State Of The Reverse Mortgage Counseling Industry 2008 Report

image HUD’s Office of Policy Development and Research recently published its 2008 State of the Housing Counseling Industry  Report.  The study covers all types of education and counseling services and provides an overview of the housing counseling industry and investigate the challenges it faces.

A substantial amount of the report discusses how HECM counseling will continue to be a major growth sector in the industry and details how HUD is working to expand its network of HECM counselors.  Below I will go over a few different topics that are addressed in the report but I encourage everyone to spend some time reading about the concerns HUD has about HECM counseling.

Concerns That Borrowers Need More Time To Understand HECMs  


The report shows that there is a major concern among intermediaries and counseling agencies that counselors are feeling pressured by lenders and borrowers to provide HECM information too quickly.  Counselors are worried they may not fully understand the implications of taking out a HECM and is looking for HUD to provide guidance.  Below is a comment from a human services organization in NC:

“HUD needs to set more stringent standards for reverse mortgage counseling in terms of the amount of time that should be spent with a client. We hear many reports of clients being given ‘counseling’ that consists of nothing more than a 5-15 minute telephone conversation, with no financial data provided and minimal effort to explain the concepts of a reverse mortgage.” (Human services organization in NC)

A national intermediary also voices their concern with the need for quick turn around for HECM counseling.

“Reverse mortgage counseling is required for all individuals receiving an FHA-insured HECM. As a result, there is a demand for quick turnaround in the counseling sessions, with pressure from lenders… Counselors, lenders, and clients need to slow down the reverse mortgage and reverse mortgage counseling processes to ensure that clients are well-informed.” (National intermediary)

While I agree that enough time should be given to a borrower to ensure they receive a sufficient amount of counseling, part of the push from lenders comes from the fact that there aren’t enough counselors to meet the demand.  When borrowers are being asked to wait a month to receive counseling, I can understand why they’re feeling pressure from lenders to get counseling done. 

Establishing A List of Eligible HECM Counselors

HUD is currently taking steps to improve the quality of HECM counseling. In January 2007, HUD issued a proposed rule to establish testing standards to qualify individuals as HECM counselors and to establish a roster of eligible HECM counselors.  In order to be included on the roster, a counselor must be:

  • Employed by a HUD approved counseling agency
  • Pass a standardized HECM test
  • Continue to receive training and education

Counselors can also be removed from the roster for various causes, including failure to comply with HUD requirements and standards.

AARP Mystery Shopper

AARP is planning to launch a “mystery shopper” program to keep track of and encourage improvements in qualified HECM counselors performance.  The mystery shopper is an experienced counselor acting as a client who uses a checklist to verify that key information items required by statute, regulation and mortgagee letter are provided accurately by the counselor in a way that encourages client understanding and protection.

The checklist will be shared with counselors and their supervisors in advance so they will know what is expected of them. This quality check program is in a beta-testing phase as of mid-2008 and is expected to be implemented by the end of the calendar year, or early the following year.

HECM Counseling Numbers

  • Among the approximately 110,000 clients that completed HECM or mortgage refinance counseling in 2007 and fully or partially resolved their issue, the most common outcome was to obtain a HECM.
  • About 65,000 clients, or 60 percent of those that completed counseling, took out a HECM.
  • Another 6,000 clients received HECM counseling but decided not to take one out.


To read a copy of the report click the link below.

The State of the Housing Counseling Industry: 2008 Report

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  • I would like to thank all the counselors out there that help our clients. 99% of the time, we recieve good reviews from our clients about their counseling.

    The thing we want to hear from the client is that they did not learn anything more. To us, that means we have done our job educating the client and they know what they are doing.

    All parties need to remember that just because someone is a senior does not mean they do not know what they are doing. Some of the people who push the counseling so hard seem to think seniors are not capable of making a sound decision. Just think if the government and some organization required us to have to take counseling to buy, invest, etc something and have to pay for it, even if you been functioning in life for over 60 years!

    Now we do have salespeople out there not doing a good job educationg the client about reverse mortgages and counting on the counseling to cover. What a way to count on a pay check.

    Just a couple of my thoughts.

  • With the HECM program revision to allow for purchase as of January 1, 2009, it is more important than ever to get the counseling phase completed in a timely fashion. A home sale needs to close and fund within 30 days of a contract of sale being completed, so time is of the essence in getting the counseling cert signed and submitted. We need more and better trained counselors.

  • My clients tell me (and your clients will tell you, if you ask) counseling sessions last about 45 minutes to an hour. They always wish to know why counseling is
    necessary after I explain the RM details.
    I say: one, because it’s required by FHA law or regulation in order to get an FHA HECM; two, FHA wants
    you to hear for a third party, someone other than just “Jim Salesman” about what a RM is and is not; and
    three, once completed, the client receives a certificate showing the client has completed FHA certified counseling, attached to which is an FHA case number whic is needed to order an FHA appraisal of the property. Unfortunately, the numbers on the application won’t mean a damn thing in terms of authenticity until the FHA standards appraisal is completed (I’ve had a few discussions with FHA powers about the phoneyness of their very foolish HECM process. The application, could be reduced to two or
    three pages, in my opinion; Until the FHA appraisal is done the numbers shown now are a fraud, in almost all cases no matter how much you try to guess the property’s actual value)and, fourth, you the client need to make sure you are hearing from the counselor exactly ( we may say it a little differently) what I am telling you. It is a good system of checks and balances. I have had absolutely no problem with counselors not doing their proper job. If counselors can talk a Senior client of mine out of doing a RM with common sense and professional knowledge, that’s fantastic–I only wish to sell a RM to a Senior who can truly benefit from one. Most of us know the FHA HECM is a blessing for most Seniors trying to remain in their own home, rather than going to a nursing home. Yes, sometimes there are dalays in getting counseling for one’s client and yes I don’t agree with the recent payment change but I believe the problems will be solved over time. I would tell FHA, however, sometimes because of a specific Senior’s health situation, the LO must be deeply involved in the counseling process: One time I picked up a Senior and drove three hours thru high-drive time traffic to an
    in-person counseling enity because the Senior no longer drove and was partially deaf and did not like to talk on the telephone. Senior’s needs may be similar in general but each Senior is unique and may have specific needs. I’m sorry I have been so wordy.

  • what a phony report the counsling industry put out!!!
    Hud has put out rules for how long reverse mortgage cousling session should be. Generally approx 1 hour.Underwrite can accept 40 minutes any time less than 40 minutes is not acceptiable. Report shows calls lasting 10 to 15 minutes this is not enough. report says cost $500 to $1000 for session is out rageous. I don’t see in report the amount of generated fees for cousling service at 125.00 per session even if hey went the 1 hour.How much does the counslor receive? how much has the compay earned? How much does AARP charge for trainning or Neghborhood trainning Company? . Does counslors pay for trainning.What about adding all the services providing total revenue. and including aal sources of money for reverse mortgages. 35% of counslors do not 2 years of Colledge have trainning. Where is legal advise to seniors on reverse mortgage. What happen to the investagation of Owners of Counsling ceo who are non profit earnning Hundres of thousands of doolars in salary. Let’s see the bottom figures of how much money they make negotaitng bill payments with credit card companies for them to receive money from people behind in payments. Why is seniors paying $125.00 for counsling to make sure they can stay in thier home and anyone purchasing a home don’t pay for counsling???????/

  • The trend I am seeing more and more is one where the counselor is required to do the LO’s work. When HUD changed the required face to face counseling it also opened the door for an enormous workload on the counselors b/c now we have everyone from everywhere dialing for dollars just like the refi days of the past. If my memory serves me correctly this left borrowers uninformed and uneducated and …. wait, let me just grab today’s paper. There are enough dragons with telephones preying on our mom’s and dad’s today in other markets. If HUD wants to slow down the industry, they need to bring back the face to face requirement with the stipulation it would be the required task of the Mortgage company. I believe this would bring forth more accountability of the mortgage company, a better education of the homeowner and ease the burden on the counselors. You also have to understand these counselors, in most situations, are also having to deal with the pressures from bankruptcy attorneys to get the required bankruptcy counselings completed. It is a thankless job these counselors are doing and to send them uneducated homeowners and pressuring them to get them counseled will only lead to shortcuts at the homeowner’s expense and more tragic headlines in tomorrow’s paper.

  • This is Ridicules! All of the counseling sessions my clients have done told me that they last at least 45 min. Why is it that certain groups feel the need to police our industry like they are all knowing and the protector of the land? The reason for wanting to move along fast for the most part is that once the client has made the decision to move forward they are anxious to get it done so they can stop making there mortgage payments and start spending this money and any other they may be getting out in anyway they choose too!
    Please quit acting like all Reverse LO’s are crooks! These people need these loans are genuinely happy to have them available to help their financial situations. I hear the same things over and over how these loans should be looked at so carefully, of course they do! But once the clients financial situation has been evaluated by all parties and the conclusion is that a Reverse Mortgage is a good fit, let’s move on and get it done before something changes and the borrower cannot qualify because a program has just been dropped or better yet their home losses value so they qualify for less. Has anyone seen this happen in today’s market?
    The counselors are professionals, the loan officers are professionals, and the clients are well informed, lets all move on as quickly as possible so all parties can benefit!

  • You all make some good points. I am a counselor and I primarily do HECM counseling. The clients I see are in a situation where the reverse mortgage is a lifeline for them. If they have a good broker, they usually know quite a bit and the counseling is just verifying what a broker has already told them. I think most of my clients appreciate a third party helping them understand the process. And like Eric says, once they have decided that a reverse mortgage is for them, they are eager to get on with the process.

    One of the biggest problems that we see are that many seniors have a hard time coming up with the upfront $125. The new rules make it difficult for them. We accept payment at close, though we know that means we will likely not get paid for a good number of them. It would be much simplier if they created a fund that brokers paid into, to pay for the counseling. That way there would still be a seperation between broker and counselor but the senior would not have to come up with the upfront payment.

  • Having been a reverse mortgage counselor for several years prior becoming a reverse originator I must say that I’ve seen great experienced counselors as well as those who are “scripted” and can’t answer anything not in the script.
    However, I think it’s up to the lender to provide the prospective borrower with good education on reverse mortgage before they go to counseling! If we do our job properly our borrowers will have confidence in us to help them with their decisions – knowing we will not force them into something that is not in their best interest.
    Originators who do most of their business by mail and phone because it’s the quick, easy way for them don’t have the best interest of the borrower in mind and this is a disservice to the borrower!
    For the record I’m a senior starting my 19th year in the reverse mortgage industry.

  • To Patty: True many of the experence Loan officers explain all about reverse mortgages. but remember we now have all the forward mortgage people trying to do reverse mortgages. There should be a seperate license for reverse people.Secondly have you read my blog. Where it quotes Study of counsling and quotes phone calls last 10- 15 Minutes.Hud requires and most underwriters want to see at least 40 minutes. to keep every one honest. as far as lenders paying for counsling, with reducing our fees and our over head going up makes it difficult to lay out money for counsling and find out many properties don’t apprasail. Question do you get $125.00 for your time?
    and how about lowering fees for counsling since I know there are counslors who charge 40.00 and some states charge 0. I fidn’t know early reverse mortgages required counsling in 1991 If they did it would make Eddy Jo in her 18 year. What about Hds grant money for counsling seniors. seenms like a lot of money!

  • I think AARP and HUD should pay for the counseling. They are the insitutions requiring it.

    110,000 clients x $125= $13,750,000

    Remember AARP took away $1,255 from every lender, which is my future membership funds to AARP.

    Nice to know AARP does not care about people future and building up retirement funds/investments.

  • I originated my first HECM in 1996, so I’ve seen a lot. What irks me the most is that the North Carolina “Do Good Agency” laments telephone sessions that last 10 to 15 minutes! Hello, North Carolina requires face to face counseling only! This, by the way, makes it very difficult for North Carolina seniors who live more than 100 miles from a counselor.

  • Todd makes a good point about the face-to-face counseling; face-to-face counseling is much more likely to be a higher quality interaction, which ensures that the borrowers are sufficiently informed. However, as Jerry says, a drawback to the face-to-face counseling is that many borrowers may not live within 100 miles of a counselor. Phone counseling is obviously the much more efficient and less expensive method, and I think the concern over phone interaction quality will be greatly lessoned by the implementation of the AARP mystery shops. In my experience as someone who has worked for companies that conduct mystery shops and as someone who has been mystery shopped myself, I know that mystery shopping can make a huge impact on improving behaviors if the results are used appropriately.

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