.’’ A few commenters requested
that HUD define material violation as
something intentional and nontrivial. A
commenter wrote that adding a
definition would lower the number of
violations committed by agencies and
provide a clearer understanding for
agencies. Another commenter requested
HUD clarify the language to require
intentional misuse of funds.
Commenters requested that a material
violation only be considered where
there is purposeful disregard for
regulations rather than where
inadvertent errors have occurred or
where good faith efforts have been made
to comply with regulations.
Commenters wrote that the misuse of

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funds provision is too severe a penalty
for an unintentional misuse of funds.
One commenter provided an example
when his agency incorrectly charged the
HUD account for providing counseling
outside their service area, realized it
during an audit, and then reimbursed
HUD. The commenter wrote that under
the regulations as drafted such an action
could prohibit a good housing
counseling agency from ever
participating in the competitive grant
program.
Commenters wrote that if the error
was in good faith then under certain
conditions the agency should again be
eligible for funds.
Some commenters wrote that misuse
of funds should not bar an entire agency
until an investigation is complete.
Commenters also requested that after an
agency approval is revoked a process for
recertification after the necessary
safeguards are in place should be
permitted. In addition, commenters
recommended that if an individual
employee misuses funds there should be
a way for the agency to remedy the
situation and continue to receive funds
and serve its community. Commenters
also stated that the process for
remedying misuse and having access to
funds again is extremely important for
rural areas.
Commenters requested that HUD
clarify the effect of the violation and the
role of HUD certified intermediaries.
Specifically, the commenters asked
HUD to discuss the role of the
intermediary during an investigation
and whether any of its funds will be
frozen during this investigation of a
subgrantee. Another commenter
requested clarification as to whether the
intermediary will be responsible for
returning the portion of overhead grant
funds that the intermediary spent
associated with administering the grant
and will the intermediary be punished
or not eligible for funds. The
commenters noted that this clarification
will help strengthen the relationship
between HUD and intermediaries.
HUD Response: HUD appreciates the
commenters concerns regarding
intentionality and good faith but will
make a determination of whether a
violation is material based on individual
circumstances using procedures
outlined in the relevant grant
agreement. The new requirement is
consistent with the HUD policy that
intermediaries and grantees share
responsibility for their subgrantees’ use
of funds and all HCAs are responsible
for their employees.
Comment: Violation of Federal
Election Law. Commenters requested
clarification on how HUD plans to

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check for compliance around the new
requirement related to a violation of
Federal election laws. The commenters
recommended that instead of having to
create a database HUD should require
agencies to sign an annual
representation or warranty statement for
the process.
HUD Response: Like all other
requirements, agencies participating in
HUD’s Housing Counseling program
must ensure that they are in compliance
with the requirement related to a
violation of Federal election laws. In
addition, organizations that are applying
for approval to participate in the HUD
Housing Counseling Program are
reviewed to determine if they are in
compliance with the approval
requirements at § 214.103, including
that they are in compliance with
§ 214.103(c) related to ineligible
participants. Compliance with the
requirement related to a violation of
Federal election laws will be enforced
in the same manner as existing program
requirements. HUD intends to provide
further guidance on this provision.
E. Recommendations: Other suggestions
for the Housing Counseling Program
Comment: Require Broader Housing
Counseling. A few commenters
discussed the need to support more
housing counseling services. One
commenter suggested HUD require
ongoing housing counseling for
homebuyers beyond a 1-hour session to
help avoid foreclosure. The commenter
suggested that each new homeowner be
required to attend classes for at least 8–
10 sessions and once-a-year counseling
after buying a home. The commenter
suggested HUD explore incorporating a
more comprehensive approach to
housing counseling, such as requiring
homebuyers to attend prepurchase
counseling, prior to purchasing a home
with a federally insured mortgage,
followed by post-purchase follow-up
and continuing education sessions.
HUD Response: This rule is not
addressing the protocol for prepurchase
homeownership counseling, which is
outside of the scope of this final rule.
Comment: Public Education and
Outreach. A commenter recommended
HUD undertake a public education and
outreach campaign to educate
consumers about working with a
legitimate HUD certified housing
counselor who is currently employed by
an HCA, in order to avoid
misunderstanding and the potential for
fraud.
Another commenter requested that
HUD provide a webinar explaining the
need for the certification, whether it is
optional, and a basic overview of the

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housing counseling certification rule
and key pieces to the rule.
HUD Response: HUD agrees that
public education and outreach to
housing counseling agencies is
important. At the time of publication of
this final rule, and subject to available
resources, HUD will provide webinars
and other guidance for entities and
individuals affected by this rule. HUD
will also work with housing counselors
and HCAs to help educate the public
about the dangers of scams and the
benefits of working with a HUDapproved housing counseling agency
and a HUD-approved housing
counselor.
Comment: Background/Credit checks.
Some commenters recommended that,
in addition to testing, housing
counselors pass a criminal background
check. Another commenter wrote that
often housing counselors have access to
sensitive information and it is important
that new hires have not engaged in
criminal activity in the past that may
put clients in jeopardy.
Another commenter recommended
that housing counselors be required to
have a minimum credit score as a
condition of employment, because many
people in the industry have not
mastered the information themselves.
HUD Response: HUD agrees that it is
important that housing counselors not
have been convicted of certain offenses
relevant to their positions as housing
counselors. The existing regulation on
ineligible participants at § 214.103(c)
already provides that an agency,
including any of the agency’s directors,
partners, officers, principals, or
employees, must not be: (1) Suspended,
debarred, or otherwise restricted under
HUD’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); or (3) subject to unresolved
findings as a result of HUD or other
government audit or investigations. All
agencies participating in the HUD
Housing Counseling Program are
currently responsible for ensuring
compliance with this requirement. In
addition, agencies that are applying for
approval to participate in the HUD
Housing Counseling Program and
persons in a position of trust with these
agencies are reviewed to determine if
they are in violation of Housing
Counseling Program regulations and
other requirements.
An individual’s personal credit score
is not an element that is part of the

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criteria for becoming a HUD housing
counselor.
Comment: Social Benefits. A
commenter stated that the social benefit
cannot be weighed until the
examination is available for comment.
HUD Response: The certification
examination will ensure that counselors
have a comprehensive knowledge of the
six areas identified in Section 106. HUD
certified housing counselors will have
the additional knowledge to provide to
those they counsel, and the clients will
have the additional information to make
better housing decisions. Once
examinations have commenced, HUD
will, on an ongoing basis, evaluate
feedback on the examination and will
revise the examination if needed.
Additional evaluation of the benefits of
this rule can be found in Section VI of
this preamble.
Comment: HUD’s Housing Counseling
Handbook. A commenter recommended
that HUD provide an update to the HUD
Handbook 7610.1 REV–5 to account for
the requirements for the
‘‘comprehensive counseling services’’
since HUD has specified the six defined
areas that all housing counselors must
be proficient in and added the
requirement that housing counselors
pass the Housing Counselor
Certification Examination. The
commenter also recommended that
HUD revise the handbook to account for
any additional education and/or
counseling topics that must be
completed in the session with the client.
HUD Response: HUD agrees. HUD
will at a later date update the HUD
Handbook 7610.1 to reflect the new
requirements contained in this final
rule. This final rule does not change the
types of counseling services that may be
offered by HCAs.
VI. Findings and Certifications
Regulatory Review—Executive Orders
12866 and 13563
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health, and safety
effects; distributive impacts; and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility.
Under Executive Order 12866
(Regulatory Planning and Review), a
determination must be made whether a
regulatory action is significant and,

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therefore, subject to review by the Office
of Management and Budget (OMB) in
accordance with the requirements of the
order. This rule was determined to be a
‘‘significant regulatory action’’ as
defined in section 3(f) of the Executive
order, but not an economically
significant regulatory action, as
provided under section 3(f)(1) of
Executive Order 12866.
As discussed in this preamble, this
rule revises HUD’s Housing Counseling
Program regulations to adopt, through
regulatory codification, the new
requirements established in Section 106.
The Section 106 amendments
established the Office of Housing
Counseling and gave the office the
authority to establish, administer, and
coordinate all regulations, requirements,
standards, and performance measures
related to housing counseling. In
addition, the Section 106 amendments
require the certification of entities and
of individual housing counselors
providing housing counseling services
required under or in connection with all
HUD Programs. Under Section 106,
‘‘certification’’ means specifically taking
and passing an examination,
administered by HUD, that tests
knowledge on six aspects of housing
counseling. While the Section 106
amendments introduced new
requirements that a broader group of
entities and individual housing
counselors must be certified, the
Housing Counseling statute has always
required that approval or certification
by HUD of either counseling agencies or
individual counselors must be
implemented through regulation. HUD
already reviews and approves housing
counseling agencies that voluntarily
seek participation in the Housing
Counseling Program. However, the
requirement on Other HUD Programs is
incorporated in HUD’s general
requirements in part 5, as well as some
program specific regulations.
This rule adds the certification of
individual counselors and that Other
HUD Programs providing
homeownership counseling and rental
housing counseling, as defined in
Section 106, become, partner with, or
use an entity participating in HUD’s
Housing Counseling Program to deliver
housing counseling services. HUD has
attempted to minimize the costs of this
regulation to individual counselors and
entities. The training for the Housing
Counseling Certification Examination
will be free and the examination will
cost $100 for online testing at the
examinee’s location and $140 for an onsite proctoring center examination.
Currently, there are approximately 2,070
HCAs, with an estimated 7,245

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individual counselors. At an estimated
average cost of $120 per counselor to
take the examination required for
certification, the initial cost for housing
counselors working for HCAs would
total approximately $869,400. HUD also
estimates that 20 percent may not pass
the examination the first time, and adds
an additional $252,960 for those that
retake the examination. HUD estimates
approximately 880 entities counseling
in Other HUD programs will need to
either: (1) Become HUD-approved
housing counseling agencies that
employ HUD certified housing
counselors, (2) create partnerships with
HCAs using certified housing
counselors to deliver housing
counseling services on their behalf, (3)
stop providing housing counseling
services, or (4) otherwise modify their
program to comply with this rule. Given
the options provided to these entities in
Other HUD Programs and the benefits of
being part of the Housing Counseling
Program if chosen by those entities that
are not currently HCAs, HUD only
includes in its analysis the cost of the
certification examination for the
employees of these entities that might
pursue the certification. HUD estimates
that 45 percent of the 880 entities will
become a HUD-approved housing
counseling agency, or choose to affiliate
with an existing intermediary or state
housing finance agency or partner with
an HCA. HUD estimates three
counselors per each of these agencies
with an estimated average cost of $120
per counselor taking the examination
required for certification within the
compliance period, totaling
approximately $142,560.
As for training for the Housing
Counseling Certification Examination,
the training is estimated to take
approximately 11 hours to complete and
HUD estimates that 80 percent of test
takers will be housing counselors that
take the training and may experience
lost wages. The average housing
counselor makes on average $37,000
annually 21 for 2080 hours worked,
which equates to an hourly salary of
$17.79 or a rounded loaded wage of
$36.00 an hour.22 The approximate lost
wages for a housing counselor
undergoing 11 hours of training would
be $396 and for the 6,746 counselors
approximately $2,671,420.
Thus, the total initial compliance cost
of the regulation in the 36 months
entities have to be in compliance is
21 The average salary for a housing counselor
comes from http://www.payscale.com/research/US/
Job=Housing_Counselor/Salary.
22 Multiplying the average salary times two to
arrive at a loaded wage and rounding up from
$35.58.

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estimated to be $3,936,340. Subject to
available appropriations,
comprehensive Housing Counseling
Program grant funds may be used by
grantees to help reduce the costs of
compliance with standards and of the
examination.
Other statutory changes to improve
the effectiveness of housing counseling
include increasing the breadth of
counseling services so that the services
are comprehensive with respect to
homeownership and rental counseling.
As noted earlier, the statutory mandate
to provide comprehensive
homeownership and rental counseling
is not a significant change to HUD’s preSection 106 Housing Counseling
Program. HUD’s Housing Counseling
Program currently provides
comprehensive homeownership and
rental counseling.
The compliance costs of the rule are
examination costs that primarily must
be borne by the individuals becoming
certified. There may, however, be
indirect impacts on HCAs that decide to
pay for the cost of certification. There
will also be some costs to those entities
that decide, amongst the four
alternatives, to become an HCA and an
estimate of the costs has been discussed
above. The compliance cost in the
proposed rule was estimated at $4
million in the first year and less in
succeeding years, for an annualized
compliance cost over 5 years of $1.0
million ($0.96 million). The compliance
cost of the final rule is estimated to be
approximately $3.9 million in the initial
compliance period (3 years) plus
$920,620 for year 4 and 5 for new
individuals in the housing counseling
industry, for an annualized compliance
cost over 5 years of $1,148,250. Most of
the cost will be incurred only once.
The rule generates substantial benefits
to all parties that entirely or partially
offset the cost. The benefits to the
prospective homebuyer or existing
homeowner is the more efficient and
effective delivery of housing counseling
services if, as a result of the certification
process, one counselor may be able to
assess all questions of the prospective
homebuyer or existing homeowner, or
make a more effective referral in order
to help the client overcome housing
barriers. Entities that currently conduct
housing counseling but do not meet
HUD standards will have the benefits of
a better quality program, with access to
public and private funding sources that
limit eligibility to HCAs. The value of
the HUD-approved HCA label is
significant, and entities will be able to
use their status in marketing their
programs to clients and funders. These
entities will have unique access to

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downpayment assistance programs, and
public and private mortgage products
that are only available to borrowers who
work with HUD-approved HCAs.
Individual housing counselors will also
benefit from the rule. Their professional
certification should make them more
desirable on the job market, not only for
employment with HCAs, but also for
employment in other fields where the
government certification will be
recognized. Finally, the statutory
mandate to certify individual counselors
may further enhance the performance of
agencies and counselors participating in
HUD’s Housing Counseling Program.23
The general benefits to the borrower
and the market from housing counseling
are well documented by research.
Consumers who received housing
counseling from a HUD-approved HCA
have better outcomes, including more
savings, better credit, better loan
modifications, and fewer foreclosures,
than similar consumers who did not
receive housing counseling. Some of the
studies have quantified the benefit. In
2011, a total of 126,534 loans were
modified after seeking assistance from
HUD housing counselors. Statistically,
borrowers who received loan
modifications after receiving postpurchase housing counseling had
savings of $4,980 annually.24 In
addition, foreclosures prevented as a
result of housing counseling have an
estimated social benefit of $40,730.25
HUD believes that housing counselor
certification requirements increase
assurance of a more knowledgeable
housing counselor for the consumer.
Certified housing counselors are
expected to lead to better identification
of issues, higher quality referrals, and
even better resolution of client barriers
to stable housing, as well as a greater
ability to avoid discrimination and
scams. It is not possible to project the
actual value to the consumer of a
certified counselor compared to the
state of current counselor knowledge
which is often regulated by State
23 The Obama Administration referred
individuals and families to HUD housing
counseling agencies and counselors as part of the
Making Home Affordable programs. See http://
www.makinghomeaffordable.gov/get-started/
housing-expert/Pages/default.aspx.
24 National Foreclosure Mitigation Counseling
Program Evaluation Final Report, Rounds 3
Through 5, Prepared by Kenneth M. Temkin Neil
S. Mayer Charles A. Calhoun Peter A. Tatian with
Taz George, Prepared for NeighborWorks® America
(Urban Institute: September 2014).
25 An analysis HUD’s Office of Policy
Development and Research found that the total
‘‘deadweight’’ loss per foreclosure prevention cost
is approximately $40,730. (See http://
www.huduser.org/periodicals/cityscpe/voll4num3/
Cityscape_Nov2012_impact_lim_sellers.pdf at page
219.)

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requirements. Consequently, HUD
expects the benefits of this rule to equal
the projected compliance costs if 140
loan modifications are made and 125
foreclosures are avoided over 5 years as
a result of this rule.

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Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
(5 U.S.C. 601 et seq.), generally requires
an agency to conduct a regulatory
flexibility analysis of any rule subject to
notice and comment rulemaking
requirements unless the agency certifies
that the rule will not have a significant
economic impact on a substantial
number of small entities. This rule
would revise the regulations governing
HUD’s Housing Counseling Program to
reflect changes to the program made by
the Section 106 amendments.
The key changes made to the Housing
Counseling Program by this rule are the
requirement that individual housing
counselors must be certified as skilled
to provide counseling in HUD’s Housing
Counseling Program, and that Other
HUD Programs providing
homeownership counseling and rental
housing counseling, as defined by the
Dodd-Frank Act, become part of or use
an entity participating in HUD’s
Housing Counseling Program to deliver
housing counseling services.
HUD examined a number of
alternatives to minimize the burden of
the Dodd-Frank Act and the regulations.
In order to minimize costs and
administrative burden on entities and
individuals, HUD has provided a free
Web site offering training for the
examination, structured its testing
program to substantially reduce the cost
of the examination from the initial
proposal of $500, and made the costs of
training for the examination an eligible
use of HUD Housing Counseling Grants.
This rule also provides for a 36-month
period after availability of the
certification examination to give time
for entities to come into compliance.
Accordingly, given the additional
time for individual counselors to be
certified and for the funding made
available to assist in meeting the core
areas specified by statute for
certification, the undersigned certifies
that this rule will not have a significant
economic impact on a substantial
number of small entities.
Executive Order 13132, Federalism
Executive Order 13132 (entitled
‘‘Federalism’’) prohibits an agency from
publishing any rule that has Federalism
implications if the rule either imposes
substantial direct compliance costs on
state and local governments or is not
required by statute, or the rule preempts

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state law, unless the agency meets the
consultation and funding requirements
of section 6 of the Executive order. This
rule would not have Federalism
implications and would not impose
substantial direct compliance costs on
state and local governments or preempt
state law within the meaning of the
Executive order.
Environmental Impact
This rule does not direct, provide for
assistance or loan and mortgage
insurance for, or otherwise govern or
regulate real property acquisition,
disposition, leasing, rehabilitation,
alteration, demolition, or new
construction; or establish, revise, or
provide for standards for construction or
construction materials, manufactured
housing, or occupancy. Accordingly,
under 24 CFR 50.19(c)(1), this rule is
categorically excluded from
environmental review under the
National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104–4;
approved March 22, 1995) (UMRA)
establishes requirements for Federal
agencies to assess the effects of their
regulatory actions on state, local, and
tribal governments, and on the private
sector. This rule does not impose any
Federal mandates on any state, local, or
tribal government, or on the private
sector, within the meaning of the
UMRA.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance
(CFDA) Program number for the Housing
Counseling Program is 14.169.

List of Subjects

Administrative practice and
procedure, Aged, Claims, Drug abuse,
Drug traffic control, Grant programs—
housing and community development,
Grant programs—Indians, Individuals
with disabilities, Loan programs—
housing and community development,
Low and moderate income housing,
Mortgage insurance, Pets, Public
housing, Rent subsidies, Reporting and
recordkeeping requirements.
24 CFR Part 92
Administrative practice and
procedure, Low and moderate income
housing, Manufactured homes, Rent
subsidies, Reporting and recordkeeping
requirements.

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Administrative practice and
procedure, Grant programs—housing
and community development, Low and
moderate income housing,
Manufactured homes, Rent subsidies,
Reporting and recordkeeping
requirements.
24 CFR Part 214
Administrative practice and
procedure; Loan program-housing and
community development; Organization
and functions (government agencies);
Reporting and recordkeeping
requirements.
24 CFR Part 570
Administrative practice and
procedure, American Samoa,
Community development block grants,
Grant programs—education, Grant
programs—housing and community
development, Guam, Indians, Loan
programs—housing and community
development, Low and moderate
income housing, Northern Mariana
Islands, Pacific Islands Trust Territory,
Puerto Rico, Reporting and
recordkeeping requirements, Student
aid, Virgin Islands.
24 CFR Part 574
Community facilities, Grant
programs—housing and community
development, Grant programs—social
programs, HIV/AIDS, Low and moderate
income housing, Reporting and
recordkeeping requirements.
24 CFR Part 576
Community facilities, Grant
programs—housing and community
development, Grant programs—social
programs, Homeless, Reporting and
recordkeeping requirements
24 CFR Part 578

24 CFR Part 5

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Community development,
Community facilities, Grant programs—
housing and community development,
Grant programs—social programs,
Homeless, Reporting and recordkeeping
requirements.
24 CFR Part 1006
Community development block
grants, Grant programs—housing and
community development, Grant
programs—Indians, Hawaiian Natives,
Low and moderate income housing,
Reporting and recordkeeping
requirements.
Accordingly, for the reasons stated
above, HUD amends 24 CFR parts 5, 92,
93, 214, 570, 574, 576, 578, and 1006 as
follows:

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decision to rent, responsibilities of
tenancy, affordability of renting and
eviction prevention.
*
*
*
*
*

PART 5—GENERAL HUD PROGRAM
REQUIREMENTS; WAIVERS
1. The authority citation for part 5 is
revised to read as follows:

■

Authority: 12 U.S.C. 1701x; 42 U.S.C.
1437a, 1437c, 1437d, 1437f, 1437n, 3535(d);
Sec. 327, Pub. L. 109–115, 119 Stat. 2936;
Sec. 607, Pub. L. 109–162, 119 Stat. 3051 (42
U.S.C. 14043e et seq.); E.O. 13279, 67 FR
77141, 3 CFR, 2002 Comp., p. 258; and E.O.
13559, 75 FR 71319, 3 CFR, 2010 Comp., p.
273.

2. In § 5.100, add alphabetically the
definitions for ‘‘Homeownership
counseling,’’ ‘‘Housing counseling,’’ and
‘‘Rental housing counseling’’ to read as
follows:

■

§ 5.100

Definitions.

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*

*
*
*
*
Homeownership counseling means
housing counseling related to
homeownership and residential
mortgage loans when provided in
connection with HUD’s Housing
Counseling Program, or required by or
provided in connection with HUD
Programs as defined in § 5.111.
Homeownership counseling is housing
counseling that covers the decision to
purchase a home, the selection and
purchase of a home, issues arising
during or affecting the period of
ownership of a home (including
financing, refinancing, default, and
foreclosure, and other financial
decisions) and the sale or other
disposition of a home.
*
*
*
*
*
Housing counseling is independent,
expert advice customized to the need of
the consumer to address the consumer’s
housing barriers and to help achieve
their housing goals and must include
the following processes: Intake;
financial and housing affordability
analysis; an action plan, except for
reverse mortgage counseling; and a
reasonable effort to have follow-up
communication with the client when
possible. The content and process of
housing counseling must meet the
standards outlined in 24 CFR part 214.
Homeownership counseling and rental
counseling are types of housing
counseling.
*
*
*
*
*
Rental housing counseling means
counseling related to the rental of
residential property, which may include
counseling regarding future
homeownership opportunities when
provided in connection with HUD’s
Housing Counseling Program, or
required under or provided in
connection with HUD Programs as
defined in § 5.111. Rental housing
counseling may also include the

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■

3. Add § 5.111 to read as follows:

§ 5.111

Housing counseling.

PART 92—HOME INVESTMENT
PARTNERSHIPS PROGRAM
4. The authority citation for part 92 is
revised to read as follows:

■

Authority: 42 U.S.C. 3535(d) and 12701–
12839, 12 U.S.C. 1701x.

5. In § 92.2, add alphabetically the
definitions for ‘‘Homebuyer counseling’’
and ‘‘Housing counseling’’ to read as
follows:

■

Definitions.

*

*
*
*
*
Homebuyer counseling has the same
meaning as homeownership counseling
in 24 CFR 5.100, and is a type of
housing counseling.
*
*
*
*
*
Housing counseling has the meaning
given the term in 24 CFR 5.100.
*
*
*
*
*
§ 92.350

[Amended]

6. In § 92.350(a), remove ‘‘and drugfree workplace’’ and add in its place
‘‘drug-free work; and housing
counseling.’’

■

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PART 93—HOUSING TRUST FUND
7. The authority citation for part 92 is
revised to read as follows:

■

Authority: 42 U.S.C. 3535(d), 12 U.S.C.
1701x and 4568.

8. In § 93.2, add alphabetically the
definitions for ‘‘Homeownership
counseling’’ and ‘‘Housing counseling’’
to read as follows:

■

(a) Any housing counseling, including
homeownership counseling or rental
housing counseling, as defined in
§ 5.100, required under or provided in
connection with any program
administered by HUD shall be provided
only by organizations and counselors
certified by the Secretary under 24 CFR
part 214 to provide housing counseling,
consistent with 12 U.S.C. 1701x.
(b) For purposes of this section,
required under or provided in
connection with any program
administered by HUD means:
(1) Housing counseling required by
statute, regulation, Notice of Funding
Availability (NOFA), or otherwise
required by HUD;
(2) Housing counseling that is funded
under a HUD program;
(3) Housing counseling that is
required by a grantee or subgrantee of a
HUD program as a condition of
receiving assistance under the HUD
program; or
(4) Housing counseling to which a
family assisted under a HUD program is
referred, by a grantee or subgrantee of
the HUD program.

§ 92.2

90657

§ 93.2

Definitions.

*

*
*
*
*
Homeownership counseling has the
same meaning given the term in 24 CFR
5.100, and is a type of housing
counseling.
*
*
*
*
*
Housing counseling has the meaning
given the term in 24 CFR 5.100.
*
*
*
*
*
§ 93.350

[Amended]

9. In § 93.350(a), remove ‘‘and drugfree work’’ and add in its place ‘‘drugfree work; and housing counseling.’’

■

PART 214—HOUSING COUNSELING
PROGRAM
10. The authority citation for part 214
continues to read as follows:

■

Authority: 12 U.S.C. 1701x, 1701 x–1; 42
U.S.C. 3535(d).

11. Section 214.1 is revised to read as
follows:

■

§ 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

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housing counseling, including
homeownership counseling or rental
housing counseling, required under or
provided in connection with HUD
programs.
■ 12. In § 214.3, remove the definition
of ‘‘HUD-approved housing counseling
agencies’’ and add alphabetically the
definitions of ‘‘Homeownership
counseling,’’ ‘‘Housing counseling,’’
‘‘Housing counseling grant funds,’’
‘‘HUD-approved housing counseling
agency,’’ ‘‘HUD certified housing
counselor,’’ ‘‘Nonprofit organization,’’
‘‘Rental housing counseling,’’ ‘‘State,’’
and ‘‘Unit of general local government’’
to read as follows:
§ 214.3

Definitions.

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*

*
*
*
*
Homeownership counseling. See
definition at 24 CFR 5.100.
Housing counseling. See definition at
24 CFR 5.100.
Housing counseling grant funds.
Grants awarded to participating
agencies under section 106 of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701x).
*
*
*
*
*
HUD-approved housing counseling
agency. Private and public nonprofit
organizations that are exempt from
taxation under section 501(a), pursuant
to section 501(c) of the Internal Revenue
Code of 1996, 26 U.S.C. 501(a) and
501(c) and approved by HUD, in
accordance with this part and 106(e) of
the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x(e)), to
provide housing counseling services to
clients directly, or through their
affiliates or branches, and which meet
the requirements set forth in this part.
HUD certified housing counselor. A
housing counselor who has passed the
HUD Certification examination, works
for a participating agency, and is
certified by HUD as competent to
provide housing counseling services
pursuant to this part.
*
*
*
*
*
Nonprofit organization. Shall have the
meaning given in section 104(5) of the
Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12704(5)),
except that subparagraph (D) of such
section shall not apply.
*
*
*
*
*
Rental housing counseling. See
definition at 24 CFR 5.100.
*
*
*
*
*
State. Each of the several States, the
Commonwealth of Puerto Rico, the
District of Columbia, the
Commonwealth of the Northern Mariana
Islands, Guam, the Virgin Islands,

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American Samoa, or any other
possession of the United States.
*
*
*
*
*
Unit of general local government. Any
city, county, parish, town, township,
borough, village, or any other general
purpose political subdivision of a State.
■ 7. In § 214.100, revise paragraph (a) to
read as follows:
§ 214.100

General.

*

*
*
*
*
(a) Approval. The approval of a
housing counseling agency and the
certification of a HUD certified housing
counselor does not create or imply a
warranty or endorsement by HUD of the
approved agency, or its employees,
including counselors, to a prospective
client or to any other organization or
individual, nor does it represent a
warranty of any housing counseling
provided by the agency or a HUD
certified housing counselor working for
an agency. Approval means only that
the agency has met the qualifications
and conditions prescribed by HUD, and
a HUD certified housing counselor only
means the housing counselor has
successfully passed an examination
pursuant to these regulations and works
for a participating agency.
*
*
*
*
*
■ 8. In § 214.103, revise paragraph (g)(2)
and add paragraph (n) to read as
follows:
§ 214.103

Approval criteria.

*

*
*
*
*
(g) * * *
(2) Staff. The agency must employ
staff trained in housing counseling. All
staff providing housing counseling,
including homeownership counseling or
rental housing counseling, must be HUD
certified housing counselors, and at
least half the agency’s counselors must
have at least 6 months of experience in
the job they will perform in the agency’s
housing counseling program.
*
*
*
*
*
(n) Certification of housing
counselors. (1) In order for an agency to
participate in HUD’s Housing
Counseling Program, all individuals
who provide counseling, including
homeownership and rental housing
counseling, must be HUD certified
according to requirements in this
section.
(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;

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(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 by 36 months after HUD
commences the administration of the
certification examination by publication
in the Federal Register.
■ 9. In § 214.300, add paragraphs (a)(7),
(8) and (9) to read as follows:
§ 214.300

Counseling services.

*

*
*
*
*
(a) * * *
(7) 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.
(8) 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.
(9) 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.
*
*
*
*
*
■ 10. In § 214.311, revise the section
heading and paragraph (a) and add
paragraphs (c) and (d) to read as follows:
§ 214.311

Housing counseling grant funds.

(a) HUD housing counseling grant
funds. HUD approval or program
participation does not guarantee
housing counseling grant funding.
Funding for the Housing Counseling
Program depends on appropriations
from Congress, and are awarded

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Federal Register / Vol. 81, No. 240 / Wednesday, December 14, 2016 / Rules and Regulations
competitively under Federal and HUD
regulations and policies governing
assistance programs, including the
Department of Housing and Urban
Development Reform Act of 1989 (42
U.S.C. 3545 et seq.). If housing
counseling grant funds become available
that are to be competitively awarded,
HUD will notify the public through a
Notice of Funding Availability (NOFA)
in the Federal Register and by the
Internet or other electronic media.
*
*
*
*
*
(c) Limitation on distribution of funds.
No housing counseling funds made
available under the Housing Counseling
Program shall be distributed to:
(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. If any participating agency
that receives housing counseling grant
funds under the Housing Counseling
Program is determined by HUD to have
used those housing counseling grant
funds in a manner that constitutes a
material violation of applicable statutes
and regulations, or any requirements or
conditions under which such funds
were provided:
(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

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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.
PART 570—COMMUNITY
DEVELOPMENT BLOCK GRANTS
11. The authority citation for part 570
is revised to read as follows:

■

Authority: 12 U.S.C. 1701x, 1701 x–1; 42
U.S.C. 3535(d) and 5301–5320.
§ 570.201

[Amended]

12. In § 570.201:
a. In paragraph (e) introductory text,
after the first sentence, add the sentence
‘‘If housing counseling, as defined in 24
CFR 5.100, is provided, it must be
carried out in accordance with 24 CFR
5.111.’’; and
■ b. At the end of paragraph (k), add the
sentence ‘‘If housing counseling, as
defined in 24 CFR 5.100, is provided, it
must be carried out in accordance with
24 CFR 5.111.’’
■ 13. In § 570.482, add paragraph (c)(4)
to read as follows:
■
■

§ 570.482

Eligible activities.

*

*
*
*
*
(c) * * *
(4) Housing counseling, as defined in
24 CFR 5.100, that is funded with or
provided in connection with CDBG
funds must be carried out in accordance
with 24 CFR 5.111.
*
*
*
*
*
■ 14. Add § 570.615 to read as follows:
§ 570.615

Housing counseling.

Housing counseling, as defined in 24
CFR 5.100, that is funded with or
provided in connection with CDBG
funds must be carried out in accordance
with 24 CFR 5.111.
PART 574—HOUSING
OPPORTUNITIES FOR PERSONS WITH
AIDS
15. The authority citation for part 574
is revised to read as follows:

■

Authority: 12 U.S.C. 1701x, 1701 x–1; 42
U.S.C. 3535(d) and 5301–5320.

16. In § 574.300, revise paragraph
(b)(1) to read as follows:

■

§ 574.300

Eligible activities.

*

*
*
*
*
(b) * * *
(1) Housing information services
including, but not limited to,
counseling, information, and referral
services to assist an eligible person to
locate, acquire, finance, and maintain

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90659

housing. This may also include fair
housing guidance for eligible persons
who may encounter discrimination on
the basis of race, color, religion, sex,
age, national origin, familial status, or
handicap. Housing counseling, as
defined in § 5.100, that is funded with
or provided in connection with HOPWA
funds must be carried out in accordance
with § 5.111. When grantees provide
housing services to eligible persons
(including persons undergoing
relocation) that are incidental to a larger
set of holistic case management
services, these services do not meet the
definition of Housing counseling, as
defined in § 5.100, and therefore are not
required to be carried out in accordance
with the certification requirements of
§ 5.111;
*
*
*
*
*
■

17. Add § 574.600 to read as follows:

§ 574.660

Housing counseling.

Housing counseling, as defined in
§ 5.100, that is funded with or provided
in connection with HOPWA funds must
be carried out in accordance with
§ 5.111. When grantees provide housing
services to eligible persons (including
persons undergoing relocation) that are
incidental to a larger set of holistic case
management services, these services do
not meet the definition of housing
counseling, as defined in § 5.100, and
therefore are not required to be carried
out in accordance with the certification
requirements of § 5.111.
PART 576—EMERGENCY SOLUTIONS
GRANTS PROGRAM
18. The authority citation for part 576
is revised to read as follows:

■

Authority: 12 U.S.C. 1701x, 1701 x–1; 42
U.S.C. 11371 et seq., 42 U.S.C. 3535(d).

19. In § 576.105, add paragraph (e) to
read as follows:

■

§ 576.105 Housing relocation and
stabilization services.

*

*
*
*
*
(e) Housing counseling. Housing
counseling, as defined in § 5.100, that is
funded with or provided in connection
with ESG funds must be carried out in
accordance with § 5.111. When
recipients or subrecipients provide
housing services to eligible persons that
are incidental to a larger set of holistic
case management services, these
services do not meet the definition of
housing counseling, as defined in
§ 5.100, and therefore are not required to
be carried out in accordance with the
certification requirements of § 5.111

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§ 576.407

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[Amended]

20. In § 576.407, amend paragraph (a)
by adding ‘‘and the housing counseling
requirements at 24 CFR 5.111’’ at the
end of the first sentence.

■

PART 578—CONTINUUM OF CARE
PROGRAM
21. The authority citation for part 578
is revised to read as follows:

■

Authority: 12 U.S.C. 1701x, 1701 x–1; 42
U.S.C. 11381 et seq., 42 U.S.C. 3535(d).

PART 1006—NATIVE HAWAIIAN
HOUSING BLOCK GRANT PROGRAM
22. The authority citation for part
1006 is revised to read as follows:

22. In § 578.53, add paragraph
(e)(8)(iii) to read as follows:

■

§ 578.53

Authority: 12 U.S.C. 1701x, 1701 x–1; 25
U.S.C. 4221 et seq.; 42 U.S.C. 3535(d).

■

Supportive services.

*

*
*
*
*
(e) * * *
(8) * * *
(iii) Housing counseling, as defined in
§ 5.100, that is funded with or provided
in connection with grant funds must be
carried out in accordance with § 5.111.
When recipients or subrecipients

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provide housing services to eligible
persons that are incidental to a larger set
of holistic case management services,
these services do not meet the definition
of Housing counseling, as defined in
§ 5.100, and therefore are not required to
be carried out in accordance with the
certification requirements of § 5.111
*
*
*
*
*

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23. In § 1006.210, revise paragraph (a)
to read as follows:

■

§ 1006.210

Housing services.

*

*
*
*
*
(a) Housing counseling, as defined in
§ 5.100, in connection with rental or

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homeownership assistance must be
carried out in accordance with 24 CFR
5.111;
*
*
*
*
*
24. In § 1006.375, add paragraph (e) to
read as follows:

■

§ 1006.375

Other Federal requirements.

*

*
*
*
*
(e) Housing counseling. Housing
counseling, as defined in § 5.100, that is
funded with or provided in connection
with NHHBG funds must be carried out
in accordance with 24 CFR 5.111.
Dated: December 7, 2016.
Edward L. Golding,
Principal Deputy Assistant, Secretary for
Housing.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2016–29822 Filed 12–13–16; 8:45 am]
BILLING CODE 4210–67–P

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