HECM Counseling Protocol Brings New Tools and Education Materials

When the new HECM counseling protocols are rolled out in September, all Department of Housing and Urban Development counseling agencies must give clients a new 28 page consumer booklet on reverse mortgages from the National Council on Aging.

In addition, HECM counselors must complete an extra level of financial assessment to help prospective borrowers gain a greater understanding of financial risk and other factors that may impact their loan.

“We are pleased to work with HUD to provide additional education and support to older adults seeking to tap their home equity through a reverse mortgage,” said Barbara R. Stucki, Ph.D., vice president of Home Equity Initiatives for NCOA.  “We created these new tools to help older homeowners better understand their options and risks in using what is most often their most valuable financial asset – their home.”

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The tools include NCOA’s booklet, counseling tool, and BenefitsCheckUp.org, an online benefits screening service.  Free copies of the NCOA booklet, Use Your Home to Stay at Home, can be downloaded at the website in English or Spanish or lenders can purchase printed copies of the booklet.

According to NCOA, the Use Your Home to Stay at Home booklet educates consumers on the benefits and challenges of using home equity to deal with financial challenges in later life. The booklet also helps consumers determine if staying in their homes is the right decision for them, understand the trade-offs of using a reverse mortgage versus other home loans, and provides information on government programs that can help them stay at home.

Reverse mortgage counselors will also be required to complete a budget review with their clients, using NCOA’s Financial Interview Tool (FIT).  Developed and tested by NCOA, the tool helps 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.  Seniors with incomes below 200% of the federal poverty level will also be required to complete BenefitsCheckUp.org as part of the counseling session.  NCOA’s BenefitsCheckUp is a web based service to screen for more than 2,000 benefits programs for seniors with limited income and resources.

“Through this holistic approach we hope to facilitate discussions and decisions that are based on life of the borrower, and not just the cost of the loan,” said Stucki.  “FIT helps older homeowners consider all of their financial obligations and how they will meet them on an ongoing basis.  Through BenefitsCheckUp, they can learn of services and benefits that can be an alternative or supplement to a reverse mortgage.”

For additional information on FIT, see RMD’s coverage here and here.

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  • Given the originator’s role in both assessing the suitability of a HECM for a given borrower and preparing that borrower for the new counseling protocol, can anyone explain why reverse mortgage originators are barred from viewing the FIT tool?

  • Is the new protocol holistic? rnrnThe Merriam Webster online dictionary defines holistic as: u201c1) Of or relating to holism and 2) relating to or concerned with wholes or with complete systems rather than with the analysis of, treatment of, or dissection into parts.u201d Holism is then defined as: u201cA theory that the universe and especially living nature is correctly seen in terms of interacting wholes (as of living organisms) that are more than the mere sum of elementary particles.u201drnrnWhile the new approach is certainly more comprehensive to all HECM borrowers, holistic it is not. In fact it appears to be just the opposite. All the new protocol does is enhance what was already there and enlarge it to include FIT and possibly BCU (where it is required or the borrower voluntarily participates).rnrnTo be holistic requires far more than using memory to gather information. It also requires a complete review of finances, health, family relations, inheritance issues, understanding the risk tolerance of the borrower, income tax situations, investment portfolios, relationships with spouses or significant others, and on and on it goes.rnrnFIT and BCU are skewed. They are designed to superficially help the needy. Their emphasis has social service overtones. That is not bad and in some cases could be very helpful. rnrnIf our industry is successful in bridging to the financial community, this demographic dynamic is hardly addressed in the new counseling regime. Counselors are not and should not be expected to be experts in such matters. Those counselors who take on that mantle will rarely do more than create confusion.rn

  • Given the originator’s role in both assessing the suitability of a HECM for a given borrower and preparing that borrower for the new counseling protocol, can anyone explain why reverse mortgage originators are barred from viewing the FIT tool?

  • Is the new protocol holistic? rnrnThe Merriam Webster online dictionary defines holistic as: u201c1) Of or relating to holism and 2) relating to or concerned with wholes or with complete systems rather than with the analysis of, treatment of, or dissection into parts.u201d Holism is then defined as: u201cA theory that the universe and especially living nature is correctly seen in terms of interacting wholes (as of living organisms) that are more than the mere sum of elementary particles.u201drnrnWhile the new approach is certainly more comprehensive to all HECM borrowers, holistic it is not. In fact it appears to be just the opposite. All the new protocol does is enhance what was already there and enlarge it to include FIT and possibly BCU (where it is required or the borrower voluntarily participates).rnrnTo be holistic requires far more than using memory to gather information. It also requires a complete review of finances, health, family relations, inheritance issues, understanding the risk tolerance of the borrower, income tax situations, investment portfolios, relationships with spouses or significant others, and on and on it goes.rnrnFIT and BCU are skewed. They are designed to superficially help the needy. Their emphasis has social service overtones. That is not bad and in some cases could be very helpful. rnrnIf our industry is successful in bridging to the financial community, this demographic dynamic is hardly addressed in the new counseling regime. Counselors are not and should not be expected to be experts in such matters. Those counselors who take on that mantle will rarely do more than create confusion.rn

  • Given the originator’s role in both assessing the suitability of a HECM for a given borrower and preparing that borrower for the new counseling protocol, can anyone explain why reverse mortgage originators are barred from viewing the FIT tool?

  • Is the new protocol holistic? rnrnThe Merriam Webster online dictionary defines holistic as: u201c1) Of or relating to holism and 2) relating to or concerned with wholes or with complete systems rather than with the analysis of, treatment of, or dissection into parts.u201d Holism is then defined as: u201cA theory that the universe and especially living nature is correctly seen in terms of interacting wholes (as of living organisms) that are more than the mere sum of elementary particles.u201drnrnWhile the new approach is certainly more comprehensive to all HECM borrowers, holistic it is not. In fact it appears to be just the opposite. All the new protocol does is enhance what was already there and enlarge it to include FIT and possibly BCU (where it is required or the borrower voluntarily participates).rnrnTo be holistic requires far more than using memory to gather information. It also requires a complete review of finances, health, family relations, inheritance issues, understanding the risk tolerance of the borrower, income tax situations, investment portfolios, relationships with spouses or significant others, and on and on it goes.rnrnFIT and BCU are skewed. They are designed to superficially help the needy. Their emphasis has social service overtones. That is not bad and in some cases could be very helpful. rnrnIf our industry is successful in bridging to the financial community, this demographic dynamic is hardly addressed in the new counseling regime. Counselors are not and should not be expected to be experts in such matters. Those counselors who take on that mantle will rarely do more than create confusion.rn

  • Is the new protocol holistic? rnrnThe Merriam Webster online dictionary defines holistic as: u201c1) Of or relating to holism and 2) relating to or concerned with wholes or with complete systems rather than with the analysis of, treatment of, or dissection into parts.u201d Holism is then defined as: u201cA theory that the universe and especially living nature is correctly seen in terms of interacting wholes (as of living organisms) that are more than the mere sum of elementary particles.u201drnrnWhile the new approach is certainly more comprehensive to all HECM borrowers, holistic it is not. In fact it appears to be just the opposite. All the new protocol does is enhance what was already there and enlarge it to include FIT and possibly BCU (where it is required or the borrower voluntarily participates).rnrnTo be holistic requires far more than using memory to gather information. It also requires a complete review of finances, health, family relations, inheritance issues, understanding the risk tolerance of the borrower, income tax situations, investment portfolios, relationships with spouses or significant others, and on and on it goes.rnrnFIT and BCU are skewed. They are designed to superficially help the needy. Their emphasis has social service overtones. That is not bad and in some cases could be very helpful. rnrnIf our industry is successful in bridging to the financial community, this demographic dynamic is hardly addressed in the new counseling regime. Counselors are not and should not be expected to be experts in such matters. Those counselors who take on that mantle will rarely do more than create confusion.rn

  • Given the originator’s role in both assessing the suitability of a HECM for a given borrower and preparing that borrower for the new counseling protocol, can anyone explain why reverse mortgage originators are barred from viewing the FIT tool?

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