FIT Data to Help Industry Understand Needs of Reverse Mortgage Borrowers

As part of the Department of Housing and Urban Development’s new HECM Counseling protocols, counselors are required to use the new Financial Interview Tool to help prospective borrowers consider the immediate financial needs and long-term challenges that can make it hard to stay at home and benefit from a reverse mortgage.

The tool includes a serious of questions to help discuss the borrowers situation and “help to inform the decision older homeowners make about the appropriateness of a reverse mortgage for their situation and the loan features that might meet their needs,” said Dr. Barbara Stucki, vice president of home equity initiative at NCOA during an interview with National Mortgage Professional.

Developed by the National Council of Aging (NCOA) in 2007, Stucki said it felt that reverse mortgage counselors should discuss the loan using a holistic perspective that looks at factors that could affect a senior’s stay in the home and their level of dependence on the loan funds.  This lead to the development of the FIT tool and is meant to help clients look at the big picture.

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“It is a tool to promote discussion, not just a checklist,” she said.  “It is a way of getting people, whose judgment may be clouded by immediate needs, to think long-term about how they plan on staying at home so they can get the full value of this loan.”

Stucki also said through the FIT tool, “NCOA collects data on counseling clients to better understand the potential needs and risks of this group of seniors.”  The data could help to inform product design, develop seniors-sensitivity training for lenders, and provide a better handle on the nature and magnitude of the potential vulnerabilities of reverse mortgage borrowers beyond anecdotes she said.

According to John Lunde, President of Reverse Market Insight, the data will help understand what financial indicators are linked to things like taxes and insurance defaults down the road.  It can also provide insight into the difference between counseled seniors that borrow all the money and those that leave the money in a credit line.  “Having this type of data presents a lot of new opportunities for wider analysis of impact and decision making in reverse mortgage process,” said Lunde.

Read a copy of the interview here.

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  • The biggest help you can provide your borrowers is reading the counseling protocol and prepping your borrowers for what FIT, BCU, and other counseling topics cover. At the Irvine NRMLA Road Show one speaker asked if counseling flash cards were created and being sold. Shannon Hicks has a helpful tool for putting budgets together.

    We all need to understand counseling had to be upgraded. The results of the GAO report last year were neither good for counseling nor for the industry. HUD believes that FIT (Financial Interview Tool) and BCU (Benefits Check Up) along with the new protocol will strengthen counseling.

    While no fan of the holistic approach as part of counseling, it is understandable how it got there. Please do not misunderstand; there are real benefits to the approach but even some of those very real benefits seem tangential to the purpose of HECM counseling. It is not yet clear counseling is the right place for all of it.

    Last week a mutual friend arranged a time with Dr. Stucki exclusively regarding FIT. In that 70 minute conversation, we covered a wide range of topics. Dr. Stucki answered some concerns and in turn agreed to address others. It would be very beneficial to the industry if NRMLA or the MBA would become a repository for gathering questions and concerns about FIT so that the questions could be addressed in a meeting with Dr. Stucki.

    The topics covered everything from individual questions to the privacy issues which could be objectionable if asked in front of family or other advisors during counseling. We also covered the quality of information obtained by mandated counselors over the telephone versus that given to long-time trusted advisors in person or even at the beginning of a session versus at the end (and sometimes even by each spouse).

    Perhaps the most difficult topic is the necessity of completing FIT. While the answers given to FIT and BCU cannot result in a senior not receiving a counseling certificate, not completing them could. In other words, if the senior objects to providing information, the counselor cannot provide a certificate stating that counseling has been completed. This is not a pass-or-fail issue; it is a completed-or-not-completed issue. While objecting to such questions may be rare, it can occur.

  • The biggest help we can provide borrowers is reading the counseling protocol and prepping borrowers for what FIT, BCU, and other counseling topics cover. At the Irvine NRMLA Road Show one speaker asked if counseling flash cards were created and being sold yet.

    Based on the results of the GAO report last year, it was obvious counseling needed to be improved for the sake of HUD and the industry. HUD believes that FIT (Financial Interview Tool) and BCU (Benefits Check Up) along with the new protocol will strengthen counseling.

    While no fan of the holistic approach as part of counseling, it is understandable how it got there. This is not to say there are no real benefits to the approach but some items seem tangential to the purpose of counseling. It is not yet clear that counseling is the right place for all of it.

    Last week a mutual friend arranged a time with Dr. Stucki exclusively regarding FIT. In that 70 minute conversation, we covered a wide range of topics. Dr. Stucki answered some concerns and in turn agreed to address others. It would be very beneficial to the industry if NRMLA or the MBA would become a repository for gathering questions and concerns about FIT so that the questions can be addressed in a meeting with Dr. Stucki.

    The topics covered a wide range of issues from specific FIT questions to problems which could arise from personal issues being raised when family or other advisors are present during counseling. We also covered the quality of information obtained by mandated counselors over the telephone versus that given to long-time trusted advisors in person or the difference of some answers at the beginning of a session versus at the end (and the difference in responses which sometime arise between spouses).

    Perhaps the most difficult topic is the necessity of completing FIT. While the answers given to FIT and BCU cannot result in a senior not receiving a counseling certificate, not completing them could. In other words, if the senior objects to providing information, the counselor cannot provide a certificate stating that counseling has been completed. This is not a pass-or-fail issue; it is a completed-or-not-completed issue. While objecting to such questions may be rare, it can occur.rnrnWhile a detailed budget is not required as part of counseling, it can very helpful in prepping prospects for counseling. Shannon Hicks has prepared a detailed budget schedule and readers can obtain a copy at Reverse Fortunes. rn

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