Reforms to housing counseling and financial literacy programs

(a) In general Section 106(a)(4) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)) is amended— (1) in subparagraph (B)— (A) by striking The Secretary and inserting the following: (i) In general The Secretary; and (B) by adding at the end the following: (ii) Requirement The Secretary shall require each organization receiving assistance under this paragraph to employ individuals providing housing counseling who— (I) are certified to understand sustainable homeownership; and (II) pass required examinations that determine the ability of the individual to counsel borrowers on responsible homeownership. (iii) Suspension of certification If an individual employed by an organization that receives assistance under this paragraph provides counseling services to borrowers who, after receiving those services, have default rates that exceed the average default rates for borrowers counseled by individuals in the area served by the organization, the Secretary— (I) shall suspend the certification from the individual; and (II) may deny future assistance under this paragraph to that organization. (iv) Prohibition on lobbying activities An organization that applies for or receives assistance under this paragraph shall not engage in political activities, advocacy, or lobbying, whether directly or through other parties.; and (2) by adding at the end the following: (F) Set asides The Secretary shall set aside 40 percent of amounts authorized to carry out this paragraph for organizations that provide rental counseling or pre-foreclosure counseling. (G) Geographic diversity In making grants under this paragraph, the Secretary shall ensure that the recipients are geographically diverse and include organizations that serve urban and rural areas.. (b) Requiring prepurchase and foreclosure mitigation counseling (1) Covered mortgage loan defined In this subsection, the term covered mortgage loan means any loan which is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from 1- to 4-families that is— (A) insured by the Federal Housing Administration under title II of the National Housing Act (12 U.S.C. 1707 et seq.); (B) insured under section 255 of the National Housing Act (12 U.S.C. 1715z–20); (C) guaranteed under section 184 or 184A of the Housing and Community Development 3 Act of 1992 (12 U.S.C. 1715z–13a, 1715z–4 13b); (D) guaranteed or insured by the Department of Agriculture; or (E) made by the Department of Agriculture. (2) Requirement for purchasers Before purchasing residential real property that secures a covered mortgage loan, the purchaser shall participate in prepurchase housing counseling. (3) Requirement for borrowers A borrower with respect to a covered mortgage loan who is 30 days or more delinquent on payments for the covered mortgage loan shall participate in foreclosure mitigation counseling.