HUD’s New Reverse Mortgage Counseling Protocol Includes Test For Borrowers

April 7th, 2009 | by John Yedinak Published in Commentary, Counseling, FHA, News, Reverse Mortgage | 82 Comments

Along with the recent changes to HECM counseling, the Department of Housing and Urban Development is expected to unveil a new counseling protocol next month to help borrowers asses whether a reverse mortgage is the right choice for their financial situation.

The new protocol will include stronger assessment tools as well as the creation of a new HECM counselor roster. All counselors who wish to continue counseling seniors will need to pass an exam, thus demonstrating their knowledge of reverse mortgages.

Counselors will be required to conduct a thorough financial analysis of each client to help understand each borrowers individual situation. According to a statement from the National Reverse Mortgage Lenders Association, counselors will have the authority to withhold counseling certificates if they feel the borrower fails to comprehend basic reverse mortgage concepts.

Counselors will ask 10 question from a list of 20 items published in the protocol and borrowers are required to answer at least 5 questions correctly to be eligible to receive a certificate. If borrowers fail the test, they’re required to wait a minimum of 7 days and then undergo a limited counseling session to address the topics missed on the test.

The 150-page protocol covers:

The role and responsibilities of counselors
The steps of counseling
Client needs and circumstances
The features of reverse mortgages
Financial alternatives
Reverse mortgage counseling tools
An appendix of HUD counseling policies

Besides the new testing aspect of HECM counseling, HUD is mandating that consumers receive a loan comparison sheet, amortization schedule, and a booklet published by the National Council on Aging titled Use Your Home to Stay at Home prior to the session.

Sue Hunt, a housing counseling manager with Consumer Credit Counseling Service of Greater Atlanta, said that allowing time for these documents to be read prior to the counseling session means that it will take long for counselor to schedule meetings with borrowers.

I think certain aspects of the new protocol are good, but the new testing element of HECM counseling seems to put more pressure on seniors. "Counselors giving quizzes doesn’t feel right to me as many of these seniors are anxiety ridden from all the stress they are under and it seems unfair," says one HECM counselor. "It is almost like they have to justify themselves to us".

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Anonymous

Question_Mark,rnrnI appreciate your reply and I would not expect everyone to see eye to eye with me all the time, I respect you for saying that.rnIt is imposable to roll the Clock back but their is nothing wrong in using some of the good that was used in the past coupled with the changes time creates.rnThree or four years ago our industry was not looked at or considered predatory or the next sub-prime industry because we were not. In fact we are not now but certain factions and legislators are making us out to be.rnthe proposed bills and some of the new legislation passed has has not only made us less effective than we were but it has also turned us into looking like a greed monger industry like the forward industry has become. Believe you me, we are not that type industry!rnrnYou make a lot of sense in what you say, I enjoyed reading your views on my opinions, many made sense. Please do not think what you might say would be disagreeable to me, on the contrary, I appreciate you for saying what you feel and rncombating my views if you see them differently.rnrnWe are in very troubled times, our industry and most definitely our country. We have no choice other than whether the storm but we can do all we can to fight it when it is wrong for our clients, the seniors. Thank you Question_mark, you have a good weekend.rnrnMy best,rnrnJohn A. Smaldone
Anonymous

I understood clearly what you were saying and you are so right. lets turn the clocks back to where a reverse mortgage was black and white..
Anonymous

I agree
Anonymous

Seems to me they are saying our Senior are uneducated and unable to know whats best for them. I don’t see the same happening to forward borrowers. We are talking about people that have paid off there homes & obligations, responsible people. They thought they would live out there lives on penions,investments,SS and as we all have found out thats not happening today and age has nothing to do with it. These people are proud and the last thing we need to do is make them feel they have to beg for help.. I think it might be time for this honest, caring Reverse Mortgage Originator to change careers this saddens me… I’m glad my mother got her reverse mortgage years ago..
Anonymous

the test seems to more about testing the housing counselor as to how well they were able to educate the client than anything else and I think it is very needed
Anonymous

Question_Mark,rnrnI appreciate your reply and I would not expect everyone to see eye to eye with me all the time, I respect you for saying that.rnIt is imposable to roll the Clock back but their is nothing wrong in using some of the good that was used in the past coupled with the changes time creates.rnThree or four years ago our industry was not looked at or considered predatory or the next sub-prime industry because we were not. In fact we are not now but certain factions and legislators are making us out to be.rnthe proposed bills and some of the new legislation passed has has not only made us less effective than we were but it has also turned us into looking like a greed monger industry like the forward industry has become. Believe you me, we are not that type industry!rnrnYou make a lot of sense in what you say, I enjoyed reading your views on my opinions, many made sense. Please do not think what you might say would be disagreeable to me, on the contrary, I appreciate you for saying what you feel and rncombating my views if you see them differently.rnrnWe are in very troubled times, our industry and most definitely our country. We have no choice other than whether the storm but we can do all we can to fight it when it is wrong for our clients, the seniors. Thank you Question_mark, you have a good weekend.rnrnMy best,rnrnJohn A. Smaldone
Anonymous

I understood clearly what you were saying and you are so right. lets turn the clocks back to where a reverse mortgage was black and white..
Anonymous

I agree
Anonymous

Seems to me they are saying our Senior are uneducated and unable to know whats best for them. I don’t see the same happening to forward borrowers. We are talking about people that have paid off there homes & obligations, responsible people. They thought they would live out there lives on penions,investments,SS and as we all have found out thats not happening today and age has nothing to do with it. These people are proud and the last thing we need to do is make them feel they have to beg for help.. I think it might be time for this honest, caring Reverse Mortgage Originator to change careers this saddens me… I’m glad my mother got her reverse mortgage years ago..
Anonymous

the test seems to more about testing the housing counselor as to how well they were able to educate the client than anything else and I think it is very needed
Anonymous

Question_Mark,rnrnI appreciate your reply and I would not expect everyone to see eye to eye with me all the time, I respect you for saying that.rnIt is imposable to roll the Clock back but their is nothing wrong in using some of the good that was used in the past coupled with the changes time creates.rnThree or four years ago our industry was not looked at or considered predatory or the next sub-prime industry because we were not. In fact we are not now but certain factions and legislators are making us out to be.rnthe proposed bills and some of the new legislation passed has has not only made us less effective than we were but it has also turned us into looking like a greed monger industry like the forward industry has become. Believe you me, we are not that type industry!rnrnYou make a lot of sense in what you say, I enjoyed reading your views on my opinions, many made sense. Please do not think what you might say would be disagreeable to me, on the contrary, I appreciate you for saying what you feel and rncombating my views if you see them differently.rnrnWe are in very troubled times, our industry and most definitely our country. We have no choice other than whether the storm but we can do all we can to fight it when it is wrong for our clients, the seniors. Thank you Question_mark, you have a good weekend.rnrnMy best,rnrnJohn A. Smaldone
Anonymous

I understood clearly what you were saying and you are so right. lets turn the clocks back to where a reverse mortgage was black and white..
Anonymous

I agree
Anonymous

Seems to me they are saying our Senior are uneducated and unable to know whats best for them. I don’t see the same happening to forward borrowers. We are talking about people that have paid off there homes & obligations, responsible people. They thought they would live out there lives on penions,investments,SS and as we all have found out thats not happening today and age has nothing to do with it. These people are proud and the last thing we need to do is make them feel they have to beg for help.. I think it might be time for this honest, caring Reverse Mortgage Originator to change careers this saddens me… I’m glad my mother got her reverse mortgage years ago..
Anonymous

the test seems to more about testing the housing counselor as to how well they were able to educate the client than anything else and I think it is very needed
http://www.reversefortunes.com Shannon Hicks

Critic makes some excellent points.

I would also add that communication, dialects and/or accents of the HUD counselors may be an issue. Some of my clients have complained that the HUD counselors spoke too quickly or had an accent that was difficult to comprehend.

All the more reason to make local counseling available to the borrower. This would allow for much clearer communication. Also, will originators have the ability to know what the 20 questions are so as to educate their clients, or will that be viewed as “coaching them” to pass the test? In reality an experienced originator should not have any client learn something new from HUD counseling.

I can see some potential pitfalls if originators hand the list to the borrower prior to counseling which would in effect amount to an open-book exam. As far as extending the time between application and the HUD counseling this is fine, but with changing margins and interest rate increases this can adversely effect the senior.

Most people take little to no time to read mutual fund brochures/prospectuses, mortgage documents or disclosures. It looks like seniors wanting a reverse mortgage will be the first to do so.
http://www.oknows.com onisha

This seems discriminatory in nature Considering all of the predatory conventional loans that many Americans continue to make payments on,and the poor financial decisions that people made in choosing a 30 yr fixed, there is no requirement nor discussion of requiring younger applicants of conventional loans to pass a loan exam.

An affordability piece makes sense to ensure that the consumer can afford taxes and HOI, but quite frankly there are many counties that are facing considerable unforseen tax increases and even some places such as florida where we don’t know what insurance rates will look like in two years.

This is an example of over regulation.
http://www.HECM.net Travis De Renzo

Not only are our Clients under pressure and don’t always completely understand why the counseling is necessary, to begin with, but many seniors do not conduct business on a telephone (which is the primary method of counseling today). I agree that the quality of counseling needs to be improved, but better educated counselors would be a simple solution.

And no, the counselors should not have descretion as to who can apply for a loan. I don’t disagree with requiring counseling but I do dissagree with giving unnecessary “power” over someones financial well being. There are too many problems to list with that type of proposal.

**The speling in this messig was spel chekt by ME!!**
Kareverse

Instead of making the process easier for seniors, there seems to be a few people in HUD that are bored wit htheir jobs and need recognition of some sort to make their directors feel their worth! I have had counselors that calculate the reverse and came up with my seniors coming to closing wiht $5000. I closed them with 1200. in a credit line nad paying off a mortgage over 100,000. Also, I had another counselor telling my senior the Origination Fee is negotiable!! Hello! Where are these people coming from? Wallstreet?
bill smith

This is total nonsense. The only person qualified to determine if a reverse mortgage is “needed” is the borrower. Why do we insist upon making this process as complicated as possible? The idea of taking a test is just ridiculous. Undergoing financial cross examination over the phone is insulting to seniors. This will destroy the reverse mortgage business. HUD is turning this into a welfare program.
Chris Schafale

You folks just need to calm down, at least until you see the questions. The purpose of the “exam” is not to make anyone anxious or trip anyone up, it’s just to make sure that the senior has a minimal understanding of the basics of a reverse mortgage, after the counseling is done. I am a counselor and have been using a form of this tool since last spring. I find it very helpful as a way to review the session with my clients right before they walk out the door. It’s really basic stuff, like “Does the reverse mortgage money ever have to be paid back?” Surely you wouldn’t want a client going to closing if they didn’t understand that they were getting a loan, would you? The purpose of the tool is help counselors have an objective way to assess those situations where they feel the client is really unable to understand what they are about to do. The only time a certificate would be withheld is if the client is so impaired that they cannot demonstrate understanding of the very most basic facts about the reverse mortgage.
Peter Bell

Chris Schafale explains this well. It is not a “test” per se that HUD is implementing. It is simply a set of questions to ascertain whether the client is actually “receiving” and “comprehending” the information being discussed in the counseling session.

One of the reasons we had more federal legislations last year and are now facing a wave of state legislation is that many policymakers have doubts about the efficacy of the counseling process as it works in some situations today. During the McCaskill hearings two Decembers back, clients said they had never received counseling — even though the lenders’ file contained signed counseling certificates. How could this have happened some might ask?

Perhaps the client participated in a quick telephone counseling session when handed the phone by the lender, without understanding that was what was taking place. That’s why HUD has changed the process to require a clean break between the lender’s dealings with the client and the client’s scheduling of counseling.

The Q & A procedure that is being introduced is simply another measure being taken to ascertain that propsective borrowers are truly “hearing” what is being reviewed in their counseling session. If anyone has other sessions for how to achieve this, suggestions are encouraged.

HUD is sincerely taking steps intended to improve the counseling process, insure its integrity, better protect seniors from being rushed through the reverse mortgage decisionmaking process, and address the concerns of consumer protection advocates, state legislators and regulators, attorney generals, etc. who are questioning whether the existing consumer protections are appropriate and effective.

It’s in our interest to make the existing protections work well in all cases, so we don’t face additional new restrictions, more state regulations and other items that slow down our clients’ access to their money.

Once again, if anyone has suggestions for more effective ways of doing this, I always find that HUD is receptive to sound ideas. NRMLA forums provide an opportunity to bring your ideas to HUD officials and we also constantly bring them thoughtful ideas that are submitted to us by our members.
Just the facts, please

This has elevated to a level of complete and utter disrespect for the decision making ability of our seniors and another demonstration of power by AARP.

More specifically, another attempt to intimidate and deny this program to persons of lesser intelligence or social standing. After all, that demographic is not likely to log into the AARP web site and buy insurance, are they.

It is time for the ACLU to look into this and consider suing on behalf of seniors. This will have the result of de facto discrimination.

Sure, we all know the intent is just fine. Most of us, a majority I believe, want to ensure that seniors are suitable for an RM and understand their responsibilities. And that they are not taken advantage of.

But they are not equal in their ability to express themselves and as we age we respond differently under percieved pressure. Its a fact of aging.

The real reason behind this is a complete belief that none of us can do our jobs and that we need “big brother” checking up on us. Another power move on the part of the AARP.

Where is that originator’s counceil that we have sought for so long, so HUD can test proposals onthe opinions of some real foot soldiers instead of the elite at NRMLA or non-practitioners at AARP? Why hasn’t HUD seen the need for this? Maybe they enjoy rewriting Mortgagee Letters after they prove to be unworkable.

Again, make no mistake. I am for protecting our clients. But really, a test?
John Macca

I believe HUD is missing the point.
Counseling = Advising
There is nothing about testing when it comes to advising. The counselors job is to LISTEN and ADVISE and EDUCATE. The counselor should be more concerned with the question of senior financial abuse by making sure that neither the family, the originator nor the lending institution are taking advantage.
Perhaps the counselor would best serve the senior by following up after the loan is closed, during the rescission period to make sure there are no additional questions. Since most seniors are overwhelmed at the closing, that would then be a good time to “test” their knowledge without it being so intimidating.
They can then make sure that no bait and switch tactics were used by an unscrupulous lender or originator. Then, if there is something that is not right, there is time to do something about it.
Let’s Help the seniors not intimidate them.
http://www.seniorzone.net Jim

I am a 75 year old senior and I have been originating reverse mortgages for 4 years and I can tell you this from personal experience “testing seniors is the dumbest idea HUD has come up with” Some of my clients were so stressed out about their financial condition they would rather sit in their car in the garage with the motor running than take a stupid test to access THEIR money. THE JOB HUD IS RESPONSIBLE FOR IS TO HELP NOT HINDER SENIORS.
Keeping it simple

By the way, all originators will soon be subject to licensing and background checks as part of the SAFE Act. Part of the bill takes effect this year, and most states are attempting to be in compliance with the bill at large by the end of next year.

One good effect is the standardization of the licensing and background check process. Another good effect is the preclusion of convicted felons. An unintended bad effect is the high cost to the originator and lender.

This bill calls for originators and processors to complete extensive education and survive background checks. If the act remains as it is today.
http://www.seniorzone.net Jim

Another thought if the president and congress want to really stimulate the economy they should make it easier and less costly for seniors to access the trillions of dollars in their home equity.
http://www.reversefortunes.com Shannon Hicks

Wow.

My kudos to John for creating RMD and a forum for these important issues to be discussed. Also to many who have posted.

I’m glad to hear there will be a license for reverse mortgage originators in the near future which will include a background check. We must also insist that all HUD counselors be checked against any past felonies or criminal records considering the sensitive nature of the information they are privy to.

Some of the raw nerves I sense with this issue are as follows:

1. From the originator’s side of the fence their appears to be an underlying
attitude that seniors must be protected from reverse mortgages as if they’re
toxic (Just the impression from draconian legislation, new rules each month)

2. Currently we know of no national standard for HUD counselors to be
background checked to insure none have a criminal history.

3. According to these new counseling rules, HUD counselors must not fall into
the trap of giving financial advice while doing their “analysis”. Again I would
stress the originators as a whole could do a much better job fact-finding and
documenting their clients assets/liabilities/income/expenses.

4. The idea that seniors are being “rushed” through the process of getting a
reverse mortgage is puzzling at best. From application, to counseling to
closing docs most seniors have 30-60 days to “think about it” and some do
cancel during this time.

5. It would be good for HUD to publish the list of the 20 questions that may be
used in the session. This would help inexperienced originators make sure
they are covering the basics at a minimum.

6. We must be careful on how we present this new requirement to our borrowers
so as not to: 1- alarm them, 2- insult their intelligence.
nixon

I think that is too much power for one individual! Many of those counselors are trained (in a 5-day training session) then put on the telephones. Many of them are younger and not sensitive to the senior needs; just doing their jobs. They are also overwhelmed with counseling for other types of housing issues, so their concentration is not necessarily focused on the reverse. I think it’s not going to work efficiently and effectively.

The “BEST” counselors are reverse mortgage specialists, you just need to pull the good ones out of the bunch!
http://www.reversemortgagesupport.net Brad

To the Critic:

Many states already require extensive FBI background checks, finger printing accompanied with extensive educational requirements including comprehensive testing before being issued an originator license.

It is my understanding ALL states will have to comply with this type of licensing requirement by the end of this year.

It is also mandatory in the states that require testing to maintain your license you must complete several hours of continued education per calendar year.

Like any other profession (doctors, lawyers, teachers, engineers etc) it is the individual’s responsibility to stay current in their area of specialty. To suggest that federal and state governments require even further testing on originators offering reverse mortgages sounds redundant considering all the laws and regulations already in place and more coming.

Really, at some point to much government oversight becomes suffocating to the industry and ultimately has a negative effect on the borrower.

There have been so many changes in this industry recently there needs to be a cool off period to see how all of these regulations are working together before further changes are recommended.
MPete

I personally don’t like or agree with the new counseling protocol, but we really can’t do anything about it. One suggestion I would bring before HUD is to eliminate the counseling fee, or reduce it to a maximum of $50 or so. Making them go through all of this and then charging them $125 seems criminal.
http://www.reversemort.com R M Broker

Lots of good points here. If all of the counselors are great counselors and ask the questions in a sensitive and conversational way. I have no problem with the “test”. But we know that will not be the case. Just as all reverse mortgage specialist are not great, neither are the counselors. This is too much power in the hands of the gatekeepers. I have also had counselors tell borrowers that a loan will not work or that they will get less money then I am able to provide. Counselors are not the be all of reverse mortgage information. And with underwriting guidelines, rates and programs varying from lender to lender, they will be even less informed of the details of financing in the future.
I agree that everyone that gets a reverse mortgage should understand the basic facts. The devil will be in the details of implementation of that new rule.
I am most concerned with the timing issue. Why, when it takes about 30 days to process a reverse mortgage is it important for the borrower to have more time to read the documents. And the fact is we do not even have the real figures as far as money available etc… until we at least have an appraisal. So the borrower will spend extra time reviewing information for us to tell them that the information is different once we get the appraisal and lock in the rate.
I agree with the comments above that the counselors time would be better spend looking for fraud and other misconduct issues and following up with the borrowers as a loan is in process and during the rescission period.
Peter Bell mentioned letting NRMLA know of issues, is there a place for comments to NRMLA on their website?
http://www.reversemort.com R M Broker

I just looked at a copy of the “Use You Home to Stay at Home” booklet that borrowers will be required to receive and read. It states in the front of the booklet that the information provided was funded by a grant from:
NRMLA (ok), Financial Freedom (?), Wells Fargo (?), BNY (?) and Seattle Mortgage (?)
No wonder some of the big lenders like the idea. Free advertising to all reverse mortgage borrowers.
Reed Swain

Telling a senior they will have to pass a test will scare them to death. Once again HUD has proven they do not think about nor really care about seniors. This is just another case of the FED being totally out of touch with reality as usual. If you want to raise the bar for counselors then put the monkey on their backs not the poor seniors who are just trying to survive!!
Peter Bell

In response to RM Broker, the way to forward your thoughts is to send an email to anyone of our staff members here at NRMLA. My email address is pbell@dworbell.com. Darryl Hicks’ email is dhicks@dworbell.com. Liz Scholz’ is lscholz@dworbell.com.

Also, the copy of the “Use Your Home to Stay at Home” book that you have looked at it is from an earlier printing of it when it was initially funded by NRMLA and some of our members a number of years ago. NRMLA contributed $100,000 to an NCOA research project and this book was part of the reseacrh done. A few companies also contributed $25,000-$50,000 each towards that project.

It is my understanding that the book that will be distributed under the new HUD protocol will be an updated version that will not include company names, nor probably even NRMLA.

I sure wish folks would get answers and facts before jumping to conclusions and posting items on this site that are erroneous.
http://reversemortgagedaily.com admin

Peter,

I don’t think RM Broker was jumping to conclusions, he was just stating what he found and then you responded and addressed his concern.

Unless NRMLA members are informed that the updated version of Use Your Home to Stay at Home won’t include the companies listed, how are we supposed to know?

I wouldn’t of thought to ask the question in the first place, so I’m glad RM broker brought it to attention.
Treverse

I appreciate the response from Chris Schafale. I wish all my seniors could be counseled by Chris with such a positive and reassuring attitude. What Chris fails to understand is counselors with that attitude and dedication right now are not the norm.

There is a need for standardization in counseling with well trained counselors. I believe questions at the end of the session to make sure the client understands what they are about to undertake is a great idea. But,I also believe it should NOT be put forth to the senior that they will be taking an “exam” which will put undue pressure on them. As Chris stated it should be expressed as a review of what we just went over. It should NEVER be a pass/fail!

In response to Just The Facts; The last thing we need is to get the ACLU involved in anything involving the Reverse Mortgages business! In the world we live in their are people of all different social,economic and educational backgrounds. It is the responsibility of the counselor to help them understand as much as possible.

As stated by Peter Bell we need to give our input because we are the front line in dealing with seniors.
Hopefully, HUD will listen. We do not need over regulation. I believe we are seeing too much of that in every area of our lives today!

In review I would like to put forth the following to HUD:
1-I believe my input of taking the perception of “test or exam” out of the terminology and phrasing it as a review is good suggestion.
2-Also, having a pass or failing grade is insulting to our seniors. If it is determined at the review that their are areas that the senior does not understand it should be gone over at that time. If it takes extra time that is why they are paying $125.00!

On another matter I think going over a full financial analysis should be “optional”. Many seniors I talk with are financially savvy and state they just want Reverse Mortgage counseling and are fully aware of their finances. They resent having to give S.S. numbers and going through all their personal information with a stranger over the phone.
http://www.denton.org Raymond

I like the new counseling protocol and am glad it’s being adopted. For the past 3 years, if time permits, I’ve been asking all my clients to read “Home Made Money” and “Reverse Mortgages for Dummies” prior to their counseling session, and everything seems to flow smoother with the homeowners who have read the books (I provide the books). Yes, it takes extra time, but it’s well worth it.
Eric

*** This is NOT a RANT****

This is a Joke, right? Why is this all happening? I am really getting tired of us (Originators) getting treated like we are a bunch of crooks! This is Big Brother at its Best! No need to settle down or sugar coat what is going on here as we have a group of people who have never needed help and do not understand what it feels like to even go through a process like getting a reverse mortgage making up these new rules that will only hurt our industry and the senior citizens that need and want a reverse mortgage. The only thing that will happen by putting up all of these road blocks and slowing down the process is hurt all involved. What is the basis for these new protocols? Is it because there have been a few isolated cases of borrowers complaining because they were misinformed or is there a MASS of borrowers complaining? I am betting the former.
I know that most of the counselors do a good job just like most of the originators do a good job, so why is HUD penalizing everyone with these new rules? Giving councilors more authority is flat out wrong. Having them do an in depth financial analysis for my client? Then giving them a test? Then if they do not pass the test they have to take it over? And they can withhold the certificate? And telling customers that my fees are negotiable? Now we have to give them a book to read that has Wells Fargo, B of A etc. on the cover? I will tear that off before any of my clients receive it! Let’s see, I spend 10-12 hours a day talking to potential borrowers, analyzing their needs, talking with their financial planners, attorneys, CPA’s, children, I spend money on marketing, I drive to as many of the customers homes to meet them personally to go over the program again face to face before they sign the application, I drive back to the customers at the signing to answer any questions they may have and make sure everything goes smooth, I do all of this only to have HUD cut my fees, have councilors advise my clients that my already reduced fees are negotiable, now the councilors are going to be REQUIRED to do a financial analysis and give them a TEST! All of this when margins are going up, rebates are going down, and mandatory locks are in effect with the smallest margin of error! Whets next, is HUD going to require that all applicants get 3 quotes and have their kids sign off as well? I hear that HUD will always listen to good suggestions, from whom they will listen to these from, not us! Once again I ask will someone please tell me who is representing the originators, the people that are REALLY on the front lines trying to the best job they can and help our clients, anyone?
Carl Shadle

First of all, this is an open forum Peter for interested people to voice their concerns. We don’t have all the facts because the facts haven’t been released. You appear to have inside information.

The people who subscribe to RMD are probably not the same people who Sen. McCaskill, state legislators, AARP, the misinformed media are attempting to protect the senior community from.

I’m a licensed RE Broker in California, a CSA and have attended many RM training sessions on all aspects of our business online and at NRMLA functions. The problem that I see developing here is that the rules keep changing in an attempt to provide perfect protection against the most egregious predatory scenario.

It is also true that the testimony before McCaskill was given by reverse mortgage “victims”. A handful of seniors that had suffered abuse at the hands of irresponsible originators.

The seniors who do not have a voice in the discussions with the legislators and rule makers are the thousands and thousands of senior homeowners who have been treated with dignity, respect, honesty and who are living independent lives free from financial worry, thanks to originators like myself and other subscribers to RMD who are conscientious, competent and caring.

Attempting to legislate to protect everyone from the worst in our industry results in punitive treatment and unnecessary delays for the thousands who want and need our service in a timely manner.
http://AmericanSeniorFunding.com HECM Dude

I believe the purpose of giving counselors the authority to withhold counseling certificates is to prevent situations in which seniors who may suffer from cognitive impairment are making decisions to obtain a reverse mortgage that might not be appropriate for them.

25 percent of seniors aged 85 suffer from dementia, and that percentage increases by five for each additional year. While counselors are not qualified to make a diagnosis of dementia, they are on the front line in dealing with this issue. If a counselor suspects a senior’s cognitive impairment prevents him or her from understanding a reverse mortgage, it would be inappropriate for a counseling certificate to be issued.

If such a senior could indeed benefit from a reverse mortgage, then a conservator or trustee may make that decision.

Unfortunately, not all seniors are equally capable of making complex financial decisions; some need help; others truly need someone else to make those decisions on their behalf.
louise

I’d like to hear more about the SAFE Act.
http://www.ReverseWithLinda.com Linda Lewis

Request for clarification on MORTGAGEE LETTER 2009-10, Budget Analysis and HECM Counseling:

Is the HUD counselor determining suitability?
If so, would FINRA have a problem with this financial counseling?

When a Certified Financial Planner has done a thorough financial analysis for a client and suggests a Reverse Mortgage, the client then talks to a HUD counselor to determine suitability or provide financial advise?

I can understand and appreciate safeguards but I can’t determine where the line is drawn in the Mortgagee Letter.

By the way, my clients say counseling sessions are about 15 minutes. I can understand why a senior wouldn’t remember!
Old Timer

Why don’t we just cut to the chase and make every borrower produce a letter from his/her attending physician stating that they are indeed competent.

Might as well cut the Doctors in on a piece of the pie. I bet they would be happy to sign off on such a letter for $125 or so.

“HECM Dude says:

April 8th, 2009 at 11:33 am (#)

I believe the purpose of giving counselors the authority to withhold counseling certificates is to prevent situations in which seniors who may suffer from cognitive impairment are making decisions to obtain a reverse mortgage that might not be appropriate for them.

25 percent of seniors aged 85 suffer from dementia, and that percentage increases by five for each additional year. While counselors are not qualified to make a diagnosis of dementia, they are on the front line in dealing with this issue. If a counselor suspects a senior’s cognitive impairment prevents him or her from understanding a reverse mortgage, it would be inappropriate for a counseling certificate to be issued.

If such a senior could indeed benefit from a reverse mortgage, then a conservator or trustee may make that decision.

Unfortunately, not all seniors are equally capable of making complex financial decisions; some need help; others truly need someone else to make those decisions on their behalf.”
http://www.reversemortgagevalue.com John A. Smaldone

WOW!

This issue is getting almost as much intention as the FNMA margin increase. First off, it is the counselors that are going to be required to be tested. Nothing wrong in that, counselors need as much education about a Reverse Mortgage as they can get.

However, I feel a very important part of the counselors test and education is that a counselor MUST be impartial when it comes to discussing or recommending companies that a borrower should go to. Steering is still a practice widely being perpetrated on our seniors by counselors.

Secondly, I agree with Sue Hunt. Even though the borrower’s are not the ones being tested, they are being quizzed. They may be quizzed to the point that they will be made to feel inferior and ignorant.

Sure, it is important that the senior understands what a reverse mortgage is but lets face it, we have to give our seniors credit for being intelligent human beans.

Why should a counselor be able to withhold a counseling certificate. This is an awful lot of authority and power given to these counselors. As far as requiring the borrower to receive the comparison and amortization schedule along with booklet by the NCOA, prior to counseling, may not be a bad thing.

Now what would concern me is the counselor advising the borrower that what you are quoting is to high or, if they say go see another lender. I see a lot of adversity coming from this.

It all boils down to the agencies don’t really know how to stop the problem of bad Apples in a Bushel. In short, the problem is with those lenders or loan officers that are doing a poor job with our seniors. Lenders and LO’s that are taking advantage of the seniors by being scam artists. This is the root of the problem, we try and solve the problem in ways that are so complicated that it destroys the tremendous good a program like a Reverse Mortgage has done for our seniors.

We need to make our laws tougher on those who are perpetrating fraud on our seniors. We need tough laws, higher fines and tough incarceration laws on these people.

What I have seen in the past few weeks with what FNMA has done and proposals like this is criminal. Criminal because we are destroying the reverse mortgage program piece by piece. Every day seems to be a day of sadness somewhere in this country, when are we going to wise up, most likely never.

The agencies are destroying a program that has many compassionate and educated people in it dealing with our seniors. Because of the few bad Apples and the incompetence of many of the people in our agencies, states and Federal Government to deal with the problems the way they should be dealt with, what is going to happen? Our seniors, the back bone and pioneers of our country are going to pay for it once again.

My best,

John A. Smaldone
http://www.HECM.net Travis De Renzo

Peter,

It all boils down to two issues:
1: SUITABILITY
2: ACCOUNTABILITY

My suggestion is very simple. One, yes one, question should be asked: WHY ARE YOU GETTING A REVERSE MORTGAGE?

The response should be documented and it should be made part of the Lender’s and HUD’s permanent file.

Counselors should be REQUIRED to issue a certificate that reflects the consumers “suitability answer” and if a lender dare provide an unsuitable loan, it would be easily documenatble thus facilitating accountability.

The current proposal only convolutes the accountability issue by giving unscrupulous Lenders/Brokers the opportunity to point fingers at the Counselor who determined the suitability (evidenced by their decision to issue a certificate). If I were a Counselor I would be reluctant to issue ANY certificates and take on that degree of liability for $125. Us Lenders/Brokers need to be accountable, not the counselors, their pay does not warrant it.

If the consumer did not answer the suitability in a manner that indicates clear understanding, the Lenders/Brokers would be wise to re-educate and then send them back through counseling to obtain an ADDITIONAL certificate to document their new understanding of “WHY AM I GETTING A REVERSE MORTGAGE”.

Each and every counseling session should result in a certificate and it should be required that Lenders/Brokers maintain all certificates (for sessions within the last 6 months) in their permanent files.

Educate the Counselors and hold the Lenders/Brokers accountable. If this isn’t the right track, then I am very fearful for the future of our industry.

Further on the ACCOUNTABILITY issue, our industry needs to form a task force to “go after our own”. Why should we wait to see if the regulators clean up our industry befor the “press bombs” destroy it? Count me in, I volunteer to torture the accused and make them TALK!

Travis De Renzo
RSaffer

I believe what is being proposed is highly discriminatory and borderline illegal. Where is the counseling and testing for people applying for regular FHA mortgages? Do people have to take tests when they make major purchases like a house or a boat or play the Lottery to make sure they understand what they are doing? Teenagers who have no understanding of finances are given credit cards at the most vulnerable times in their lives. But seniors, who have a lifetime of experience and knowledge and have been making decisions for themselves and their families for decades, are now being told not only do they have to have mandatory counseling before they can apply for a loan, something which has been in effect and accepted albeit woefully at times, now are told they must pay for it themselves AND their financial competence is going to be evaluated AND they will be tested to make sure they UNDERSTAND and then, and only then, will they be ALLOWED to apply for a reverse mortgage on their own homes. I am 57, not yet the proper age for a reverse mortgage. But I imagine when I am 62 I would be highly insulted to have to jump through these hoops for the privilege of obtaining a loan when there is no other loan in the world that has this requirement. My mom is 78 and believe me, she would be, too. We are less able today than we were just a year ago to tell people how much they can expect to benefit from a reverse mortgage with any kind of accuracy because of crazy appraisals, home values, margins changing daily and live pricing. Now we are going to delay it even more. The appraisers are telling us we’re still in a declining market, so let’s let values decline even more while we delay counseling and then test our clients. This has all just made me and my colleagues wonder if this is a program that HUD really wants to keep or that FHA really wants to insure. And just an additional point. Back in the day when I did help seniors make the phone call to a counselor I usually was placed on hold with a recording waiting and waiting until a live person came on the phone. Seniors love that. Or you’d have to leave a message and they call back. Many seniors don’t even answer their phones when they don’t know who’s calling because they get so many marketing phone calls — usually from reverse mortgage salespeople! Well, I guess there’s the bright point. That will probably end when this program is killed by unreasonable, discriminatory and insulting regulation.
http://www.ReverseWithLinda.com Linda Lewis

To The Cynic: First, thank you for your responses and all the information you provide here! Yes, many organizations who were supposed to be financial watchdogs failed (or succeeded in helping the rich get richer).

Why FINRA and Mary Schapiro (now at the SEC) are so mis-informed about RMs is beyond me. I’d certainly like to know how to change that.

I prefer working with financial advisors who help clients make crucial financial decisions. I hope a HUD counselor with minimal information never contradicts the advice of a certified financial planner who examined the clients’ overall financial situation and long-term goals.
Hattori Hanzo

Howdy!

Where are we supposed to get an updated version of “Use your home to stay at home”? and when must we start sending this and the Amort and comparison?

thanks!
Treverse

RSafer:

I don’t think our situation and the situation of the seniors we are suppose to be serving could have been stated any better.
I also wonder about the reasoning behind recent decisions. It seems like a blatant attempt to slow down the fundings of reverse mortgages and as you stated possibly the end of them altogether. It’s not too hard to read between the lines
We are being OBAMARIZED with regulations. What’s next?
Will we have a government regulator review every file?
All this and where is NRMLA? Peter Bell seems to be defending the over regulation. Where was he last week when we were looking for answers regarding the margin increases?
I think Travis is right. We need to form our own task force and deal with the real issues!

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