Your counseling program has a defined mandate, and a review of the servicer's compliance sits outside it. This note explains how we carry that work for your clients and what the conflict of interest rules say about a referral.
You run a HUD-approved housing counseling program, and your duty to the client is real. Under 24 CFR 214.303(f), you and your staff must avoid conflicts of interest and any action that might compromise the agency’s ability to serve the best interests of its clients. You also work inside a program with a defined mandate, a fixed set of reported outcomes and a counseling model built around loss mitigation.
One category of work sits outside that model, and it can change a client’s outcome. This note explains how we can carry it for your clients and what the conflict of interest rules say about a referral.
The session your program delivers is well defined: a budget and affordability review, an explanation of the servicer’s loss mitigation options, an action plan and a referral into the right process. That structure serves most clients well.
It was not built to include an examination of whether the servicer has complied with federal servicing rules. Whether a written request for information was answered on time and in full, whether a notice of error was investigated, and whether the assignment history shows who is entitled to foreclose are questions about the servicer’s conduct. Your counselors are not trained or measured on them, and your work plan does not cover them. That boundary comes from the program’s mandate.
Serv Inc. runs that second track. We are a private consumer investigation and dispute resolution membership organization, and reviewing servicer compliance is the work we do. We read the loan file with the questions the counseling session has no room for, and we do it alongside loss mitigation. A client can pursue a modification through your office while the servicer’s compliance is examined. The two tracks support each other, and few agencies have a named referral for the second.
Compliance-minded directors ask this first, and the conclusion belongs to your agency, its counsel and your HUD point of contact. We can set out the provisions and our facts. The prohibited relationships are listed in 24 CFR 214.303(f)(1): a direct interest in the client as landlord, broker or creditor; originating, servicing, underwriting or holding a financial interest in a mortgage on the client’s property; owning or purchasing property the client seeks to rent or buy; and serving as a collection agent for the client’s lender, landlord or creditor. Staff must also avoid any action that might create the appearance of preferential treatment to any organization, or compromise the agency’s ability to serve its clients’ best interests (24 CFR 214.303(f)(3)).
Our facts are these. Serv holds no interest in any client’s property and does not originate, service, underwrite or collect on loans. No referral fee or anything else of value passes in either direction. Members pay Serv directly, and no lender or servicer funds our consumer investigations. We also offer training and compliance services to institutions, which our enterprise page describes.
The disclosure rule is the other provision to read. Under 24 CFR 214.303(g) your disclosure statement must describe any financial relationships between the agency and its industry partners, tell clients that they are not obligated to receive other services from your organization or its exclusive partners, and provide information on alternative services, programs and products. We can supply draft disclosure language for your counsel to review. The regulation also expects an approved agency to have working relationships with community resources for needs it cannot meet itself (24 CFR 214.103(j)).
Your agency pays nothing, and a client begins with a free analysis of their documents. A client who wants the full investigation joins as a paying member, and the current terms are on our pricing page. We ask that your disclosure describe the relationship in those terms, and we can supply draft language.
A partnership gives your office a named resource for the compliance review your staff is not positioned to run, an independent alternative to list when your disclosure calls for one, and a client who leaves with both tracks covered. Referrals also run the other way. When we meet a homeowner who needs budgeting, affordability and loss mitigation help, we send them to you.
We work with housing counseling agencies under a short memorandum of understanding that defines the referral path in both directions. The details are on our HUD partners page, and you can reach us at 888-899-9372 or icd@servincorporated.com.
Serv Inc. is not a law firm and does not provide legal advice. An agency should review any partnership against its own approved work plan and grant agreements.
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