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.”
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.”