NMP - November 2019 - 42

Addressing Post-Housing
Crisis Issues

Pilot Program Connecting MLOs and Real Estate Agents
to Housing Counselors
BY PAM MARRON
rior to being selected
for the U.S.
Department of
Housing & Urban
Development's
(HUD) Housing
Counseling Federal Advisory
Committee (HCFAC)1, my
knowledge of what HUD-approved
housing counselors could do to
assist clients was very little. From
the very first meeting during my
three-year term from 2016 through
2019, so many areas of help for
challenged clients were discovered.
By 2019, a pilot program that
connects mortgage loan originators
and real estate agents to HUDapproved housing counselors to
assist challenged clients had begun.
The pilot program focuses on
three top needs of potential
homebuyers:
1. Help with credit issues and
building credit
2. Assessing for available
downpayment assistance
3. Budgeting for a home purchase

P

NOVEMBER 2019 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

42

The Tampa Bay Community
Development Corporation (TBCDC)2
is the Florida housing counseling
agency that has worked on this
rollout for the last year. Details such
as cost, multiple revisions of a
document called a "Memorandum
of Understanding (MOU)3," how
client progress would be
communicated back to the referring
party, and using the Fee for Service
Model4 to construct a method of
payment that is tied to a credit for
the client towards closing costs on
their mortgage were hammered out.
While being on the HUD Housing
Counseling Federal Advisory
Committee, I continually checked to
make sure that each step of this

effort was being done correctly.
And on Sept. 10, 2019, the CFPB
issued a No-Action Letter (NAL)
that states ... the Bureau will not
take supervisory or enforcement
action under RESPA against HUDcertified Housing Counseling
Agencies (HCAs) that have entered
into certain fee-for-service
arrangements with lenders for prepurchase housing counseling
services.5 This helped immensely
with clarity needed for the MOU.
The method of payment to
Housing Counseling Agencies
(HCA) that this pilot is using is
called a Fee for Service. Referred
clients pay a pre-determined fee
upfront to the housing counseling
agency. That fee is credited back to
the client closing costs on their
home purchase by the referring
mortgage loan originator or realtor
who signs the MOU.
Using the Fee for Service model
allows two benefits:
1. Encourages clients above
Low- to Moderate-Income (LMI)6
levels to utilize housing counseling
services. Historically, HCA services
have been geared to LMI income
levels and below.
2. Provides a funding mechanism
for independent loan originators to
utilize housing counseling services
with an incentive for the client if
they return to same referring loan
originator who signed the MOU.
l Why important? Bank loan
originators often form
partnerships with housing
counseling agencies through
their institutions that can pay
for housing counseling
services by using Community
Reinvestment Act (CRA) funds.
Independent loan originators
do not have CRA funds.

A few extra points:
1. The client is not required to
return to the referring loan
originator or real estate agent.
However, the credit is only
available from the signor of the
MOU.
2. Real estate agents can also
sign an MOU and provide a credit
towards the home closing. This
MOU is being developed now.
3. Businesses can utilize this
pilot program as well. Recently, I
spoke with a forward-thinking
entrepreneur who thought this
program could be helpful to his
employees who work at his
franchise locations. Kudos to
businesspeople who realize the
benefit of assisting employees into
homeownership!
4. A downpayment assistance
(DPA) matrix that includes

wholesaler DPA programs is being
developed now and will be available
to HCA's to assess clients for all
available DPA programs.
5. Millennials often need help
building credit and budgeting for a
home purchase. Their excitement
when they see the end of the tunnel
is inspiring!
Thanks to my colleagues on the
HUD HCFAC and especially to
Sarah Gerecke who has inspired
me more than you know. Thank you
to the Tampa Bay CDC ... Wanda
and Beverly ... who have worked so
hard to make this pilot a reality. And
thank you to National Mortgage
Professional Magazine for allowing
the reported progress of this effort
to be chronicled in your monthly
publication.
Stay tuned!

Footnotes
1-Housing Counseling Federal Advisory Committee
(hudexchange.info/programs/housingcounseling/federal-advisory-committee).
2-Tampa Bay CDC (tampabaycdc.org).
3-Memorandum of Understanding (MOU): HUD Housing Counseling Program Handbook
7610.1, Pg. 68 (hud.gov/sites/documents/76101HSGH.PDF).
4-Fee for Service|U.S. Department of HUD/Office of Housing Counseling/Model Funding
Agreements and Fee Structures/Fee for Service specifically noted on pgs. 2 and 4, but
touched upon throughout handbook
(files.hudexchange.info/resources/documents/Housing-Counseling-Model-FundingAgreements-FeeStructures.pdf).
5-CFPB Issues Policies to Facilitate Compliance and Promote Innovation/First No-Action
Letter Issued to HUD Housing Counseling Agencies/Sept. 10, 2019
(consumerfinance.gov/about-us/newsroom/bureauissues-policies-facilitate-compliancepromote-innovation).
6-Low to Moderate Income (LMI) Levels: Low and Moderate Income Census Tract Data
Analytics/FFIEC "Census 2019" Census Tract Characteristics Interactive Table
(proximityone.com/tractslmi.htm).

Pam Marron (NMLS#: 246438) is senior loan originator with
Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa
Bay, Fla. She may be reached by phone at (727) 375-8986, email PMarron@InnovativeMortgage.onmicrosoft.com or visit
HousingCrisisStories.com, CloseWithPam.com or
8Problems.com.


http://www.hudexchange.info/programs/housingcounseling/federal-advisory-committee http://www.tampabaycdc.org http://www.hud.gov/sites/documents/76101HSGH.PDF https://files.hudexchange.info/resources/documents/Chdo-Toolbox-for-HOME-PJs.pdf https://files.hudexchange.info/resources/documents/Chdo-Toolbox-for-HOME-PJs.pdf https://www.consumerfinance.gov/about-us/newsroom/bureau-issues-policies-facilitate-compliance-promote-innovation/ https://www.consumerfinance.gov/about-us/newsroom/bureau-issues-policies-facilitate-compliance-promote-innovation/ http://www.proximityone.com/tractslmi.htm http://www.HousingCrisisStories.com http://www.CloseWithPam.com http://www.8Problems.com

NMP - November 2019

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