New Requirements For Reverse Mortgage Counseling

image The U.S. Department of Housing and Urban Development (HUD) published Mortgagee Letter 2009-10 to clarify several issues regarding HECM counseling for prospective borrowers.  According to ML 09-10, FHA wants to ensure that prospective borrowers initiate the request for HECM counseling.  Lenders may not contact a counselor or counseling agency to refer a client, discuss a clients personal information, including the timing or scheduling of the session.  

The ML states that HUD is aware of instances where lenders have dialed a counseling agency’s phone number and then handed the phone to the borrower to schedule counseling or the lender entered the borrower’s contact information into a web-based system which automatically put that borrower’s name in a queue to be called by a counselor. 

Other new requirements from ML 09-10:

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  • Lenders are required to provide every client with a list of no fewer than ten (10) HUD-approved counseling agencies that can provide HECM counseling, five of which must be in the local area and/or state of the prospective HECM borrower with at least one agency located within a reasonable driving distance for the purpose of face-to-face counseling.
  • HECM counselors are required to review a client’s unique financial situation during a HECM counseling session.  In order to conduct this review, a counselor must document a client’s budget based on financial information (e.g. income, assets, debts, monthly expenses) provided by the client.
  • Form HUD-92902, Certificate of HECM Counseling has been updated.  The revised certificate provides a space to record how the session will be paid, – either “Upfront Fee for Counseling Session” or “Financed Fee for Counseling Session” – and a box to check if the fee has been waived. See copy here

To learn more about the ML-10, click the link below.

Mortgagee Letter 2009-10

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  • I really don’t get. Can somebody help me out? Counselors are THIRD PARTY and must be certified by HUD. What’s all the fuss about? Steering is old hat and this only lengthens the process for a senior citizen to get financial relief. Is HUD trying to choke down production??????

  • Sure sounds like it. I think the 5 Mandatory counselors on the list may have something to do with this. There business is dropping so they are trying to starve out the competition. Offering the convenience of setting up counseling is a wonderful thing to offer a borrower. If the client does not feel comfortable with going through counseling then they will do what they always do:

    1) No show for their appointment
    2) Call back up and cancel

    The biggest obstacle we run into, is sitting on hold for 10-20 minutes getting the scheduler on the line, then we conference in the client as a courtesy. This is a ridiculous thing to make originators go through.

  • Ten names???? I have no idea where I am going to get the names of 10 counsleors. In MT we have 3 Federal Housing agencies and Counsumber Credit Counseling services with 5 locations across the State. In WY there are two CCCS locations.

    If anyone would like to share some other names so I can build a list of ten I am open to suggestion.

  • Terry, you only need to provide FIVE names, addresses, and telephone number for counselors in the state/area. By giving them the information on the OTHER FIVE nationwide numbers in the ML it totals TEN.

  • And where is NRMLA?

    So we got an elder law attorney, financial advisor and mortgage professional all nodding there heads in agreement that a reverse mortgage is the right solution and we get to all hold our breath while a HUD trained counselor:

    “reviews a client’s unique financial situation during a HECM counseling session. In order to conduct this review, a counselor must document a client’s budget based on financial information (e.g. income, assets, debts, monthly expenses) provided by the client”

    Wow just WOW, God help us all.

  • I am a HUD-Approved Network Counselor who provides the majority of our counseling sessions over the phone in several states and we run into many issues of clients not wanting to release their financials to us. These regulations will make sure that all counselors provide an impartial and accurate education (which I do think is a good thing – who can say what is right for someone you don’t actually know), but so may clients are already nervous coming to us as it is now. Add in a test and an accent the client can’t understand because they called a call-center type counseling service, and I’m fearful of the results.

  • I don’t mind the counseling but for them to tell my customer to ask me to lower my fee!! I am not getting what I normally do on a regular loan so for them to tell my customer that I can cut my fee makes me look bad if I don’t. HUD has put a max that we can get then the lender get their fee our of our fee.
    If they would just counsel them, ok but stay out of my fee.

  • Brenda

    You hit the nail on the head. These counselors ARE telling the customers that the fees are negotiable and to go back and ask the LO to lower their fees.

  • All the new regulations for reverse and forward mortgages are making it harder to “make loans”. All the hollering about stimulating the economy by making banks lend more money and then tying our hands behind our back. We are getting HUGELY “Mixed Messages” here. I’m guessing if the need is great enough, the senior homeowners (and us originators) will continue to forge ahead. It makes you wonder what’s next. ?????

  • Well perhaps someone could forward these comments on to the new management at HUD. Once again, no one asks a real “boots in the street” originator how these “rules” will adversly affect the very persons they are trying to help.

    I just don’t get it either. Counselors are third parties. What happens on the phone is up to them, not up to us.

  • I am also getting more concerned about the counselor’s role. It seems like HUD is giving them more and more authority to give advise to the senior about whether they should get a Reverse Mortgage or not, since when is this their role? I am finding that the counselors are acting like they are the final authority on if my client should do this, looking into their finances? I have been searching for the requirements, training, and experience one must have to become a counselor but cannot find it, can someone please tell me? I may be wrong but I was always under the impression that councilors were to make sure that the senior understood how the program works, the good and the bad and make sure that I have done MY job in explaining everything thoroughly. For them to start getting into my fees which are already REGULATED is ridicules. Will someone PLEASE represent the originators in all of this! What can WE do to voice our thoughts besides posting on here? NRMLA, they do absolutley nothing for the originators, nothing.

  • Dave Says:

    Follow the money.Big banks, big insurance co’s are the ones that will be controling this market, If they can have the govt give them big money they can take over and leave all of the rms or rmp’s or whatever you want to call us out. It was a nice run but the end is in sight…

  • Attention Counselors – It is NOT your job to decide if a reverse mortgage is right or not right for a borrower. I repeat – it is not your job. Borrowers do not want to discuss their personal finances with a counselor. This is insultaing to many. Counselors have no qualifications/training to act as a financial advisor. And counselors have NO business telling borrowers to ask the originator to negotiate fees.

    Hello ??? NRMLA ??? What are you doing for us here ???

  • I was told that
    “counselors provide information, not advice”
    “counselors provide options, not recommendations”
    I am finding that those statements are not true.

  • I feel as though all counselors are getting a bad reputation. We, at my Agency, certainly adhere to those priciples as stated by “arc” while going over the information that HUD requires us to give. It is NEVER our role to give financial advice or to try to determine whether a borrower should take out a HECM.

    We ALWAYS refer the Borrower to their lawyer, financial advior, accountant, and even lender about advice as we CANNOT give it. While we do ask very basic income/ debt/ asset information – it is only used to make them aware of programs/ alternatives which may be based on this information.

    Please know that NOT ALL Counselors are making recommendations, prying in depth into financial information, and giving a ruling or advice on whether it is ok for the borrower to do.

    The borrowers can take the money and go to Las Vegas if they so choose – as long as they know the implications – then this is their decision. Whether this is advisable & whether some (so it sounds)Counseling Agencies can keep the opinion of whether gambling it all is advisable is what this debate is all about.

    It’s too bad so many of you have had bad experiences with Counselors, but at our Agency, counselors make sure borrowers know the implications, options & decisions which need to be made without adding our own values or judgements to it. Unbiased, 3rd Party Education. ONLY.

  • Well, Here Goes!
    I am surprised at the many Counseling Companies that tell the borrower, we need our money upfront and will not wait for payment out of escrow. A (very) few don’t but that is not the norm! Re: Financial Advise: I am concerned about the number of people counseling seniors on Revrse Mortgages and the new HECM for Purchase Loan. They may have an Option Arm Loan or Sup-prime Loan and owe more than their property value. They made bad financial choices and are going to advise this senior homeowner, Oh Yow! YES, I want to belive the majority of the Counselors are dedicated but I also know, Counseling is now BIGGER BUSiNESS at a max of $125 per counseling session.

    Wow, Sparks are comming!

  • Just got off the phone with a client who had her counseling phone call. The customer’s first comment: “Gee, the counseling wasn’t what I expected. She spent the whole time talking about my budget.” I asked my customer, “did the counselor explain the program?” No. “Did she explain that the margins just went way up and how that affects you?” No. Apparently they spent a lot of time talking about the borrower’s gas bill and how much she spends on clothing.

    What’s going on?! How is this helping people make better decisions? How much do you spend on clothes??? Give me a break!

  • I have had clients receive phone calls from other lenders the minute they arrive home from their counseling session. How did they get the clients name and number? Counselors wouldn’t take kickbacks would they? Not government trained counselors! Of course they wouldn’t?

  • I have a customer who just completed her “counseling session” yesterday. The session took 2 1/2 hours during which time the counselor not only asked in depth about her finances but also question like “can you bathe yourself” are you able to fix your own meals, etc. The counselor then went on to tell the client that ALL fees are negotiable, she should find her own appraiser and local person to do her title work and that lenders would pay their appraisal fees. I just think of it as “Counselors Gone Wild”. I intend to call the agency that she used and report this unseemly intrusion into the life of my client and the business that I am trying to generate for my company.
    I think we all need to start contacting the agency heads of management and report these outrageous scenarios.

  • HUD should stop putting counseling agencies, and lenders in a box by trying to make rules based on a few bad instances. They shoud do their due diligence, weed the bad ones out or put them on probation; and leave the good one’s alone.  It’s seems as though when HUD makes a rule, they always throw the baby out with the bath water.

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