HECM Reverse Mortgage Counseling

HUD steps up its' efforts to protect prospective reverse mortgage borrowers from being pushed into reverse mortgage counseling before they are ready. Lenders can not assist borrowers in scheduling appointments or set the reverse mortgage counseling appointment on behalf of senior borrowers.

HUD (Housing and Urban Development) issued several revisions to their guidelines pertaining to FHA insured HECM (home equity conversion mortgage) reverse mortgage counseling. Reverse mortgage counseling requirements have been amended in several key areas.

HECM Reverse Mortgage Counseling Appointment

Reverse mortgage borrowers must initiate all communication with the counseling agency and set their own appointments for reverse mortgage counseling. There can be no assistance from the lender.

The lender may not contact a counselor or reverse mortgage counseling agency to refer a borrower, or discuss a borrower's personal information, including the timing or scheduling of the reverse mortgage counseling session. HUD's new guidelines are meant to reiterate that HECM reverse mortgage counseling must be provided by an independent third party that is neither directly or indirectly associated with the reverse mortgage lender or the loan transaction. HUD's intention is also to insure that borrowers have not been pushed or coerced in any way by a lender to advance their decision to apply for a reverse mortgage loan.

Approved HECM Reverse Mortgage Counseling Agencies

Lenders are required to provide reverse mortgage borrowers with a list of no fewer than ten approved counseling agencies that can provide HECM reverse mortgage counseling services. Five of the reverse mortgage counseling agencies must be in the local area or
state where the reverse mortgage borrower is located. At least one of the reverse mortgage counseling offices must be within a reasonable driving distance for the prospective borrower in case the borrower wishes to receive face-to-face reverse mortgage counseling. The other five reverse mortgage counseling agencies must be National HUD approved agencies, capable of conducting telephone counseling sessions nationwide. Those five agencies are:

National Foundation for Credit Counseling 1-866-698-6322

Money Management International 1-877-908-2227

AARP 1-800-209-8085

Consumer Credit Counseling Services of Atlanta 1-800-251-2227

National Council on Aging 1-800-510-0301

Financial Evaluation of Reverse Mortgage Borrowers

HECM reverse mortgage counseling agents are required to review the borrower's individual financial situation during the reverse mortgage counseling session. The reverse mortgage counselor must document the borrower's budget based on financial information that the borrower provides, such as income, assets, debts, and monthly expenses. The budget analysis is necessary in order for the reverse mortgage counselors to evaluate and discuss the appropriateness of a HECM reverse mortgage loan as well as possible alternatives that the prospective borrowers may not have previously considered.

HECM Counseling Certificate Revisions

HUD has revised the HECM reverse mortgage counseling certificate of completion to include several options for payment of the reverse mortgage counseling session. The payment for reverse mortgage counseling must be paid by the prospective borrower. It can be paid up front or financed through the reverse mortgage loan closing costs. In hardship cases, the reverse mortgage counseling fee may be waived. The new reverse mortgage counseling certificate provides a space to record how the reverse mortgage counseling session will be paid. The fee for counseling usually ranges from $100.00 to $125.00.

Comprehensive information about HECM Reverse Mortgages can be found by visiting, Let Your Home Pay You.

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