Housing Counseling Demonstration Program

Pursuant to a legislative requirement, GAO assessed the effectiveness of a prepurchase and foreclosure-prevention counseling demonstration program intended to: (1) reduce defaults and foreclosures on single-family mortgages insured by the Federal Housing Administration (FHA); (2) encourage responsible and prudent use of such mortgages; (3) help homeowners with FHA mortgages retain their homes; and (4) encourage the availability and expansion of homeownership through the FHA mortgage insurance program. GAO noted that: (1) the Department of Housing and Urban Development (HUD) operated the demonstration program in Englewood/Marquette Park, Chicago, Illinois, South Suburban, Chicago, Illinois, and South Dekalb County, Atlanta, Georgia; (2) problems in comparing target and control areas, implementing the counseling intervention, and geographic limitations precluded GAO from assessing the impact of the demonstration program; (3) HUD officials stated that legislative constraints made it difficult to implement the program; and (4) HUD and Congress are considering several other changes in homeownership counseling that would make such counseling a routine part of the purchase process or would reduce insurance premiums for purchasers who receive counseling.