HUD tightens housing counselor standards, expands free foreclosure help
H.R. 6726 — To amend the Housing and Urban Development Act of 1968 to provide reforms to housing counseling and financial literacy programs. · Filed by David Scott (D-GA) · 2 cosponsors · Introduced Dec 15, 2025 · Referred to committee
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What it does
This bill strengthens oversight of housing counseling programs by requiring the HUD Secretary to conduct performance reviews of counseling agencies, set competency standards for individual counselors based on borrower default rates, and allow denial of federal funding to underperforming organizations. It also expands access to free foreclosure counseling for borrowers 30+ days delinquent on FHA, VA, USDA, or tribal loans, with costs paid from the Mortgage Insurance Fund.
Why we flagged it
The bill's primary function is to establish performance standards and oversight for HUD housing counseling programs while expanding free foreclosure counseling access to distressed borrowers. It is a regulatory reform and consumer protection measure, not a subsidy or carve-out.
What the text implies
- Performance reviews tied to default rates may inadvertently incentivize counselors to avoid serving higher-risk borrowers, potentially creating a two-tier counseling system where the most vulnerable borrowers receive less attention.
- The bill authorizes the Mutual Mortgage Insurance Fund (a self-insuring pool) to pay for foreclosure counseling, which may increase premiums for future FHA borrowers if counseling costs exceed fund reserves.
The full analysis lists 4 implications of this text.
Who stands to gain
Real estate investment trusts (REITs) managing multifamily housing; Mortgage servicers (reduced default risk from counseled borrowers); FHA mortgage insurers (lower claims from counseled borrowers)