HUD Approves Borrower Paid Counseling For Reverse Mortgages

Last week the U.S. Department of Housing and Urban Development published Mortgagee Letter 2008-12 to permit counseling agencies to charge seniors a fee for counseling services. HUD said the counseling fee should be reasonable and customary for the service provided and not exceed $125. The payment of the fee can be paid using one of the three ways described below:

  1. The HECM counseling client and related parties can pay counseling fees directly to the agency; or
  2. Lenders may pay HUD-approved counseling agencies for counseling services, through a lump sum or on a case by case basis. The lender payment may be made directly to the counseling agency or disbursed at closing by the settlement agent, as provided in paragraph (3) below. The lender payment may be mad e directly to the counseling agency or disbursed at closing by the settlement agent. Counseling agencies must disclose to their clients any funding or relationships with lenders. Lenders that pay agencies for counseling services may seek reimbursement from clients who proceed with the HECM and become HECM borrowers.
  3. The cost of HECM counseling can be paid out of a HECM borrower’s loan proceeds. Upon agreement of both the lender and the borrower, the closing agent can assume responsibility for remitting payment to the counseling agency that performed the service.

Lenders are reminded that they may not steer, direct, recommend, or otherwise encourage a client to seek the services of any one particular counseling agency.
To read a copy of the ML 2008-12, click the link below.

Mortgagee Letter 2008-12


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  • Here is the problem: HUD has not updated the website. Quite a few of the “Counseling Agencies” are now lenders and even the CCCS advertises a reverse mortgage seminare.
    They were charging the brokers prior to HUD telling them they could but good luck having someone call when requested if they aren’t paid by the broker as the agencies will tell you they aren’t/weren’t getting paid for them so they were not a priority–30 days out!.
    I think a little more attention should be paid to these agencies. If we are reduced to only 1 then we really can’t give our clients the choice HUD is requiring.

  • HUD can update its website daily if it chooses, if you have a problem with an agency report them. HUD is watching the whole borrower pay thing pretty closely.

    HUD has always allowed counseling agencies to take money from lenders/broker… but anyway, you should find short wait times now that there’s actually a system that allows counseling agencies to get paid for the work they do.

    No need to put up with long wait times..or bad counseling.. unless you are shopping for free sessions.. then like you say good luck!

  • I have a client with macular degeneration that asked me to set her appt. Vision frustration is only one issue. Most Reverse Mortgage clients are going to have vision, hearing and comprehension issues of telephone technology and leaving mesaages that do not get returned and they forget who they called. After reviewing HUD list and Fannie Mae list, options are slim to none. AARP uses same HUD list. I am in agreement that something must be done. I handle reverse mortgages in a fairly good size metropolis and if I am having this kind of difficulty, I can’t imagine what smaller communities are facing regarding HECM Counseling options. The Govt should provide the counseling on the Govt loan and have clear instructions on finding a provider that is either at no charhe or nominal fee, especially when they are not paying for the fuel to get to the appt.

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