Subject: File No. DF Title IX - Financial Literacy
From: Sarai Johnson
Affiliation: Program and Resource Development Director, Community Development and Housing Counseling Agency (NEDCO: Neighborhood Economic Development Corporation))

July 21, 2011

I support increasing the requirement for housing counseling, particularly among first-time homebuyers as a contingency of receiving a mortgage loan. However, a recent research study in which I participated showed that while homebuyer education was correlated with significantly lower default rates among recipients, the effect decreased among those who received education during their purchase pending period.

As a Program Director at a Locally Approved Housing Counseling Agency under HUD, I also strongly feel that such requirements must be supported by funding for housing counselors. We uphold a tremendous standard of performance, excellent quality of services and produce measurable outcomes in decreasing mortgage default we also invest heavily in staff training and development. However, the loss of HUD Counseling funds in the FY 2011 budget does not bode well for future funding for our homeownership counseling programs. Funding will have to be reinstated before creating a mandate for counseling.

Finally, a consideration about housing counseling in general might be to remove it from HUD and place it in the new Consumer Protection bureau, where it more appropriately belongs. As consumer advocates and educators, we find housing counseling with the purpose of turning non-owners into owners using FHA and other HUD-related products may not be the best fit.

Thank you for considering these comments. The research report to which I alluded above is available via email if you wish to review it.

(Attached File #1: financialliteracy-1.pdf)