HUD Publishes New HECM Counseling Mortgagee Letter

The Department of Housing and Urban Development published Mortgagee Letter 2010-37 on Tuesday.

According to the ML, lenders are required to provide each client with a list of HECM Counseling agencies and it must include no fewer than nine HUD-approved counseling agencies.

Within one business day of requesting an FHA case lender, a lender should complete the HECM referral list update in FHA Connection.  The screen must be completed prior to a HECM loan being endorsed for insurance says HUD.

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Lenders are now required to input the nine agencies that the lender provided on the list given to the client.

The guidance provided in the ML is effective for case numbers issued on or after February 1, 2011. Lenders may opt to begin using these screens on November 22, 2010, however, it is not required until February 1, 2011.

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  • I would really like an explanation on this as it appears to be yet another useless requirement that was probably endorsed by some want to be senior advocate politician. Requiring us to enter this into FHA Connect within 1 day of assigning the case number, what happens if we don’t, we are out of compliance and therefore no one of the “Bad Apples” that is running amuck ripping off the seniors? It seems like more and more these new guild lines are put in place to trip us up and create more unnecessary work. Lately about half of my new clients have already done the counseling by the time I even talk with them. This is do because they went to a seminar or already talked to someone but for whatever reason chose not to go with them, I had nothing to do with getting them into counseling!
    When will all the madness stop, that is the real question?

    • EricSD,
      Good luck getting an explanation. Has there ever been an explaination from HUD or politicians? They do what ever they want and we have to deal with the useless, un-necessary regulations from someone who has no idea how our industry currently works. The new processes just keep coming and they are getting better and better each time. Making our jobs to be paper pushers. Good luck!

  • This step is meant to provide some level of accountability for lenders and ensure that they are not inappropriately steering clients to a particular counseling agency. As a counselor, I have spoken to a number of clients who were not appropriately informed by their lender about their options for counseling, were referred to agencies a hundred miles away rather than in their same town, were told that they had to receive counseling by phone when there are counselors available locally to meet face-to-face, etc. As things stand today, there are no checks on lenders. This provision, while might not be enforceable (and lenders could just decide to lie, I suppose), at least forces them to think a little about the referrals they are making.

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