$88 million in HUD financing is in jeopardy after recent cuts in the federal budget.

Representatives from both the Mortgage Bankers Association (MBA) and the Department of Housing and Urban Development (HUD) are asking the government to renew an $88 million fund for HUD non-profit counseling that was cut in recent budget negotiations.

“This cut jeopardizes the vital consumer protections housing counselors provide nationwide, and restoration of these funds is important to the recovery and stability of our housing markets,” said Deborah Holston, an acting deputy assistant secretary for single family housing at HUD.

In recent years, HUD counseling has been increasingly in-demand; for instance, in 2009 and 2010, nearly half of clients sought foreclosure prevention assistance, up from just 10 percent in 2006. If funding is not restored, HUD may have to reduce staff and raise prices, among other cost-cutting measures.

William Kilmer, senior vice president of the MBA, has also made appeals to reinstate the full $88 million.

“HUD housing counseling grant funds are critical to our efforts to assist homeowners facing foreclosure, help first-time homebuyers navigate the challenges of the purchase process and educate seniors — a traditionally high-risk group for financial fraud — considering reverse mortgages,” Kilmer wrote in a letter to two ranking members of the Senate Appropriations Committee.

Though the Senate has approved a bill that includes $60 million for HUD, the bill must still pass the House, a development that seems challenging, if not nearly impossible. As HousingWire pointed out, on Sept. 15 the House approved a bill that would fund the Federal Emergency Management Agency, or FEMA, while cutting $1 billion in funds elsewhere – the Senate rejected the measure the following Tuesday, leading to renewed fears of a possible government shutdown.

But even in the face of such odds, Kilmer is committed to restoring the funds.

“The need for housing counseling has probably never been greater than during this recent economic downturn,” he wrote.