The following highlights some of the more notable changes made in the final rule.

Definitions
HUD has revised definitions for affiliate, branch or branch office, education, HUD-approved housing counseling agency, housing counseling work plan, housing counseling action plan, housing goal, intermediary, local housing counseling agency, and subgrantee, and added definitions of housing counselor, multi-state organization (MSO), and participating agency.

Counseling Settings
Although HUD believes that in-person, face-to-face counseling is ideal, HUD has revised the regulations to allow for alternative counseling settings when it is in the best interests of the client.
In addition, agency facilities must meet, when applicable, all accessibility requirements.
There may also be circumstances where an agency will have to provide a person with a disability counseling in an alternative format or at an alternative location as a reasonable accommodation to the person's disability.

Approval Criteria
HUD has provided greater flexibility to agencies in hiring staff.
Under this final rule, for agencies seeking HUD approval, to maintain HUD approval, and to participate in HUD's Housing Counseling program, at least one-half of an agency's counselors must have the minimum 6 months counseling experience.
Recognizing the expanding roles of housing counseling agencies, HUD removed the requirement that housing counseling agency facilities be located in the communities they serve. In addition, agencies must make space available to provide housing counseling services, but are not required to limit the use of the space solely for the purpose of providing housing counseling services.
The final rule has been revised to provide that offenses that reflect upon the responsibility, integrity,
or ability of housing counseling agencies to participate in housing counseling activities refers to a criminal offense that can be prosecuted at the local, state, or federal level. An example of such an offense would be if a member of the board of directors, the executive director, or an employee has been indicted or convicted of embezzling city, state, or federal funds.
 
Inactive Status for Housing Counseling Agencies
 When an agency is unable to continue to meet the requirements for a HUD- approved counseling agency, HUD will remove an agency from the list of participating agencies until such time as the impediment to compliance is removed. 

Client Management System
 HUD revised the requirements for a client management system so that participating agencies will utilize such a system for the collection of client-level information including, but not limited to, financial and demographic data, counseling services provided, and outcomes data. The system used must provide the counseling agency with the tools necessary to track and manage all counseling and educational activities associated with each client. Agencies must utilize a system that satisfies HUD's requirements and interfaces with HUD's databases.

Agency Workload
HUD revised the workload determination to a minimum of 30 clients annually and requiring that the agency
maintain a level of funds that enables it to provide housing counseling to at least this required 30-client workload every year, whether or not the agency receives HUD funding.

Conflicts of Interest
HUD has revised and redesignated the conflicts-of-interest provision to make the provisions easier to understand and provide additional flexibility. The revised regulations prohibit directors, employees, and officers of HUD-approved housing counseling agencies and intermediaries from engaging in activities that create a real or apparent conflict of interest. A conflict, for example, could arise if these individuals or their spouse, child, general partner, or organization in which he or she serves as employee (other than with the HUD-approved counseling agency), or with whom he or she is negotiating future employment, has a direct interest in the client as landlord or creditor, or originates, has a financial interest in, services, or underwrites a mortgage on the client's property, owns or purchases a property that the client seeks
to rent or purchase, or serves as a collection agent for the client's mortgage lender, landlord, or creditor.
Further, the revised regulations prohibit the director, employee, or officer of a HUD-approved housing counseling agency or intermediary from referring clients to mortgage lenders, brokers, builders, or real
estate sales agents or brokers in which the individual, his or her spouse, minor child, or general partner has a financial interest.
The provisions require the agency, its staff, or any member of his or her immediate family to avoid any action that might result in, or create the appearance of, administering the housing counseling operation for personal or private gain, which includes providing preferential treatment to any organization or person; or undertaking  any action that might compromise the agency's ability to ensure compliance with the requirements of this part and to serve the best interests of its clients. HUD may investigate agency practices and may take action to suspend or terminate the agency's approval. 

Housing Counseling Fees
HUD will allow for participating agencies to accept funding from lenders, as long as the relationship does not create a conflict of interest and that the relationship is disclosed to the client. Agencies may charge
reasonable fees to clients, as long as the fee does not place a hardship on the client. Acknowledging that a client's ability to pay a fee is based on factors beyond the client's income, HUD revised the
requirement that a fee be based solely on the client's income. The housing counseling agency may make a determination about a client's ability to pay based on factors, including, but not limited to, income
and debt obligations. Clients should not be turned away because of an inability to pay. Agency fee schedules, as well as determinations of clients' ability to pay, are subject to review by HUD during periodic
monitoring.
HUD removed the provision that HUD would pre-approve an agency's fee schedule. Instead, HUD will review fee schedules during a review of an agency's application for approval or a performance review, in order to ensure that the fees are consistent with fees charged by similar agencies providing similar
services.

Recordkeeping
HUD has removed the client and counselor signature requirement and the intake interview requirements. HUD has expanded the recordkeeping requirements so that the client file can be a paper file,
an electronic file, or a combination. 
HUD clarified the requirements for client files and education files.
Client income data is required to be among the client information that agencies collect.

Phased-In Implementation of New Regulations for Approved Counseling
Agencies
Housing counseling agencies approved by HUD on or before the effective date of this final rule have until
October 1, 2007, to comply with the requirements of this final rule.
Additionally, housing counseling agencies that have submitted applications to HUD as of the publication date of this final rule under the existing requirements and that are subsequently approved, even if
the agency is notified of the approval after the effective date of the rule, also will have until October 1, 2007, to comply with the requirements in this final rule. All other agencies approved after the
effective date must comply with the requirements of this part.

 Other Changes
HUD clarified thatbcompliance with applicable civil rights laws will be reviewed as partbof the performance review

Any questions or comments should be directed to:
Ruth Roman, Director, Office of Program Support,
Office of Housing, Department of Housing and Urban Development,
451 Seventh Street, SW., Room 9274,
Washington, DC 20410-8000
(202) 708-0317.

To view the full release please click here.

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