There has been a flood of potential reverse mortgage borrowers trying to schedule counseling before HUD implements a 10% reduction in principal limits for its Federal Housing Administration (FHA) insured reverse mortgage product.
Reverse mortgage lenders who obtain a FHA case numbers by September 30 can help their borrowers receive more proceeds, but not all borrowers have been able to schedule HECM counseling in time.
In order to obtain a case number, lenders must provide FHA with a signed counseling certificate that ensures the borrower has completed the counseling session. However, getting this done has caused problems for HECM counselors as they try to meet the surge in demand.
“It is nothing short of a nightmare,” said Jack Belles, President of Reverse Mortgage of New England. He added that, “the seven day notice was not enough time to get this accomplished”. Several other lenders I spoke with felt the same way.
Even Money Management International, the largest nonprofit counseling agency in the US is having trouble meeting the demand. The agency was already booked up until Oct. 1st when HUD made the announcement, but it was able to open up an additional 220 free counseling slots by reallocating other counselors said Daniel Fenton, Housing Director for MMI. They were filled in 3 hours.
RMD continues to get questions from borrowers, lenders, and HECM counselors about the deadline, looking to see which counselors have available slots before Oct. 1st. Unfortunately, despite the industry’s best efforts to meet the demand, the reality is that not all seniors will have the ability to receive counseling before the principal limit reduction.
Note: If your a HECM counselor and have any spots open before the Oct. 1st deadline, leave your information in the comments and I’m sure someone will contact you.