Funding For Reverse Mortgage Counseling Insufficient Says HUD, But Improving

Last week the U.S. Housing and Urban Development awarded $60 million in housing counseling and training grants and $8 million of it will go towards HECM counseling.

While $8 million is surely no small amount, it’s nowhere near the amount needed in order to adequately fund HECM counseling.  For arguments sake, lets say that each counseling session costs $125 which means the $8 million in grants will provide a maximum of 64,000 sessions to seniors.  Considering FY 2009 endorsement numbers are over 112,000, it’s clearly not sufficient. 

HUD agrees, and told RMD in an email that it recognizes that grant funds are insufficient to fully fund the amount of HECM counseling that occurs but said the majority of the cost is covered by consumer fees.

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“The $8 million we set aside specifically for HECM counseling will generally cover those counseling sessions where no fee is collected, for example if the senior decides not to do a HECM, they may be reluctant to pay for the counseling they received,” said HUD spokesman Lemar Wooley.  

Counseling agencies can also use “comprehensive counseling” grants which cover a full array of counseling services, including HECM counseling, so the amount spent on HECM counseling in total will definitely exceed the $8 million said Wooley.

Despite insufficient funding counseling sessions, HUD has made good progress on improving counseling with new protocols being rolled out soon and the requirement that counselors pass an exam are all good steps.  However, without appropriate funding these changes won’t help nearly as much as they should.

Below is a spreadsheet provided by Ibis which shows where the HECM grants were distributed. To see a bigger version click here.