Housing Counseling Agencies: Tips to Avoid Government Scrutiny

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The recent announcements of government funding for housing counseling is welcome news to agencies that are struggling to help homeowners. In mid-March 2012, the U.S. Department of Housing and Urban Development ("HUD") and NeighborWorks announced that over 100 million dollars in grant money would be distributed hundreds of housing counseling agencies. The money, however, comes with certain strings attached that all recipients must factor into their compliance programs.

The downfall of the Association of Community Organizations for Reform Now (“ACORN”) two years ago serves as an important lesson to all nonprofit HUD-approved housing counseling organizations. An embezzlement scandal, allegations of voter registration fraud and other questionable behavior by employees involved in a counseling session gained national attention, led to federal legislation prohibiting the distribution of federal funds to ACORN, and ultimately resulted in the organization’s bankruptcy and dissolution in 2010.

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