To amend the Housing and Urban Development Act of 1968 to provide reforms to housing counseling and financial literacy programs.
- Bill Number
- H.R. 6726
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Housing and Community Development
- Status
- Introduced
- Latest Action
- 2025-12-15: Referred to the House Committee on Financial Services.
- Last Updated
- 2026-06-11T23:26:31Z
AI-Generated Summary
Purpose
The legislation, H.R. 6726, aims to improve the effectiveness and accountability of federal housing counseling and financial literacy programs by amending Section 106 of the Housing and Urban Development Act of 1968. It focuses on ensuring high-quality counseling services, particularly for homebuyers and borrowers at risk of foreclosure, to reduce default rates and promote financial stability.
Key Provisions
- Geographic Diversity in Funding: Requires that grants for housing counseling be distributed to organizations serving both urban and rural areas, replacing previous language about "adequate distribution" to lower foreclosure rates.
- Performance Reviews for Agencies and Counselors:
- The Secretary of Housing and Urban Development (HUD) must conduct periodic performance reviews of participating agencies to check compliance with program rules.
- Reviews may include on-site visits and evaluations of counselors' overall performance.
- Defines a "covered mortgage loan" as certain federally backed home loans (e.g., FHA-insured, VA-guaranteed, or USDA loans) for 1-4 family properties.
- Allows comparison of individual counselors' performance (for pre-purchase counseling) against default rates of similar borrowers in comparable markets, considering other relevant factors.
- Counselor Certification and Accountability:
- If a counselor shows incompetence (based on performance comparisons) and it won't harm service availability, HUD can require additional education and a probationary period, retesting (up to twice), or permanent suspension of certification.
- Termination of Funding for Non-Compliant Organizations:
- HUD can deny renewal of grants to agencies not meeting requirements, based on performance reviews and regulations.
- Provides at least 60 days' written notice before finalizing denial.
- Allows organizations to request an informal conference with a HUD official to discuss uncontrollable factors (e.g., poor lender coordination) that led to non-compliance.
- Foreclosure Mitigation Counseling:
- Borrowers 30+ days delinquent on covered mortgage loans (expanded to include VA and USDA loans) must be offered housing counseling opportunities.
- For FHA-insured loans, the cost of this counseling is covered by the Mutual Mortgage Insurance Fund (if other legal requirements are met), paid at fair market rates.
Significant Changes to Existing Law
- Introduces mandatory performance-based evaluations and comparisons to default rates, which were not previously required, shifting from a more general oversight model to one focused on measurable outcomes.
- Adds new certification standards and potential suspension for counselors, enhancing individual accountability.
- Establishes formal termination procedures with notice and appeal rights, providing structured due process not explicitly detailed before.
- Expands the definition of covered loans for foreclosure counseling to include VA and USDA programs and mandates borrower access to counseling, with dedicated funding for FHA cases—previously, such provisions were narrower or less enforced.
- Replaces vague distribution criteria with explicit urban/rural diversity requirements for grants.
Potential Impacts
- Government Agencies: Increases HUD's administrative workload through required reviews, certifications, and conferences, but could lead to more efficient use of federal funds by weeding out underperforming providers.
- Citizens: Improves access to quality counseling for potential homebuyers and delinquent borrowers, potentially reducing foreclosures and enhancing financial literacy, especially in underserved urban and rural communities. Low-income or minority borrowers may benefit most from funded foreclosure mitigation.
- International Relations: No direct impacts, as the bill focuses on domestic housing policy.
Main Stakeholders Affected
- HUD and Federal Agencies: Primary implementer, responsible for reviews, certifications, and funding decisions.
- Housing Counseling Organizations and Counselors: Subject to performance evaluations, potential funding cuts, and certification requirements; must adapt to new compliance standards.
- Borrowers and Homebuyers: Especially those with federally backed mortgages, gaining better counseling access but possibly facing indirect effects from agency changes.
- Lenders and Servicers (e.g., FHA, VA, USDA programs): May need to coordinate more with counselors for delinquent borrowers, potentially improving loan workout processes.
- Taxpayers: Could see more targeted use of public funds for housing programs, reducing waste from ineffective counseling.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens program integrity by tying funding and certifications to data-driven performance metrics, but requires HUD to issue implementing regulations to avoid arbitrary decisions. The bill's definitions of "covered mortgage loans" align with existing federal housing laws, ensuring consistency.
- Constitutional: Incorporates due process elements (e.g., notice, informal conferences) for funding terminations, protecting organizations from unfair revocation of federal assistance under the Fifth Amendment.
- Political: Supports broader goals of housing affordability and foreclosure prevention, potentially appealing to bipartisan interests in economic stability post-recession. It emphasizes equity by prioritizing diverse geographic service, which could address criticisms of urban bias in federal programs, though implementation challenges may spark debates over counselor oversight burdens.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (2)
Rep. Beatty, Joyce [D-OH-3], Rep. Fields, Cleo [D-LA-6]
Recent Actions
- 2025-12-15: Referred to the House Committee on Financial Services.
- 2025-12-15: Introduced in House
- 2025-12-15: Introduced in House
Bill Versions
- To amend the Housing and Urban Development Act of 1968 to provide reforms to housing counseling and financial literacy programs. — issued 2025-12-15 — PDF (7 pages)