HUD to Release New Financial Interview Tool for HECM Counselors

The US Department of Housing and Urban Development will publish a new reverse mortgage counseling protocol next month according to the National Reverse Mortgage Lenders latest Monday Report.  After the protocol is published, HUD said it will take effect 30 days later. 

Included in the new protocol is a new financial interview tool (FIT) that counselors must utilize to help a prospective borrower asses the financial viability of remaining in their home said NRMLA.

The goal is to help counselors determine whether a reverse mortgage is the most appropriate option and whether after getting a reverse mortgage, the borrower(s) is still able to meet their contractual obligations, such as payment of taxes and insurance and maintaining the structural soundness of the home.

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“My initial take is that handled correctly, it will be good for counseling,” said Daniel Fenton, Housing Director at Money Management International in an email to RMD.  “It’s probably going to increase counseling time, but I think it gets at a series of issues around financial sustainability which clients really should be thinking about.”

We wrote about how HUD should develop a tool like this that provides objective information about a borrowers situation, maybe they were listening.  

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  • I actually called her. It went to her voice mail. I left a message in what I consider to be a friendly tone letting her know that I felt is was important for her to know that the HECM was set up for seniors to not have to make a payment on the loan as long as they lived in the house BUT if they wanted to, for whatever reason, they could indeed make payments, for any amount, at any time, whenever they wanted without penalty.

  • In the era before I arrived in the industry, loan officers talked about working with counselors to help seniors understand reverse mortgages. If the senior heard something that sounded wrong to the loan officer, the loan officer could call the counselor to discuss it and the counselor would make it right and vice versa. When I came into the industry most recent arrivals talked about the problems with counseling. The more experienced attributed it to the changes.rnrnThings seem worse, not getting better. It is sad we cannot work together to help the seniors understand a product that so many need.

  • I wish they would focus on making sure the current counselors ALL know what they are talking about. I just had a senior I was working with go through counsel and tell the senior that they couldn’t make payments on a HECM loan. *ugh*

  • Jim,rnrnThank you for your kind words. My best guess would be HUD’s new Financial Interview Tool (FIT) will focus mostly on household budget.rnrnThis comes as no surprise for those who read last year’s mortgagee letter on this subject. The FIT may lead to mandatory T&I set asides for those whose assets and/or cash flow cannot insure timely payments.

  • We provide a product. What can we do when the perception of the product we provide has been painted so black that those potential borrowers we have must be protected from us, from themselves, from the product we offer, from the products offered by others and so on and so forth. I used to have a concrete available and worthy product to offer to seniors. These days I find myself caviotting (is that a word?) all over the place. Nobody in government state or federal can make up their minds anymore as to whether they care if seniors live longer, healthier, happier lives in their own homes and if that even matters. Everybody always told me that by the time I was old enough for Medicare and Soc Sec it wouldn’t be there so I guess I’m not surprised. The younger governing generation just doesn’t care about whether or not seniors are being foreclosed on and losing health benefits and ending up being warehoused. They just care about making headlines by ripping the guts out of a program that actually helps most seniors. They over-regulate HECMs and balance their budgets on the bodies of the generation that has held everything in this country together for so many years.rnrnDon’t blame the counseling agencies. Don’t blame the politicians. Let us follow in the footsteps of Jonathan Swift and blame the seniors for living too long. After all, there are now too many of them for the welfare system to support. Here’s a modest proposal. Just cut into medicare benefits and lower social security benefits as fuel and food prices go up. Take away the seniors’ ability to access the equity in their homes by raising qualifications on HELOCs. Then whittle away at the only other program that allows them access to the equity that may mean the difference between whether they purchase groceries or winter heating. Then limit access to medical procedures that might prolong their lives if they are above a “certain” age. It’s just a modest proposal that won’t raise half the stink of Swif’t’s because, there aren’t as many babies as there are seniors, and after all they’ve lived a long life. Just beware and be ready because the effects of the proposal won’t stop just because you are the one who turns 62.

  • whymeagain,rnrnJust think of the originator who spends thousands and thousands on marketing just to get to see a senior. In just a few minutes either a connection is established or you might as well be talking to a wall. Then there is the pile of loan application documents that must be signed. Last week one of our loan officers counted five different documents that California seniors must sign that principally warn about buying annuities and other investments with proceeds.rnrnThen in comes the children sometimes angry and accusing us of doing nothing more than ripping off their parents. Sometimes even counselors help make us look bad by saying things like “you mean they didn’t do that?” “Or you were told what?” When the senior is confused or forgot what we did or did not do. Then there is the pile of paperwork at closing and in some cases call after call in between.rnrnAh, for the life of a counselor, one meeting or maybe two and it is done.

  • James,rnrnThe biggest lobbying block in U.S. history are those representing homeowners. Just ask those who tried to get rid of itemized deductions for mortgage interest and property taxes. Why don’t renters get tax breaks for their housing costs? Look at the first time home buyers credit if you want to see an interesting subsidy. Did renters ever get anything similar?rnrnYou are trying to make the HECM program an entitlement. It is not. FHA is an insurer that must adjust its policies from time to time. Some senior homeowners cannot get HECMs over credit issues for things like currently in bankruptcy or owing too much on a federal debt that is deliquent, etc. CAVIRS is another source of disqualification.rnrnWhile you and I may not like this new potential hurdle, it is now a part of the program.

  • HECM Dud, I can’t believe how utterly stupid you can be: If EVERYONE involved in the FHA HECM process doesn’t realize by now their entire occupation is wrapped up in politics, something is terribly wrong with their thinking. It’s a Government program, fellow, subjected totally to politics.

  • I’m probably in the minority among originators, but I believe a robust counseling protocol actually will advance the reverse mortgage industry. While the majority of customers are totally satisfied with their reverse mortgages, the few who were not often failed to receive adequate counseling and may even have been misled by loan officers who were motivated primarily by commissions and didn’t necessarily have the best interest of the customer in mind.rnrnIncreased training and professionalism of counselors, coupled with tools to assist the customer in making an informed decision whether to obtain a reverse mortgage (it is not the counselor’s job to make that decision) will go a long way toward reducing the number of inappropriate transactions and improving our industry’s image.

  • What happens when income and FHA HECM funds are not enough to pay forrnHomeowners Insurance and Maintainence (assuring that the Senior based on income has applied for State paid Real Estate Taxes, if such a program is in effect) yet Family Members will see that such costs are paid? Do we get signed letters stating that position? Will the Counselor have the power to deny the Senior a FHA HECM, even though Age, Home Value, and debt if any says the Senior qualifies for an FHA HECM? For most of my clients, home equity (what’s left) is their only asset. I know not a few Seniors who will commit suicide rather than be forced from their homes. HUD/FHA Officials better be damn careful what problems they create for themselves. People are damn fed up with what’s taking place in Washington, D.C. The Senatorial election in Massachusetts should be a wake up call for those in power about the mood of the Country. Those Peasants out in the Countryside are not as stupid as others think. rnrn

  • Determining whether a homeowner has adequate cash flow to remain in their home is a worthwile counseling procedure and certainly an important suitability factor. Better to have it handled in counseling rather than underwriting!

  • For several months, Mr. Shannon Hicks at Reverse Fortunes has been advocating that originators should gather financial data from customers before counseling . He believes this is a helpful strategy for preparing customers for what counselors will cover. No doubt, Mr. Hicks will be updating and revising his financial schedules to reflect the counseling FIT upon release of the new protocol. Mr. Hicks is proactive and a real help to many originators.rnrnHUD is right; if this information must be gathered and analyzed, counseling should do it. It should not be the responsibility of underwriting or the originator.rnrnAs tax preparers, we worked with the same individuals year after year so it was easy to train individuals to gather the right information especially when the needed information was limited to very specific categories. It was always a little challenge when tax rules changed or when getting a new client. There are many older seniors who resent any “invasion” of their personal finances especially in the way being proposed. rnrnFor a counselor to gather a summary of all transactions for a specific period on a one-time basis seems like trying to create a miracle worker. For originators to get seniors prepared for this new counseling wrinkle before going to counseling could be a trick in itself. It will be interesting to see how this works out. While an originator might have built up a level of trust with the senior, counselors for the most part are being asked to do this in one telephone call. rnrnWhile it is great that our legislators, regulators, and advocates want so many things covered in counseling, it is also a huge distraction from the main purpose of counseling, helping seniors to understand the reverse mortgage transaction and its implications. One thing that is true about most seniors is that their attention span is down from their middle years. One question is if counseling will simply become information overload? Will the same counselors who GAO reported as not covering many subjects to the extent believed necessary or not at all be able to effectively add even more to what they must cover? Who will monitor counseling to determine if counseling after Spring 2010 is as effective as when the GAO report was written? Hereu2019s hoping it all works.rnrn

  • Mr. Shannon Hicks at Reverse Fortunes has been advocating gathering financial data from customers before counseling for several months. He believes this is a helpful strategy for preparing customers for what counselors will cover. No doubt, Mr. Hicks will update and revise his financial schedules to reflect the counseling FIT upon release of the new protocol. Mr. Hicks is proactive and a real help to many originators.

    HUD is right. If this information must be gathered and analyzed, counseling should do it. It should not be the responsibility of underwriting or the originator.

    As tax preparers, we worked with the same individuals year after year so it was easy to train individuals to gather the right information especially when the needed information was limited to very specific categories. It was always a little challenge when tax rules changed or when getting a new client. There are also many older seniors who greatly resent an invasion of their personal finances in the way that is being proposed.

    For a counselor to gather a summary of all transactions for a specific period on a one-time basis seems like trying to create a miracle worker. For originators to get seniors prepared for this new counseling wrinkle before going to counseling could be a trick in itself. It will be interesting to see how this works out. While an originator might have built up a level of trust with the senior, counselors for the most part are being asked to do this in one telephone call.

    While it is great that our legislators, regulators, and advocates want so many things covered in counseling, it is also a huge distraction from the main purpose of counseling, helping seniors to understand the reverse mortgage transaction and its implications. One thing that is true about most seniors is that their attention is down from their middle years. One question is if counseling will simply become information overload? Will the same counselors who GAO reported as not covering many subjects to the extent believed necessary or not at all be able to effectively add even more to what they must cover? Who will monitor counseling to determine if counseling after Spring 2010 is as effective as when the GAO report was written? Here’s hoping it all works.

  • Determining whether a homeowner has adequate cash flow to remain in their home is a worthwile counseling procedure and certainly an important suitability factor. Better to have it handled in counseling rather than underwriting where documentation could be required!

  • What happens when income and FHA HECM funds are not enough to pay for
    Homeowners Insurance and Maintainence (assuring that the Senior based on income has applied for State paid Real Estate Taxes, if such a program is in effect) yet Family Members will see that such costs are paid? Do we get signed letters stating that position? Will the Counselor have the power to deny the Senior a FHA HECM, even though Age, Home Value, and debt if any says the Senior qualifies for an FHA HECM? For most of my clients, home equity (what's left) is their only asset. I know not a few Seniors who will commit suicide rather than be forced from their homes. HUD/FHA Officials better be damn careful what problems they create for themselves. People are damn fed up with what's taking place in Washington, D.C. The Senatorial election in Massachusetts should be a wake up call for those in power about the mood of the Country. Those Peasants out in the Countryside are not as stupid as others think.

    • James,

      The biggest lobbying block in U.S. history are those representing homeowners. Just ask those who tried to get rid of itemized deductions for mortgage interest and property taxes. Why don't renters get tax breaks for their housing costs? Look at the first time home buyers credit if you want to see an interesting subsidy. Did renters ever get anything similar?

      You are trying to make the HECM program an entitlement. It is not. FHA is an insurer that must adjust its policies from time to time. Some senior homeowners cannot get HECMs over credit issues for things like currently in bankruptcy or owing too much on a federal debt that is deliquent, etc. CAVIRS is another source of disqualification.

      While you and I may not like this new potential hurdle, it is now a part of the program.

    • whymeagain,

      Just think of the originator who spends thousands and thousands on marketing just to get to see a senior. In just a few minutes either a connection is established or you might as well be talking to a wall. Then there is the pile of loan application documents that must be signed. Last week one of our loan officers counted five different documents that California seniors must sign that principally warn about buying annuities and other investments with proceeds.

      Then in comes the children sometimes angry and accusing us of doing nothing more than ripping off their parents. Sometimes even counselors help make us look bad by saying things like “you mean they didn't do that?” “Or you were told what?” When the senior is confused or forgot what we did or did not do. Then there is the pile of paperwork at closing and in some cases call after call in between.

      Ah, for the life of a counselor, one meeting or maybe two and it is done.

  • I'm probably in the minority among originators, but I believe a robust counseling protocol actually will advance the reverse mortgage industry. While the majority of customers are totally satisfied with their reverse mortgages, the few who were not often failed to receive adequate counseling and may even have been misled by loan officers who were motivated primarily by commissions and didn't necessarily have the best interest of the customer in mind.

    Increased training and professionalism of counselors, coupled with tools to assist the customer in making an informed decision whether to obtain a reverse mortgage (it is not the counselor's job to make that decision) will go a long way toward reducing the number of inappropriate transactions and improving our industry's image.

  • HECM Dud, I can't believe how utterly stupid you can be: If EVERYONE involved in the FHA HECM process doesn't realize by now their entire occupation is wrapped up in politics, something is terribly wrong with their thinking. It's a Government program, fellow, subjected totally to politics.

  • We provide a product. What can we do when the perception of the product we provide has painted so black that those potential borrowers we have must be protected from us, from themselves, from the product we offer, from the products offered by others and so on and so forth. I used to have a concrete available and worthy product to offer to seniors. These days I find myself caviotting (is that a word?) all over the place. Nobody in government state or federal can make up their minds anymore as to whether they care if seniors live longer, healthier, happier lives in their own home and if that even matters. Everybody always told me that by the time I was old enough for Medicare and Soc Sec it wouldn't be there so I guess I'm not surprised. The younger governing generation just doesn't care about whether or not seniors are being foreclosed on and losing health benefits and ending up being warehoused. They just care about making headlines by ripping the guts out of a program that actually helps most seniors by over-regulation and balancing their budgets on the bodies of the generation that has held everything in this country together for so many years.

    Don't blame the counseling agencies. Don't blame the politicians. Let us follow in the footsteps of Jonathan Swift and blame the seniors for living too long. Here's a modest proposal. Just cut into medicare benefits and lower social security benefits as fuel and food prices go up. Take away the seniors' ability to access the equity in their homes by raising qualifications on HELOCs. Then whittle away at the only other program that allows them access to the equity that may mean the difference between whether they purchase groceries or winter heating. Then limit access to medical procedures that might prolong their lives if they are above a “certain” age. Just a modest proposal that won't raise have the stink of Swif't's because, there aren't as many babies as there seniors, and after all they've lived a long life. Just beware and be ready because the effects of the proposal won't stop just because you are the one who turns 62.

  • Jim,

    Thank you for your kind words. My best guess would be HUD's new Financial Interview Tool (FIT) will focus mostly on household budget.

    This comes as no surprise for those who read last year's mortgagee letter on this subject. The FIT may lead to mandatory T&I set asides for those whose assets and/or cash flow cannot insure timely payments.

  • I wish they would focus on making sure the current counselors ALL know what they are talking about. I just had a senior I was working with go through counsel and tell the senior that they couldn't make payments on a HECM loan. *ugh*

    • In the era before I arrived in the industry, loan officers talked about working with counselors to help seniors understand reverse mortgages. If the senior heard something that sounded wrong to the loan officer, the loan officer could call the counselor to discuss it and the counselor would make it right and vice versa. When I came into the industry most recent arrivals talked about the problems with counseling. The more experienced attributed it to the changes.

      Things seem worse, not getting better. It is sad we cannot work together to help the seniors understand a product that so many need.

      • I actually called her. It went to her voice mail. I left a message in what I consider to be a friendly tone letting her know that I felt is was important for her to know that the HECM was set up for seniors to not have to make a payment on the loan as long as they lived in the house BUT if they wanted to, for whatever reason, they could indeed make payments, for any amount, at any time, whenever they wanted without penalty.

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