“These funds for training will help HUD-approved housing counseling organizations be better prepared to offer valuable services assisting families in making better choices in buying or renting homes and in helping thousands of struggling homeowners avoid foreclosure and remain in their homes,” said HUD Secretary Shaun Donovan. “We are pleased that Congress heard our arguments for the vital role housing counseling plays and restored funding for housing counseling in HUD’s Fiscal Year 2012 budget. We are now working to ensure these resources are used as effectively as possible and this training will help us do that.”

Funding for housing counseling in 2012 was restored in November after being zeroed out initially in a last minute budget deal in Congress in April 2011.

Over the course of the year, HUD’s grand program will award $40 million for comprehensive counseling, reverse mortgage counseling and supplemental funding for mortgage modification and mortgage scam assistance.

The notice of funding availability is available on HUD’s website.

Written by Elizabeth Ecker

The new site, found at www.hecmcounselors.org, covers Department of Housing and Urban Development requirements for HECM counselors, as well as exam preparation materials for prospective HECM counselors.

New additions to the side include an online practice exam, and a password-protected area of the site for counselors, which allows for discussion groups and other support.

NeighborWorks will host a webinar on January 24 to introduce the new site and its functionality.

Find out more at www.hecmcounselors.org.

Written by Elizabeth Ecker

“We’re very pleased that Congress recognizes the value of housing counseling,” said Scott Scredon, director of public relations for CredAbility, which offers reverse mortgage counseling on a national basis. “However, until they release funding guidelines, we won’t know how much will be designated for HECM counseling.”

The funding, totaling $45 million for all housing counseling, is less than was requested by the Obama administration, and is only slightly more than half of the $88 million that was cut from the Department of Housing and Urban Development’s budget for housing counseling in a last minute budget deal signed by Congress in April.

Out of that amount, HUD announced on Thursday that $40.05 million has been made available for housing counseling grants, with $4 million of that earmarked for reverse mortgage counseling.

Although the allocation is lower than in previous years, counseling agencies, which have recently been forced to reintroduce fees to most borrowers who may have previously qualified for free counseling, are happy for the return of a funded mandate.

“It’s great news,” said Daniel Fenton, housing director for counseling agency Money Management International. “The details of how much are going to reverse mortgage counseling is not known yet, but we’re happy the money has been restored.”

Even though it is not as much as was requested, Fenton said, it is a reasonable allocation, in historical terms.

“I think we might be reverting to a more historical level,” said Peter Bell, president of the National Reverse Mortgage Lenders Association, noting pre-recession counseling levels. “There is a lot more demand on counseling these days, but there [had been] a real bump up,” he said.

A deadline on the funds being used is also providing reassurance to those who will ultimately use the funds to counsel senior reverse mortgage applicants and borrowers.

“Those funds will help a lot of people,” Scredon said. And despite the unknown allocation that will go to HECM counseling, the outlook is positive. “The good news is, HUD has to use the funding within 120 days, so we’d expect the guidelines soon,” he said.

For many reverse mortgage counselors, the weeks since the start of the current fiscal year on October 1 have led to an increase in the fees clients face as well as the wait times they encounter when signing up for and subsequently receiving counseling. As of October 1, the National Counsel on Aging had reintroduced fees of $135 per session—a slight increase over its past $125 fee. Likewise, ClearPoint Credit Counseling solutions had gone back to a fee-based model in the absence of government funds.

“The funding will allow us to continue to produce free services to seniors for reverse mortgage counseling,” said Martha Viramontes, ClearPoint’s director of housing. “The funding will allow us to waive the fee,” she said, after having gone back to charging $125 during the unfunded interim. “It will probably allow us to go back to full capacity.”

Written by Elizabeth Ecker

Grants will be awarded competitively to the hundreds of HUD-approved counseling agencies and State Housing Finance Agencies across the nation that offer a variety of services, including pre-application reverse mortgage counseling and foreclosure avoidance counseling.

“The HUD-approved counseling programs this funding will support not only help families make more informed choices about buying or renting, it is crucial in helping thousands of families avoid foreclosure and remain in their homes,” said HUD Secretary Shaun Donovan in a statement. “We fought hard to persuade Congress to restore funding for housing counseling in HUD’s Fiscal Year 2012 budget and I’m pleased that they did so. We will now work to make these important resources available to help families as quickly as possible.”

The department originally asked for $88 million in funding, which the FY 2011 Continuing Appropriations Act completely removed from the budget. In later budget bills, the Senate cut funding to $60 million, and last week, President Obama signed a spending bill approved by Congress that allocated $45 million of housing counseling assistance to HUD.

Out of that money, $40.05 million has now been made available for housing counseling, with the remaining funds meant for training (which will be announced in a future notice of funding availability) and for administrative contracts, according to a HUD spokesperson.

The bulk of the money will go to comprehensive counseling, at $36.05 million, with the other $4 million dedicated to reverse mortgage counseling.

HUD’s most recent prior funding grants allocated $9.5 million to reverse mortgage counseling.

Written by Alyssa Gerace

The Transportation, Housing and Urban Development (“THUD”) appropriations “Mini-bus,” bill passed through Congress as a group of appropriations lumped together by the Senate and House. It includes $45 million in housing counseling assistance for the Department of Housing and Urban Development through September 30, 2012.

Under the bill, the grants made available must be awarded within 120 days of enactment, the bill states.

“America’s seniors, looking to capitalize on their equity wealth to maintain their financial independence will still have access to consumer protections like housing counseling when this bill becomes law,” said H. West Richards, Executive Director of the Coalition for Independent Seniors (CIS).

The counseling funding, which was cut by Congress in a last minute budget deal signed in April, has been a serious concern for reverse mortgage counselors nationwide as they watched their federal funding dry up over the course of the last several months. Many were forced to reintroduce fee-based counseling where they were previously able to waive fees, and for some it also meant raising the cost of counseling overall.

In Congress’s approval of the spending bill on Thursday, it passed by a majority vote of 70-30. A previous Senate appropriations bill included $60 million for housing counseling, while the House appropriations bill included no funding.

The National Reverse Mortgage Lenders Association and Coalition for Independent Seniors have lobbied in Washington for restoration of the counseling funds since they were cut earlier this year.

“This is a win,” Richards told RMD as the bill made its way to the president’s desk. “Keep in mind, the House initially zeroed out all funds.”

Written by Elizabeth Ecker

“For now, the general guidance is straightforward,” Daniel Fenton, housing director of Money Management International told RMD in an email. “It’s important that all counselors understand that some form of financial assessment may be completed as part of the application to avoid incorrectly contradicting HECM originators. It is also a good idea for counselors to be able to explain in general terms why an assessment may be completed.”

As lenders begin to make changes to underwriting, counselors have started informing their clients about the change after a letter from HUD informed them that official rulemaking was under way and would be coming soon.

“I think that it is as straightforward as it’s possible to be in a situation as murkey as this one,” says Christena Schafale, a reverse mortgage counselor with Resources for Seniors. Schafale has told clients that they may encounter some additional lender requirements, and that lenders may differ. While a client might not be approved by one lender, it is still possible to get approved elsewhere, she said.

The change isn’t likely to add any additional time to the process, the counselors say, but it may add an additional layer of uncertainty.

“I used to love being able to tell low-income borrowers that this time, with this loan, they would not be rejected because of their financial struggles,” Schafale says. “But those days are gone.”

New underwriting when done in advance of guidance from HUD could introduce some discrepancies on the lender front, but it’s the pending rule itself that could cause a shift on the counseling side, Fenton says.

“Things will get more complicated when HUD’s guidance is published. In the future we will have to decide how counselors should advise seniors who appear not to meet the assessment standards (whether or not they are already working with an originator),” Fenton says. “I expect a lively debate over exactly what the counselor role should be.”

Written by Elizabeth Ecker

The exam is required to obtain and retain a place on the HUD HECM Counselor Roster, and has not been revised since May 2009. The new revision will continue to include 100 questions, but the number of question in each of four content categories and the questions themselves will change.

Reverse Mortgage Basics; HECM Costs and Benefits; Alternatives to Reverse Mortgages; and HECM Counseling will remain the four content categories, but the new version will include a greater emphasis on HECM Counseling and less emphasis on HECM Costs and Benefits and Reverse Mortgage Basics.

The current exam will be offered through November 27, 2011.

Find out more about the changes to the exam here.

Written by Elizabeth Ecker

The notification comes following the release of new recommended underwriting guidance set forth by the National Reverse Mortgage Lenders Association during the association’s annual conference in Boston last week.

Noting an October 5 e-mail from Federal Housing Administration Acting Commissioner Carol Galante that stated HECM lenders may implement financial assessment criteria as part of the qualification for a HECM loan prior to FHA publication of its own regulations, the e-mail informed counselors of their role in the implementation of such an assessment.

“Because a financial assessment is a new part of the HECM loan origination process, it will be critical for HECM counselors to address the likelihood that these requirements may vary among lenders,” the e-mail states.

The e-mail reminds counselors that housing counseling agencies are not permitted to promote, represent, recommend or steer a client to any specific lender. It does direct counselors, however, as to how they must advise clients on the assessment including two important points.

First, that “financial and credit capacity assessment guidelines may differ from lender to lender just as lenders may offer different pricing options and different product options.” Second, “some lenders my implement ‘underwriting requirements’ for HECM applicants and some may not.”

NRMLA’s guidance was published for its members on its website last week and was announced by NRMLA counsel at the association’s national convention. NRLMA encouraged, but did not require, lenders to implement such guidance as soon as possible.

Written by Elizabeth Ecker