The Department of Housing and Urban Development told lawmakers Wednesday it has identified ways to improve its housing counseling program and asked for the recently cut funding to be restored. In April, Congress cut all $88 million in HUD nonprofit counseling funds appropriated for 2011 as part of the budget negotiations. Last week, the department tapped $10 million in unspent funds from the year before to be used for the program. Deborah Holston, acting deputy assistant secretary for single family housing at HUD, told a House subcommittee Wednesday in 2012, counseling agencies will face a gap in funding going forward. "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," Holston said. Nearly half of the clients seeking counseling in 2009 and 2010 sought foreclosure prevention assistance, compared to 10% in 2006. Nearly 2,300 counseling agencies across the country are approved for foreclosure prevention help. Current law requires HUD counseling before for Federal Housing Administration Home Equity Conversion Mortgage or reverse mortgage is originated. Since 2005, roughly 486,000 seniors received one of these loans, roughly 3.6% of HUD's counseling activity. "How will counseling continue to be available to all HECM borrowers?" asked Peter Bell, president of the National Reverse Mortgage Lenders Association. "We don't want to preclude deserving older Americans from accessing a HECM that might help them re-organize their finances to achieve sustainability in their homes, simply because they can't afford the upfront fees associated with HECM counseling." Holston said HUD developed a plan to reduce the time it takes to award funds to 180 days from the previous 240 days it took before. It also took several steps to better oversee approved counseling agencies. HUD developed a risk model to better target resources and established a remote monitoring process for agencies it can't visit onsite. Research from the Government Accountability Office suggested some benefits from counseling. Some studies found counseling granted before the home was bought resulted in fewer defaults. Other studies found little affect. "Efforts to measure the impact of homeownership counseling have been hampered by a lack of data, as well as by challenges in designing studies and creating effective performance measures," said Alicia Cackley, a director at the GAO. "Further studies are under way at HUD and Fannie Mae that are designed to overcome some of these limitations." But foreclosure counseling showed clearer effects. Clients who received National Foreclosure Mitigation Counseling program funds from Congress were 1.7 times more likely to cure their foreclosure. A study in 2008 showed borrowers who received NFMC funding before a loan modification stood a 53% better chance of bringing the mortgage current, according to Fitzgerald. Republicans in Congress said the country can no longer afford such subsidies, and those on the newly formed super committee will be looking closely at any ineffective government dollar in order to trim at least $1.5 trillion from the federal deficit. But not all members of that party agree. Rep. Judy Biggert (R-Ill.), who chairs the subcommittee, said counseling for reverse mortgages and foreclosure prevention in particular proved vital during the crisis. "In the darkest days of the financial crisis it has been the counselors not the array of new federal foreclosure programs that helped many families restructure their budget," Biggert said. Biggert's language suggested establishing new oversight of the HUD counseling program could mean a restoration of the funds. "This program has far-reaching effects throughout our economy, and the services it supports will continue to be vital to the ongoing recovery," Holston said. "Housing choices are typically some of the most costly and important decisions households must make." Write to Jon Prior. Follow him on Twitter @JonAPrior.