Reverse Mortgage Counseling in Massachusetts
Basics, Choosing A Lender, Resolving Problems October 16th, 2011
Counseling rules may be changing in your state soon… Massachusetts will try it first. This regulation will not be good for many seniors.
New rules from the Executive Office of Elder Affairs in Massachusetts may be well meaning… but an unintended consequence will be that fewer seniors will be able to utilize the Home Equity Conversion Mortgage (HECM) program guaranteed by FHA. Effective August 2012, senior reverse mortgage borrowers may no longer be counseled via telephone. Face-to-face counseling is mandated.
More Seniors Excluded From HECM Program
Unfortunately, requiring face-to-face COUNSELING in Massachusetts is going to exclude a lot of seniors from the most popular reverse mortgage (HECM) program. Common sense would lead one to acknowledge that seniors will have much more difficulty traveling to/from the very few counseling sites available to meet in person with the required FHA counselor. Worse, interested family members, spouses and/or financial advisors will also be greatly inconvenienced. Unable to monitor the session via telephone, they will very likely skip the counseling altogether.
This requirement is well meaning… but poorly thought through, in my opinion. FHA reverse mortgage counseling is not the problem… the process of applying for the programs is where most issues become evident. And that process of applying for the program is where the greatest opportunity for specific discussion and education exists. The focus by regulators ought to have been a requirement that APPLICATIONS must be done face-to-face; not the initial counseling. Seniors in Massachusetts will be at a distinct disadvantage when this face-to-face counseling law is implemented.
Unlicensed Reverse Mortgage Originators
Lenders with large telephone call-center loan operations are well protected by these new regulations. Loan applications may still be completed via telephone from a distant location via an unlicensed, faceless originator. Few borrowers know that they could be speaking with an untested loan originator with very little knowledge of the program. Critical documents to be signed by the borrower are simply shipped overnight back and forth even though a responsible, professional, ethical and fully licensed loan originator (who has passed a criminal records background check, by the way) sitting face-to-face with the senior borrower would want to explain every line of every document to his/her client.
Here are a few more related posts you might want to review:
New Reverse Mortgage Counseling Requirements
Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant – NMLS #19086
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