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:
- 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.