The Federal Housing Administration will issue preliminary regulations that would be the first step in developing a method to mathematically determine a borrower’s eligibility for a reverse mortgage said Meg Burns, the director of the FHA’s office of single-family program development in a New York Times article.
The administration recently implemented a new set of standards for HECM counselors which established a roster and testing standards used to qualify counselors.
Counselors will also have to follow a set of protocols to help determine whether a reverse mortgage will help a borrower. Burns told the NY Times that “We’ll be weeding out the bad counselors going forward.”
The changes come after a report from the Government Accountability Office, which sent investigators posing as borrowers to 15 reverse-mortgage counseling sessions. According to the report, none of the counselors covered all the required topics and that some overstated the length of the sessions in records provided to the government.