I'll call you later in the week to continue this conversation.

Peace,

Atare

I agree with your reply above that these questions have been around for several years. While a program of this nature may help standardize counseling to cover the less financial side of reverse mortgages, it also seems it could easily result in simple “yes and no” conversations which ignore the needs of the individual and impose standardization over judgment and limited discretion.

If these questions were used in the past then computerization simply means counselors can no longer bypass them which I do not view as necessarily a bad thing. It also means that financial information will have a scoring mechanism attached to it where the only difference in scoring is a one or a zero. Some answers might be more worthy of five flags versus one flag on others; yet there seems to be no allowance for such differences, always a problem with binary scoring where there is weighting. This is not a good thing.

Over the years, in preparing and reviewing income tax returns, it was very apparent how little clients remember about their finances and how unwilling they are to provide such information to strangers or in an unfamiliar environment. It is not the counselors or the computer system which I distrust. It is the reliability of the data going into the system and the results of a binary scoring system. Even in our industry it is surprising the answers one gets when filling out the limited financial information on a Form 1009 versus when one goes over it at the end of the appointment or with the spouse. “Garbage in, garbage out” is no different in our industry than it is in any other.

It is not the questions which are being asked which bother me. It is the computerization of live counseling together with the lack of verification of the information counselors receive. It is also the imposition and substitution of the advice of a mandated advisor over trusted advisors. Many seniors do not want to give financial or personal information to strangers, especially if relatives or friends are in attendance as trusted advisors. Unveiling health issues and specific financial information in front of others attending counseling could prove so embarrassing that seniors feel forced to give incomplete or incorrect answers. If others are really going to be encouraged to be in counseling with the seniors, personal questions of this nature should be avoided. Getting that information in a different meeting would be preferred by many.

What is the most troubling thought is the idea that these results could at some point be required to be incorporated into underwriting. This over simplified approach to examining the financial ability of a senior is troublesome. Yet if such information exists and somehow it is believed to be relevant, it will not be long before there is a cry that it needs to be used by lenders.

Your brother and friend,

Jim

I believe your assertion that ” … when it comes to counseling there is absolutely nothing the lender can rely upon to reduce the risk of loss in reputation, from litigation, or in any other way” is too categorical. We can all learn from each other's domain. But we need an open mind.

Lending, including reverse mortgage lending, is overweighted in left- brain skills and severely underweighted in right-brain insights. FIT questions are designed to bring right-brain insights and perspective to the evaluation and decision-making process. This is a seismic innovation in reverse mortgage lending. As HECM insurer and lender of last resort, HUD is smart to mandate the FIT/BCU process. It is 21 years overdue. It is all about risk-management in the age of Dodd-Frank and resource constraints.

Thanks, brother!

Atare

It is comforting that this is a preliminary comment. The FIT questions have been in use via the NCOA network since 2007. They have been tested repeatedly in HECM counseling sessions, and they have been well received, according to authoritative sources at NCOA.

Although they are a required part of the new HECM counseling regime, smart lenders and originators will gain competitive advantage from embracing, studying, understanding, and applying the FIT questions in the prospect interview phase of reverse mortgage origination.

From the comments on FIT on RMD, considerable misconception exists about it in the reverse mortgage lending community. To promote understanding, I intend to begin a new series “FIT for Reverse Mortgage Lenders” soon.

As always, I learn from your insightful comments.

Thanks,

Atare

The question is how can you address T&I when the FIT never asks just how much one spends on these items? There is no substantial cash flow analysis spelled out in the FIT or BCU.

Another concern is the mandated BCU for those at or below 200% of the Federal Poverty Level (FPL). I would venture to say this will impact the majority of our borrowers. One issue with the BCU is that you are asking prospective borrowers to share more financial information than they do with their CPA, attorney or financial advisor.

No longer can we say a HECM is not based on one's “credit” as it appears a “forensic” analysis of one's finances may be required. Seniors: open up and say “ah” for the doctor.

It seems that those who are interested in providing social care for seniors have taken over counseling as part of the reverse mortgage origination process. Their concept of a suitable financial plan for seniors is reflected in the programs and the scoring. They somehow have concluded that these programs are superior to the advice and individualized plans of attorneys, CPAs, CFPs, medical advisors, and other professionals.

For those who believe that the foregoing is simply an overreaction then consider the consequences James Veale describes in his comment above about refusing to answer even one question in the FIT portion of counseling; fully participate in the FIT protocol or be refused a counseling certificate.

Even if a senior provides notarized and witnessed documents verifying that the senior has met with a CPA, CFP, elder law attorney, MD, gerontologist, psychiatrist, psychologist, private case worker, social worker, priest (rabbi, minister, or nun), and the local Indian Counsel, nothing, absolutely nothing will excuse a senior from participating in FIT that is if the senior wants a counseling certificate. It doesn't even matter if the senior met with three or more of each of these professionals.

Is this a wholesale delegation of counseling to the NCOA??? It sure has the feel of it.

Now consider, in places like here in California, those getting proprietary reverse mortgages will face this same counseling methodology. I do not doubt that wealthier seniors will find this insulting. Not even counselors are permitted to exercise their judgment and common sense; all are subject to an unproven program called FIT!!!

Now it is time to shut up for: “All hail FIT!”