205,822 Counseling Sessions, 9,426 Resolved Defaults: Where Housing Counseling Reaches Its Limit

We keep a working dataset of 605 HUD-approved housing counseling agencies across the states, the District of Columbia and the territories, with each agency’s reported activity for fiscal year 2025. We built it for partner outreach, and what it showed was more interesting than the purpose we built it for.

In FY2025 those 605 agencies reported serving 376,130 households and delivering 205,822 one-on-one counseling sessions. Against that volume they reported 9,426 resolved mortgage defaults, which is 4.6 percent of one-on-one sessions.

That figure needs a caution before anyone reads it as a success rate. One-on-one sessions cover every kind of counseling an agency provides, including pre-purchase, rental and financial management counseling, so the figure compares default resolutions with all sessions and understates the rate among clients who came in for help with a default. Our dataset does not separate default counseling from the rest.

The comparison is still informative. The same agencies reported 65,922 clients whose financial capacity improved, about 32 percent of one-on-one volume. Outcomes that depend on the counselor and the client are being produced at a healthy rate. The outcome that depends on a third party, the servicer, is rare by comparison. We read that as a structural ceiling, and the regulation that governs the program describes where the ceiling sits.

Scale does not lift the number

If the figure reflected capacity, the largest agencies would outperform the smallest, and the data shows the opposite.

One-on-one sessions in FY2025	Agencies	Sessions	Resolved defaults	Share of sessions
1,000 or more	38	93,262	2,831	3.0%
250 to 999	160	74,165	4,007	5.4%
50 to 249	267	34,417	2,307	6.7%
Under 50	140	3,978	281	7.1%

The 38 highest-volume agencies deliver 45 percent of all one-on-one sessions and report the lowest share. Larger agencies may also do proportionally more counseling that has nothing to do with default, which would pull their share down, so the comparison should be read with that in mind. Even so, among these agencies higher volume does not come with a higher share of resolved defaults.

One more cut deserves a director’s attention. In our set, 117 agencies delivered 100 or more one-on-one sessions and reported no resolved defaults. Together they account for 66,279 sessions, about a third of the total. Some of those agencies may do little default counseling. Part of the gap is also reporting practice: outcome coding varies, follow-up contact is a reasonable-effort duty (24 CFR 214.300(c)), and a resolution that arrives after a file closes may never reach a HUD-9902. Those factors explain part of the distance between 205,822 and 9,426. We doubt they explain all of it.

The regulation anticipates this client

Part 214 is specific about what counseling is and where it ends. The basic services are counseling that enables a client to make informed and reasonable decisions, and referrals to local, state and federal resources (24 CFR 214.300(b)). Outside reverse mortgage counseling, every counseling client has an action plan (24 CFR 214.300(a)(2)). One of the conditions for ending counseling is that “the agency determines that further housing counseling will not meet the client’s housing need or resolve the client’s housing problem” (24 CFR 214.315(h)(2)).

That provision contemplates a client whose problem is real, documented and beyond the reach of counseling, and it treats the situation as a boundary to be recorded in the file. The program also expects the agency to have somewhere to send that client. An approved agency must have established working relationships with community resources to which it can refer clients who need help it cannot offer (24 CFR 214.103(j)). For clients who arrive by referral from HUD or another participating agency, the agency must refer them onward when it does not offer the service requested or lacks the resources (24 CFR 214.303(e)).

The referral expectation is already written. In the mortgage servicing category, few agencies have a named place to refer.

What is on the other side of the boundary

The files that stall are recognizable. A counselor submits a complete loss mitigation package and the servicer asks for the same documents a fourth time. Payments post to suspense and the arrearage grows without explanation. Force-placed insurance appears on an escrow account that already carried coverage. The loan transfers during review and the new servicer has no record of the application. A written request for account information goes out and nothing comes back within the period Regulation X allows.

These are problems of servicer conduct, and they carry specific regulatory exposure under RESPA and Regulation X, the Truth in Lending Act, the Fair Debt Collection Practices Act where a debt collector is involved, and state servicing statutes. A certified housing counselor is not trained or funded to audit the responses to written requests, reconstruct how payments were applied, trace a chain of assignments or assemble the record that supports a complaint, and should not be asked to. That work lies outside the counseling relationship and outside the agency’s approved work plan. By that stage the homeowner needs evidence more than counseling.

Why this is an opportunity

For program directors. A referral that turns a stalled servicer file into a documented resolution can give your follow-up an outcome to record, where the alternative is a file closed under 24 CFR 214.315(h)(2) with nothing to record. HUD has used HUD-9902 data, including positive counseling outcomes, in scoring its Comprehensive Housing Counseling grant competitions, as it did for fiscal year 2023.

For the compliance officer who will read the agreement before the director signs it, the provisions to read are 24 CFR 214.303(f) and (g). The prohibited relationships are 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 (24 CFR 214.303(f)(1)), and staff must also avoid the appearance of preferential treatment to any organization (24 CFR 214.303(f)(3)). Serv does none of the listed things, holds no interest in any client’s property, and neither pays nor accepts consideration for a referral. Members pay Serv directly. The disclosure statement required by 24 CFR 214.303(g) has to describe the relationship, and we supply draft language for your counsel to review.

A signed memorandum of understanding also documents a working relationship of the kind 24 CFR 214.103(j) describes, in a category that general referral directories do not cover.

For attorneys, the value comes before the engagement. What usually arrives is a homeowner with a narrative, a box of papers and a sale date. What arrives through this pathway is an organized record: a correspondence timeline, a reconciliation of the payment history, and a list of written requests with their dates and responses measured against the regulatory deadlines. There is no fee sharing and no referral payment, and the attorney-client relationship remains the attorney’s.

The invitation

The distance between the two figures marks where a category of homeowner distress leaves the system unresolved, and it reflects no failing by anyone in the counseling network. The referral rules exist, the reporting system exists, and certified counselors are already doing the intake and the action plan. The missing piece has been a partner on the other side of the boundary that can take the servicer conduct file and build a documented record that an attorney or regulator can act on.

We are building that partnership agency by agency, at no cost to the agency, under an agreement either side can end on 30 days’ written notice. The details are on our HUD partners page, and partner inquiries can go to icd@servincorporated.com or 888-899-9372.

The figures in this article are the agencies’ reported activity for fiscal year 2025 as compiled in our dataset, and we will share the dataset with any agency or researcher who asks. This article is general information and is not legal advice. An agency should review any partnership against its own approved work plan and grant agreements.

Sources

• 24 CFR 214.300, Counseling services
• 24 CFR 214.303, Performance criteria
• 24 CFR 214.315, Recordkeeping
• 24 CFR 214.103, Approval criteria
• HUD, FY2023 Comprehensive Housing Counseling NOFO, frequently asked questions