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Homebuyer Education and Counseling: Examining Rural Provider Networks in Texas, Florida and South Dakota© Housing Assistance Council, 2000 FLORIDAOverview Statewide, Florida has an extensive network of government, nonprofit, and other organizations that canvass nearly the entire state. Several counties are served by more than one E&C provider, and many potential homebuyers are (according to one USDA Rural Development official) "bombarded with information" in preparation for either direct or guaranteed Section 502 loan applications. Diagram 2: Florida homebuyer E&C organizations
National networks active statewide in Florida include:
Homes in Partnership, Inc. Homes in Partnership, Inc. (HIP) operates out of the city of Apopka in central Florida. It serves a five-county area consisting of Orange, Lake, Sumter, Hernando and Osceola counties. HIP not only offers a holistic homebuyer program that includes both education and counseling, it is also the administrative agent for the Neighborhood Center for Families (NCF)--collaboration of several social service agencies including a credit union, an adult education program, a teen truancy prevention program, a child care program and a political empowerment program. NCF (originally the Apopka Growth Initiative) is funded by the Orange County Citizens Commission for Children, and is organized through neighborhood coordinators in the five-county area. USDA Rural Development (Bartow and Live Oak) The Bartow Rural Development office is the only Rural Development office in the state that provides direct homebuyer education classes. Area Four covers three counties in Central Florida (Polk, Hardee, and De Soto) just south of HIPīs service area. The Bartow office regularly holds one class per month, nine to ten months of the year (with a break for summer). In the Florida panhandle, the Live Oak Rural Development office serves seven counties-Suwanee, Hamilton, LaFayette, Madison, Taylor, Jefferson and Columbia. All of the seven counties are non-metro, two are remote rural16 , and all are persistent poverty counties with a majority African-American population. State Housing Initiatives Partnership Florida homebuyers can also go to personnel with the State Housing Initiatives Partnership (SHIP) (one office per county). Enacted by the Florida legislature in 1997, SHIP pools statewide document tax money at the state level, then redistributes it to counties based on the number of below-poverty households (the greater the number, the more SHIP funds the county receives). The program is administered by the Florida Housing Finance Agency (HFA)--a quasi-public entity that serves as the housing agent for the state. SHIP provides low-income homebuyers with direct downpayment and closing cost assistance17 , under the stipulation that its clients undergo a thorough educational program (four one-and-a-half to two-hour classes). Funds are set aside at the county level to fund the education programs, after which they are subcontracted out to local HUD-approved nonprofit E&C agencies. Unlike the TSHEP program in Texas, SHIP does not have a statewide list of recommended E&C providers, but each county is to "encourage the involvement of appropriate public sector and private sector entities as partners." SHIP has partnered with several different kinds of homebuyer E&C providers, including HIP, Inc., the Bartow USDA Rural Development office, USDA Cooperative Extension Services in Tallahassee, and some private lenders (Sun Trust, First Federal Savings). E&C Processes and Curricula Although the description of the organizations below does not detail the E&C processes and curricula of every E&C provider in the state, it does provide a snapshot of the systems offered by different providers in different networks, operating in different areas of the state. E&C Availability
Where classes are held, they are usually available on a regularly scheduled basis, often with child-care provided. HIP holds its classes weekly in the evening and during the day, in conjunction with bilingual GED classes and English as a Second Language classes. The Bartow Rural Development office holds their classes once a month, and attendance is typically anywhere from 70 to 140 (in fact, class sizes often have to be limited). However, the E&C service of these organizations is either geographically limited (Bartow Rural Development and USDA Extension classes), uneven in their coverage (SHIP offices) or sporadic in their activities (private lenders). Curricula As in Texas, many local E&C providers create their own in-house curriculum from a combination of elements.
HIP uses its own in-house booklets on homeownership and budget maintenance. The organization has also purchased a series of videos produced by Chevrolet called Home Time, addressing various topics such as home maintenance, common home repairs and home security. HIP rarely has speakers in its classes other than a construction supervisor who explains the construction and inspection process. HIPīs Executive Director, however, considers the organization's most effective teaching tool to be its one-on-one counseling, as many low-income clients do not want to ask questions concerning their private affairs in front of a group. In Bartow Rural Development classes, educational materials consist mainly of Fannie Mae homebuyer education booklets (bilingual-English and Spanish) and Bartow's own in-house worksheet packet that includes how to figure household income, cash and assets, how to spot indicators of unacceptable credit, and how to write a budget. When the office began offering homebuyer education classes in 1995, the class format was very "one-on-one"; however, as class sizes expanded, the class format changed to lecture/blackboard classes with opportunities for questions from attendees. According to the Bartow Rural Development agent, the large class format seems to have worked well, with most attendees getting the information they need. While the Live Oak office does not regularly offer classes, it will hold them if the volume of loan applicants builds up to a classroom-size group (this only occurs once or twice a year). Nonetheless, the vast majority of its applicants have already attended one of the SHIP classes, which have very detailed curricula with notebooks, slides, videos, and speakers with their own handouts. The Live Oak office also does extensive counseling with loan applicants, helping them fill out application forms and walking them through the credit repair process where appropriate. The SHIP curriculum is standardized, using homebuyer guides from Fannie Mae and books on credit and consumer protection, hand-outs and work-sheets. Partnering lenders often have bilingual staff who serve as translators during class sessions. According to the HFA Housing Chief, educators on a local level use any tools (in addition to the core curriculum) that are most effective for their clients, including speakers and testimonials from successful homebuyers who have repaired their credit. Processes and Tracking Out of the Florida E&C initiatives examined above, SHIP has the most consistent education and counseling process and thorough follow-up process. According to the Florida HFA office, SHIP's "hands-on" strategies require attendees write out their own budget, set short-term goals for repairing any bad credit, and set long-term financial goals (such as homeownership). After the classes are complete, attendees are tracked in a database and progress on their credit and homebuying goals is monitored once every six months. On a local level, the partnering E&C organizations do any personal counseling necessary. HIP's clients are typically referred by one of the Neighborhood Center for Families' neighborhood coordinators. When a family contacts the HIP office, they are asked if they are interested in homebuying and whether or not they have any credit problems. According to HIPīs director, this kind of counseling is very important because clients frequently do not know that they have credit problems, particularly if they are elderly or cannot read English. In addition, extensive "hand-holding" is necessary for many clients who simply feel overwhelmed and discouraged at facing legal bureaucratic processes. If the family pays a $15 fee, HIP will conduct a preliminary credit report, review it with the client, recommend an appropriate loan package and help him or her begin credit repair, if necessary. The Bartow Rural Development office also receives the majority of its attendees through referrals. While its classes are advertised in local papers, the county SHIP office will direct homeowner aid applicants to them. One Rural Development agent commented that the counseling requirements for SHIP assistance "give them [the applicants] a built-in incentive." The Live Oak office is not one of the SHIP partners, but does the majority of its work with loan applicants who come in "off the street." Rural Outreach Central Florida In central Florida, the incentive of direct SHIP payment assistance is usually more than sufficient to draw attendees to education classes. However, most SHIP clients are referred either by partnering lenders and housing agencies or by word of mouth; consequently, in areas where geographical distance and population diffusion prevent direct contact with lenders or housing agents, rural clients are not able to "get the word." In the Bartow office service area, Polk is a metropolitan county; however, Hardee and De Soto are non-metro, and Hardee is a persistent-poverty area with a predominantly Hispanic population (Map 2). Consequently, in its attempt to approach these areas, HIP, Inc. has had to work in a consortium that includes bilingual GED and English classes in order to be most effective for its clients. As previously mentioned, the rural Hispanic clients and other persons who are literacy-challenged often need extensive "hand-holding" in order not to be discouraged from buying a home. Map 2: Florida Nonmetro and Persistent Poverty Areas
To address this challenge, HIP has been able to purchase a recreational vehicle (RV) through a donation from the Edith Bush Foundation. The RV is capable of hosting outdoor classes and also has a VCR to show educational videos. The visibility of the van attracts attention from rural residents, and the availability of a bilingual counselor provides reassurance to class attendees that they are not dealing with a remote, uncaring entity. The rural areas rely extensively on RV classes; however, the van is only able to visit two or three rural areas per week out of a five-county area. The Florida Panhandle The challenges of homebuyer E&C in this area are somewhat alleviated by active private lenders and USDA Extension Services. In areas with inactive SHIP offices, private banks--both regional and local--have often picked up homebuyer education where nonprofits and government agencies have left off. The USDA Extension Services are also able to teach classes and do counseling in areas where the single Live Oak Rural Development office (with four staff) is unable to reach, other than by long-distance phone calls. There is no shortage of monetary incentive to draw people into classes. In fact, SHIP staff in Madison County did a 4,000-address mailing of leaflets advertising the availability of sizeable homebuyer assistance funds. The effort had virtually no response. The Live Oak Rural Development agent also said that SHIP staff have advertised in newspapers and on the radio that they were "giving away all this money," with the same results. The only marketing that seems to work is when a local friend or relative successfully builds or purchases a house with SHIP assistance, after which the Live Oak office will see a "spate" of referrals. The Live Oak Rural Development agent stated that the lack of participation has been a mystery to E&C providers in the area. He speculated that apathy, lack of education and social insularity make potential clients extremely hesitant to approach any bureaucratic entity, and that perhaps more of a "local presence" with in-person contact would help stimulate interest and engender trust. He also testified that in some rural areas, the SHIP office "couldn't care less" about program delivery, and banks and realtors frequently come forward to fill the gap in services. The two remote rural counties in the Live Oak service area--Hamilton and Madison--also have the highest percentage African-American population in the state (40 to 45 percent). In addition, 30-40 percent of the Live Oak office's clients are elderly and two-thirds are on some form of government assistance. Funding All of E&C programs described above are free of charge to the client, with the exception of HIP, Inc., which charges $15 for an initial credit check (a substantial discount) and $50 for a full credit check once a client has applied for a housing loan. In comparison with Texas, Florida E&C networks are much more capable of sustaining their current case load with their current level of annual funds. The Bartow Rural Development office is in the best position for sustainability, as the Polk County SHIP office gives them $25,000 per year expressly for homebuyer E&C, and support for classroom education is free of charge for the office--the county building is free of charge, local banks provide refreshments, the Keystone Fund pays for the curriculum materials, and E&C is already a part of the Community Development Managerīs general funds. However, neither of the Rural Development offices have federal funds directly ear-marked for homebuyer education and counseling. HIP, Inc. programs are grant-dependent, which means that they will have to re-apply on an annual basis. Although the SHIP program has a steady supply of tax funds, it will be effective at a local level only if it has viable E&C partners who can conduct classes. All of the programs need additional funds to extend their services into rural areas, particularly the Live Oak Rural Development office, which has one office with four staff to cover a seven-county rural area. Although there are SHIP offices in every county, and classes are taught by USDA Extension Services and private lenders, the Rural Development office needs thousands more dollars to establish a personal presence in rural areas and effectively communicate the programs that are available to residents there. HIP, Inc. is in the best position to do direct rural outreach with its RV; however, its staff is still limited in the number of trips and the amount of time that can be put in by the single counselor who does the outreach. Overview Homebuyer E&C in South Dakota is limited to eight organizations, six of which are actively involved in a partnership with the South Dakota Housing Development Authority (SD HDA). Diagram 3: South Dakota homebuyer E&C organizations 
The six groups in the SD HDA partnership are divided into three regional consortia:
The partnership was made possible as recently as 1998 by a HUD grant that was given to SD HDA for $130,000. Out of the six groups, two are HUD-approved: CCCS of the Black Hills in the Western Group and CCCS-LSS in the Eastern Group. There are two other HUD-approved groups in the state (Black Hills Legal Services and East River Legal Services); however, they are not a part of the consortia and deal primarily with education on fair housing issues. All of the organizations are located in metropolitan counties (even though several do rural outreach) and only one (RCHC) has service to rural minority groups as a part of its mission, providing E&C to all nine Native American reservations in the state (see Map 3). However, NHS of the Black Hills is planning on expanding its service area from far western Lawrence County into Butte and Meade counties. Activities of Rural Development or USDA Cooperative Extension Services were not mentioned by respondents. Map 3: South Dakota Metro Areas and Native American Lands E&C Processes and Curricula Since nearly all the homebuyer education and counseling in the state comes out of the SD HDA coalition, the education and counseling process is roughly the same for most of the organizations involved. Even though one or two organizations may do radio or television public service announcements, the majority receive clients by way of referrals from lenders, realtors or other social service agencies. All the groups have regular classroom education sessions once a month, and nearly all use the Fannie Mae homebuyer literature as their core curriculum (bilingual material is not necessary, as the only significant minority in the state--Native Americans--are English-speaking). Nearly all class agendas feature a number of different speakers, from partnering E&C providers and Rural Development officials to private-sector financial professionals (lenders, appraisers, realtors and insurance agents). Most of the speakers bring their own hand-outs. A few of the groups have more structured E&C cycles, such as NHS of the Black Hills and RCHC. NHS of the Black Hills has a comprehensive "full-cycle" education and counseling program that takes clients from initial prequalification counseling (particularly on credit issues), to classroom education, to downpayment assistance (after qualification), to post-purchase counseling 90 days after the home is occupied. When necessary, they also do foreclosure counseling and emergency aid. RCHC has a highly goal-oriented, three-phase cycle. The first phase is a two-hour classroom session that gives an overview of basic homeownership concepts (pre-qualification, credit counseling, and buying a home). After the class session, RCHC will contact each attendee and attempt to bring them all back for continual individual counseling regarding the goals that they set during the class and any credit repair they may need. The third phase is a two-hour workshop with realtors, home lending officers and building inspectors on the downpayment and closing process, as well as home maintenance after purchase. In terms of curriculum, the only significant deviation from the Fannie Mae materials is with CCCS of Lutheran Social Services (LSS), which uses a wide variety of materials. The HUD Federal Housing Administration "Homebuyers' Education" material serves as the primary text, supplemented by an in-house, 32-page "financial fitness" handbook with hand-outs and work-sheets on budgeting, credit, and other key issues. According to the CCCS-LSS housing resources coordinator, the Fannie Mae materials have proven useful for shorter, more general education sessions; however, the E&C coordinator has found them to have insufficient detail for use in the primary curriculum. Rural Outreach Since virtually all South Dakota counties are non-metropolitan, and more than half of the state is remote rural20 , the challenges of rural E&C delivery are a constant burden for the stateīs six providers. The activity of private lenders has received mixed reviews from nonprofit E&C practitioners. Statewide agencies such as USDA Rural Development and SD HDA report that a wide number of lenders do educational sessions for first-time homebuyers, particularly those taking out low-interest loans. However, nonprofit E&C organizations have reported that most bank activity in their areas has been restricted to client referrals and that direct homebuyer education was too cost-intensive for too little attendance. As with most organizations attempting to provide rural E&C services, the most common barrier for those in South Dakota has been funding for staff time and travel. However, an additional challenge has been reaching rural Native American communities. South Dakota has 132 tribes, the largest of which are the Oglala Sioux, Cheyenne River and Rosebud. An additional barrier comes from inside the tribal lands, where non-Indian outsiders have virtually no credibility as social service providers. The only E&C provider with Native American staff is RCHC; however their office has only two part-time employees, with the rest of the work supplied by volunteers. Finally, even though many of the staff have family and relatives living on reservations, they also face distrust as urban dwellers when they enter tribal lands. Not only are there cultural differences between city and reservation dwellers, their representative social service organizations often have to compete for scarce funding. The Consumer Credit Counseling Service organizations (CCCS of the Black Hills and CCCS-LSS) have the most extensive network of satellite offices in the state, with five offices in the Black Hills network and seven in the LSS network. Although the rural offices are very small, their staff are all NFCC-certified counselors and are capable of providing competent individual counseling on their own. They are also able to do joint counseling sessions through conference calls with the Black Hills or LSS offices, and can call at any other time to get assistance. South Dakota HDA staff are contemplating an additional approach to rural E&C delivery, which would use video-teleconferencing to teach courses by remote. A network already set up in the state uses 20 different sites to teach college education courses. Nearly all areas of the state are within 100 to 150 miles of any site, and the only other substantial costs would be renting time on the network and coordinating delivery of curriculum materials to each site. However, there has been no funding available to begin planning as of 1999. Funding One state Rural Development official commented that "we're starving for education and counseling out here." Rural Development in South Dakota, much like any other state, does not have any money ear-marked for education and counseling, the offices are left to assist the existing nonprofit providers by volunteering to lecture at their classroom sessions and referring them to potential funding sources. South Dakota HDA has $130,000 from HUD; however, that money must be divided up between six E&C provider groups, all of which must cover a considerable amount of territory with few staff. The CCCS of Lutheran Social Services is having their "best year yet" in 1999, with a $54,000 grant from HDA, a $3,500 direct grant from HUD, a $5,000 community development grant, and $30,000 from their own fund-raising (which is extremely time-and labor-intensive). Direct grants from HUD have been declining rapidly from 1997-1999, and CCCS-LSS went from a $24,000 grant in 1997, to $12,000 in 1998 down to their $3,500 grant in 1999. The staff at CCCS-LSS predict that the HDA grant will likewise decline over time. NHS of the Black Hills has a 1999 budget of nearly $100,000: $90,000 from the Neighborhood Reinvestment Corporation (NRC) ($50,000 for outreach and $40,000 for operations), $8,600 from HUD, and a $7,000 grant from USDA RHS. Nonetheless, all of the funds above (with the exception of the RHS money) have only become available as of 1999. Without the sizeable money committed through the NRC "Campaign for Homeownership 2002" program, virtually none of the NHS services would be possible. The Rapid City Housing Coalition has an average annual budget of $70,000, the vast majority of which consists of a patchwork of small grants from religious organizations such as the Campaign for Human Development. Roughly $20,000 of the budget is earmarked for education and counseling outreach (RCHC also provides construction and rehabilitation services, as well as conducting education for Native American communities on empowerment skills-building). In 1996, RCHC received a three-year start-up grant from RHS for a total of $50,000; however, that grant has run out and one staff member has said that "we're hanging on by our fingernails." Overall, providers of homebuyer education and counseling in South Dakota state that they are having one of their best years in terms of funding; however, the vast majority of those funds have only come in as of Fiscal Year 1998 and all of the money is grant-based. The organizations interviewed all estimated that they would need $100,000 to $130,000 per year in order to sustain their current activities, much less to do sufficient outreach into rural areas. |
