In April, when the so-called budget compromise for continued FY2011 funding was reached, the entire $88 million HUD Housing Counseling budget was left in the garbage heap. This a was surprise to many, since the program has long had bipartisan support, and it left HUD-approved housing counseling agencies scrambling to figure out how they will continue to function and mitigate the possible fallout on the communities they serve.

The effect on housing counseling efforts could be far greater than an $88 million shortfall too, since agencies leverage that HUD money to raise additional funds. The National Council of La Raza (NCLR), a Latino civil rights and advocacy organization, for example, says it is able to leverage $10 for every $1 of HUD housing counseling funds. Housing counselors also fear that as counseling capacity shrinks, there will be an uptick in foreclosure prevention scams. “Now is clearly not the time to eliminate one of our most vital resources,” said NAACP’s Hilary Shelton during a press call in April, calling the cuts “reckless and shortsighted.”

To add insult to injury, in a move emblematic of strained state budgets everywhere, New York state counseling agencies face a double blow as not only their federal, but also state funding has met the “austerity” ax. Gov. (and former HUD secretary) Andrew Cuomo killed a meager $1.5 million for a proven counseling program as he stayed true to the bureaucratic letter, though not the spirit, of a campaign promise to hold the line on new budgetary appropriations.

The four-year-old program, previously state funded, did its part to take the pressure off the state budget this year by using Recovery Act funds instead. Those funds run through the end of 2011. Thanks to statewide advocate organizing, the Democratically controlled State Assembly cobbled together support to put the stopgap $1.5 million into the budget, which would at least have kept the program alive far enough into 2012 for other contracts to kick in. But Cuomo vetoed even that, claiming it was a new appropriation masquerading as a reappropriation because the program hadn’t gotten state funds this year.

After these initial shocks, reality set in, and advocates are back on the case. The National Community Reinvestment Coalition, for example, is leading a charge to get the federal counseling program restored for FY 2012. And NCLR’s Home for Good campaign is focused on restoring not only funds, but federal-level leadership in battling the housing crisis. This fight is far from over.