Free Housing Counseling: What a HUD-Approved Counselor Does Before You Sell

A HUD-approved housing counselor reviews your mortgage, your budget and the options your servicer may offer, and helps you build a plan, at no cost when the help is about avoiding foreclosure. Talking to one before you sell tells you whether keeping the home, changing the loan or selling makes the most sense, so the decision is made with all the options on the table.

I'm Dennis Mark Interdonato with The Dennis Mark Group at Keller Williams Realty Ocean Living. When a job change or a bigger payment puts a house in Monmouth or Ocean County under pressure, it's tempting to call a realtor first. I'd rather you also talk to a housing counselor early, because a counselor sees the side of the picture I don't: your loan and your servicer's options. Here's what they do and how to find one.

What is a HUD-approved housing counselor?

It's a counselor at an agency that participates in the U.S. Department of Housing and Urban Development's housing counseling program. HUD describes counseling as "independent, expert advice customized to the need(s) of the client." The Consumer Financial Protection Bureau says HUD-approved counselors are trained and certified to help you assess your finances, evaluate your options if you're struggling with your mortgage, and make a plan.

HUD lists the kinds of help participating agencies may offer, though not every agency offers every service:

• Pre-purchase counseling and homebuyer education
• Help resolving missed payments and default, including foreclosure
• Reverse mortgage (HECM) counseling
• Rental counseling, and help for people facing homelessness

What does a counselor do if you're behind on payments?

According to the CFPB, a counselor can review your mortgage details and your monthly budget, talk with your mortgage servicer, and help you understand the options your servicer may offer. The CFPB is also clear about the limits: a counselor "can't promise that you will get to keep your home," and if you face imminent foreclosure or have been served legal papers, you may need an attorney as well.

If you're already behind, here's whether you can sell a house when you're behind on payments in New Jersey.

Is housing counseling free?

Foreclosure help is. HUD says foreclosure, eviction and homelessness counseling are always free. Other counseling and workshops may carry a small, reasonable fee, which has to be disclosed before counseling begins and waived if you can't afford it. The CFPB says the same about foreclosure prevention: HUD-approved agencies provide it free of charge.

How do you find one in New Jersey?

• HUD: call 800-569-4287, or search online at answers.hud.gov/housingcounseling.
• CFPB: use the CFPB's Find a Counselor tool, call the HOPE Hotline at (888) 995-4673, open 24/7, or call the CFPB at (855) 411-2372 to be connected to a counselor.
• New Jersey Housing and Mortgage Finance Agency: its Foreclosure Mediation Assistance Program offers pre-foreclosure counseling through participating agencies in each county, remotely, at no cost. It's for owner-occupants of one- to four-unit homes whose mortgage is in default or at risk of default. NJHMFA says tenants, heirs, owners without a mortgage and owners who don't live in the property aren't eligible.

What if a foreclosure has already started?

Move fast and get an attorney involved. New Jersey's Judiciary runs a Foreclosure Mediation Program for homeowners who have been sued. NJHMFA's page says mediation must be requested within 60 days after service of the foreclosure summons and complaint, that the homeowner must live in the property, and that all borrowers on the note have to agree to take part. A counselor can help you prepare.

Where does selling fit in?

Sometimes the counseling shows the best answer is to sell. A counselor can tell you what your servicer may offer. What a counselor can't tell you is what your house will sell for, what it costs to sell, and how long it should take in your part of Monmouth or Ocean County. That's my part, and it's free too: a market evaluation built from recent sales, with the numbers in writing.

• If you have equity, a regular sale pays off the loan at closing, and you keep what's left. Even after a foreclosure has started, I can help you sell before the sheriff's sale, working alongside your attorney and your counselor, but nobody can promise a closing before the sale date.
• If you owe more than the home is worth, your lender or servicer has to agree to any sale for less than the payoff, so talk with your servicer, your counselor and an attorney first.
• If keeping the home is possible, the numbers from a market evaluation still help you and your counselor weigh it.

Start with what your home is worth. How I plan around a change like this, with your counselor, attorney and lender each doing their part, is on my life events page, and the Life Events Guide lays out the order of operations.

How do you tell real help from a scam?

The Federal Trade Commission warns that mortgage relief scammers "will demand payment upfront, before you get any services," and its advice is to "talk to a certified housing counselor for free legitimate help." If someone charges you before you have a written offer from your lender, or tells you to stop talking to your servicer, stop and call a HUD-approved agency. Here's more on protecting your equity from foreclosure rescue scams.

Frequently Asked Questions

Is HUD housing counseling free?

Foreclosure, eviction and homelessness counseling are always free, according to HUD. Other counseling may carry a small fee that has to be disclosed up front and waived if you can't afford it.

What does a HUD-approved housing counselor do?

The CFPB says a counselor can review your mortgage and monthly budget, talk with your servicer, and help you understand your options. A counselor can't promise you'll keep the home.

How do I find a HUD-approved housing counselor in New Jersey?

Call HUD at 800-569-4287, search answers.hud.gov/housingcounseling, use the CFPB's Find a Counselor tool, or use NJHMFA's Find a Housing Counselor tool for free pre-foreclosure counseling.

Should I talk to a housing counselor before I sell my house?

If the sale is about a payment you can't keep up with, yes. Knowing your servicer's options first means you sell because it's the best choice, not because it was the only one you heard about.

This is general information, not legal, tax or lending advice. If you've been served foreclosure papers, talk to an attorney.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• What happens if you can't pay your mortgage in New Jersey
• How to plan a move around a big life change
• Have a question this didn't answer? Send it to Dennis Mark and it may become the next article.