Foreclosure Prevention Counseling

Our Most Effective Prevention Tool

Since the beginning of the foreclosure crisis, access to free, quality foreclosure counseling has proven to be the single most cost effective tool in the fight against foreclosure. Often for less than a thousand dollars, foreclosure counselors certified by the U.S. Department of Housing and Urban Development (HUD) and/or the Michigan State Housing Development Authority (MSHDA) are able to help thousands of homeowners implement solutions that keep them in their homes. These counselors help struggling homeowners with loan modifications, refinancing, budgeting, and other strategies. Many Michigan HUD and/or MSHDA-certified nonprofit housing counseling agencies have success rates above the national averages for such organizations and all of these services are offered free to the homeowner, regardless of income.

Recent national studies indicate that homeowners who receive housing counseling are 200% more likely to receive a loan modification and 45-50% more likely to get current on their mortgage. Michigan has a strong network of housing counseling agencies across the state that provides these free services. Homeowners can locate a free, HUD or MSHDA-certified foreclosure prevention counselor by visiting the MSHDA counseling agency locator.


Low-income individuals have long had access to free non-profit housing counseling services through HUD and MSHDA approved housing counseling agencies. However, with the recent foreclosure crisis, these services are needed by all those at-risk of losing their primary residence, regardless of income.

In late 2007, federal legislation passed authorizing $180 million for a National Foreclosure Mitigation Counseling (NFMC) program. Congress selected Neighborworks® America to administer the program. Since then, all five rounds of funding through this program have been expended and a sixth round of funding was announced in March 2012. HUD through its Housing Counseling Assistance Program (HCAP) has also provided limited funding for foreclosure prevention counseling on a competitive grant basis.  MSHDA too has contributed a significant amount of funds to support the MSHDA-certified housing counseling agencies throughout the state.

Even with the funding challenges, Michigan residents still have access to a strong network of highly trained free foreclosure prevention counselors. While funding for the continuation of these services is critical, one of our biggest challenges remains making at-risk homeowners aware of these services.

What to Expect from a Counselor

Housing counselors provide respect and confidentiality to at-risk homeowners and tenants. These unbiased professionals will:

  1. Provide clients with a clear understanding of Michigan’s foreclosure process, timeline and related rights and responsibilities;
  2. Inform clients of foreclosure prevention options (repayment plan, loan modification, forbearance, deed in lieu, short sale, etc.);
  3. Determine homeowner eligibility for state and federal programs (HAMP, Hardest Hit Homeowner Funds, etc.);
  4. Assist with the paperwork involved in working with the lender;
  5. Contact the lender and advocate for the homeowner;
  6. Refer any legal issues to the local legal aid office for free legal advice and counsel; and
  7. Report any suspected mortgage fraud or foreclosure rescue scams to the Michigan Attorney General’s office.

Most importantly, the housing counselor will listen to determine if the homeowner wants to save the home or exit with dignity. Once this is determined, the counselor will preform a thorough review of the homeowners financial situation and help to establish a budget which will determine the feasibility of the desired outcome.

While a non-profit foreclosure counselor cannot promise to save a home, working with one helps to put the odds in the homeowners favor. When saving the home is impossible, some counseling agencies will offer “soft-landing” or “post-foreclosure” services which include helping the homeowner find an affordable place to live and accessing resources to make this transition.

Michigan Foreclosure Prevention Corps

In 2009, the Michigan Foreclosure Prevention Corps was established. The corps focuses on providing wrap-around administrative support for foreclosure counselors, including:

  • serving as the first point of contact for an at-risk homeowner reaching out for help;
  • organizing a neighborhood or community scam prevention information session;
  • working to coordinate mortgage and tax foreclosure efforts between a County Treasurer’s office and a counseling agency;
  • spearheading marketing efforts to  direct at-risk homeowners to legitimate counseling services; and
  • collecting data on the impact of counseling services on a local community.

For more information about the Prevention Corps, contact CEDAM at 517.485.3588

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