The Home Equity Conversion Mortgage (HECM) program offered to senior homeowners 62 years of age or older mandates that borrowers must receive “counseling” from a HUD approved agency. Loan officers are required to provide a list of approved sources but they are prohibited from steering borrowers to any specific source.

Reverse Mortgage Counseling Protocol

New rules from HUD with respect to counseling requirements give counselors the authority to deny certificates to borrowers who fail to understand the basic elements of the reverse mortgage program. For borrowers working with an experienced reverse mortgage loan officer willing to meet  face-to-face and educate/inform them, this will not be an issue. Borrowers who have conducted business over the phone exclusively, however, are more likely to be poorly prepared on the subject matter.

The new counseling session protocol dictates the use of a “Financial Interview Tool” (FIT) to complete a comprehensive budget review. The goal is to help counselors determine whether a reverse mortgage is the most appropriate option and whether the borrower(s) is(are) still able to meet obligations, such as payment of taxes and insurance and maintaining structural soundness of the home if a reverse mortgage is approved.

Seniors with incomes below 200% of the federal poverty level (less than $2428 monthly for a couple) will also be required to complete a BenefitsCheckUp (BCU) screening as part of the counseling session. BenefitsCheckUp is a web based service to screen for more than 2,000 benefits programs for seniors with limited income and resources.

Reverse Mortgage vs. No Reverse Mortgage – You Decide!

While the HUD counseling requirement is an important component of the HECM program, borrowers need to be frequently reminded that counselors have absolutely no training as financial planners or as financial experts. Most counselors have no training in mortgage lending or banking for that matter. Some even have little exposure to the Home Equity Conversion Mortgage program – the very program they are counseling. Most important, they have absolutely no authority to make suitability decisions for borrowers nor should they be rendering advice of any kind to borrowers.

Seek A Professional Reverse Mortgage Consultant

Now, more than ever, it is critical that you work closely with a reverse mortgage consultant whom you can trust. Anyone can take an application over the phone and mail you a booklet… but a professional will take the time to prepare you properly for your counseling session, meet with you, your family, and your trusted financial advisor(s) in your home or in their office as many times as necessary.

Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant – NMLS #19086

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