Addressing the Fuss Over the Financial Interview Tool

NewImage.jpgOver at National Mortgage Professional, Atare E. Agbamu, writes about all the “fuss” over the Financial Interview Tool.

As part of the new HECM Counseling Protocols released by the Department of Housing and Urban Development, counselors are required to use the National Council of Aging’s web based Financial Interview Tool (FIT) to create a budget for the client based on their income, assets, debt and expenses.

Using FIT, counselors ask a series of questions to help the client report income, debt, and expenses to illustrate their current financial situation and determine how a reverse mortgage might assist them in meeting their needs and goals.

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Some in the industry are not a fan of the new tool and Agbamu takes a look at seven of the issues in his article.

Fuss # 1: FIT is addressing a demographic that no longer exists (field data says average HECM borrower age is now 63).

Counter-Fuss: Younger borrowers are taking out fixed-rate Home Equity Conversion Mortgages (HECMs). As other products are developed, the demographic profile of borrowers may change again. FIT reminds seniors that their life circumstances may change rapidly because of an accident, illness or the loss of a spouse.

Fuss #2: FIT is too invasive. Seniors might refuse to answer the questions if a third person (family or an advisor) is present.

Counter-Fuss: Seniors can decide who will participate in the counseling session. Family members and advisors often find it difficult to discuss sensitive issues such as declining health with a senior. The FIT review may be a good opportunity to begin to address these issues and their implications for the senior’s well-being.

Fuss #3: FIT is static; it does not anticipate changes.

Counter-Fuss: As with many budgeting tools, FIT focuses on a client’s current financial situation. We may add questions about post-retirement income changes.

Check out the rest at the link below.

FIT for Reverse Mortgage Lenders: Part II … The Fuss Over FIT

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  • The author tries to make us believe that somehow FIT detractors do not understand that FIT and the ten question exam are not tied together. This is a disgraceful attack.

    The fact remains if the senior fails to answer even one of the FIT questions (no matter if the senior answers all ten questions correctly), no counseling certificate can be issued. If no one thought the questions inappropriate or intrusive, then the detractors should be harassed and treated in a demeaning fashion. As it is, even Ronni Bennett in a RMD comment stated that if she would have been asked FIT questions, she would have found another financial alternative to a HECM. Other seniors who have completed counseling but were desperate for the funds have privately made very similar remarks. One who lived under communist rule in the 60s and 70s was frightened by that portion of counseling. So once again, I reassert, FIT is intrusive and invasive.

    The author needs to validate how a budget can be produced from the questions asked in the FIT process. To answer the questions, one must have already done some basic budgeting. It is certainly not the data gathering process that BCU attempts.

    The counselor has no discretion. If Warren Buffet was to initiate a HECM, he would have to answer all FIT questions. Is that discretion? Any senior who is $1 short of the income test under FIT must take BCU whether or not that individual has other sources of income which far exceed the test or has no debt or household costs due to rented units or from payments from family members living with them along with fully funded medical care. It does not matter the payment or credit history of the senior. How does one call that discretion? There are many other examples but that should suffice.

    Unless the senior is given some idea about what FIT covers and how the individual counselor will use it to address the issues that the author has asserted which will be addressed during FIT, how will they know whom to invite to the counseling session. HUD has always tried to encourage, not discourage, family and advisors to participate in the counseling session. FIT and BCU is so intrusive and invasive, how can one responsibly encourage seniors to do that without warnings?

    It seems the author wants to argue on one side, FIT is a budgeting tool but on the other it is not that but something different. Counselors are not trained to provide the kind of guidance the author believes they can. We heard similar arguments before GAO tested counseling last year. What has changed? Maybe GAO needs to test counseling once again but this time using qualified “financial types” who understand the process.

    Quite frankly I found the left sided brain remarks of the author in several remarks and comments not only demeaning but also arrogant and intentionally insulting.

      • Atare,

        Normally, I agree with you. It hurt me to write as I did. You are a real help to our industry because of your integrity and forthrightness. There is no question you really care for seniors even at times to your own detriment. You are a gentleman and an asset to our industry.

        What I do question is why you have allowed yourself to be what appears as co-opted by NCOA. We need your independent thought and realistic evaluation of a product which is hyped as one thing while it is actually something different. FIT was never widely tested before being caught up into counseling nor was the FIT/BCU protocol ever adequately tested to see if it could be combined into one session with both younger and more importantly older seniors. The additional time detracts from the most important part of counseling, learning about the HECM products.

        I understand why Dr. Stucki takes her position. Regarding FIT, I would never be as harsh with her statements as I am with yours. I do not expect independent thought from her on the subject. She will always be what she should be, a strong supporter of NCOA and its products. Where her assessment is not tied to NCOA or its statements, I very much respect Dr. Stucki for her strong and independent thought; outside the NCOA context, I would be as hard of a critic regarding her statements as I am in regard to yours now.

        Atare, we need you to be who you are. Even though I may not call you, I respect you not only as a writer, a REAL critic, a caregiver, and a leader to our industry but also in many other ways.

        Please don’t let us down when it comes to FIT. Be independent and inquisitive. Continue challenging yourself and us with your thoughtful, independent, and inspiring writing. You are a credit to us all even when others including me do not agree with you.

      • The Critic —

        You are very kind, and I deeply value your feedback. I still believe we should talk whenever you are ready.

  • I primarily agree with The Critic and have my own comments on the FIT. I am a counselor, so I have been using the FIT since it came out. I agree that it is terribly intrusive. I also agree that seniors may not want to answer the questions with a family member present. To at least try to deal with this, I send the entire FIT questionnaire out to the senior with my initial welcoming packet. However, that still does not guarantee that the senior is being truthful, or just saying what they think I want to hear.

    The real problem, in my mind, is that the FIT really is not a financial tool at all, nor is it a decent predictor of whether or not a reverse mortgage is right for someone. The financial questions are, at best, minimal and basic. The health questions, while somewhat useful in HECM counseling, are not the best predictor of whether or not a HECM is a good idea. The other questions are somewhat useful as conversation starters, but not in predicting whether or not a HECM is a good idea. Since using the FIT, I have had upwards of 30 counseling sessions (we are a small agency and don’t do a lot of counseling). In that time, the vast majority of FITs in these sessions have given a result of “3″ on a 1-5 scale where “1″ means that the HECM will be more challenging now and in the future and that “5″ means someone is a good candidate. The one “2″ was, in my personal opinion a good candidate for a HECM. The FIT said no because she was 98, in poor health, had no money, had physical barriers in her home, and needed care givers. The woman was 98, she is dying, and she wanted to die in her own home. She had approximately six months or so to live, and even using a term payment to get what she needed, rather than a tenure payment, the HECM was going to out last her by about 5 years. Similarly, the FIT gave a “4″ to a person who I thought was a bad candidate for a HECM. The man was in his early 60’s and wanted the HECM to get his son out of foreclosure. However, all of the other factors stacked up in his favor, so the FIT gave him a “4.” While the counselors should not ever tell people whether or not they should take a HECM, they should be educating the consumer to the point the consumer can make this decision effectively and fully informed of why they are making the decision.

    The FIT is a generic tool and I am afraid that too many counselors will just have people fill it out and miss the part where they really should be counseling. Further, the FIT does not address the senior’s budgeting or spending habits. Changes there may reduce or eliminate the need for the HECM at this time. I have my clients fill out an actual budget showing where they spend their money. This gives me as a counselor a better grasp of what is going on in the senior’s life and how good a fit the HECM will be; this is something that I discuss very carefully with my clients.

    I admit that I do find the Benefits Checkup to be very useful and I have used it with everyone of my clients, regardless of income. In all but one case, it found programs that a senior could take advantage of in the area. I agree that it is intrusive, but I believe it to be helpfully so. As with the FIT, I also send it out to seniors ahead of time so that they can answer the questions in their home privately.

    One thing about both the FIT and the Benefits Checkup that is a major issue to me is that of senior fatigue. There comes a point where the senior either is not paying attention, or is just so overwhelmed that they cannot continue to pay attention. My average counseling session, prior to the new protocols ran close to and often over an hour. Now I am running close to an hour and three quarters to two hours. At what point to we have to break these sessions into two just so the senior can sit through them? And where does that leave a senior trying to stave off foreclosure? I send the majority of these questions out ahead of time, I don’t know how counselors do it who try to do the FIT and/or Benefits Checkup in the counseling session for the first time.

    Frank J. Kautz, II
    Staff Attorney

    Community Service Network, Inc.
    52 Broadway
    Stoneham, MA 02180
    (781) 438-1977
    (781) 438-6037 fax
    [email protected] –work
    [email protected] –private

  • I agree with The Critic. The author was very dismissive of our concerns and failed to cover several areas. I can’t help but label this article as a propaganda spin piece.

    On several occasions clients have called us to repeat what counselors have told them and it has been blatantly false or downright inappropriate. The counselors are not trained enough – most barely know the program – and should not be giving out financial advice. And it is advice they are giving out, not just repeating scripted information and quizzing. It’s astounding that we all have to go through the NMLS ordeal and, in the case of California, have a real estate license, and these counselors do what? Take a seminar, pass a remedial or vague test of some kind? One of our homeowners was a retired accountant and called us after the counseling astounded at his session. He told us that they were complete idiots and were a waste of his time – that he should be counseling them on the program.

    The author failed to address another issue. The fact that seniors are adults and this “tool” is treating them like children. While there is the occasional senior who is vulnerable to be taken advantage of, there are many homeowners who are the exact opposite. Many of our homeowners are in their early sixties and are computer literate and financially astute. This process pretty much shouts “You don’t know what you’re doing!” at them. Counseling isn’t required for any other loan a senior or younger adult applies for and for good reason. They are overstepping themselves.

  • I took an application for Ms. Brown two days ago, and both Ms. Brown and her son attended the counseling session. I asked how the session went and they said it went well and was very informative – they really liked it. They said their Counselor estimated the session to last 90 minutes, but they finished 10 minutes early. I thought 80 minutes would be too long, but they didn’t have a problem with the timeframe.

    They’re not the only clients I’ve asked that question of recently, and so far I’ve received the same positive repore from all my clients … I’m really surprised.

    The Counselor for Ms. Brown was Manuel Perez from Springboard – and I’d like to say a personal “thank you” to Manuel. I hope everyone who attends counseling gets a Counselor like Manuel for their counseling sessions, because the Brown’s really appreciated the quality time they spent with him.

    • Raymond,

      How old was Ms. Brown?

      I generally find that younger seniors with less independent personalities are better suited for the new counseling marathon. Also we find it is shorter and easier on the seniors if we prepare them in advance for counseling.

      I know Dr. Stucki strongly believes that lenders should not be explaining HECMs before meeting with the counselor but that literally makes no sense. Many of us hold seminars and get calls from seniors with specific questions. Are we supposed to turn them over to counselors before answering the questions they have or have counselors make the seminar presentations?

      This “teachable moment” concept I have heard that she promotes no doubt exists but there is no practical way of ensuring that it will be preserved for counselors. Seniors read articles and books on reverse mortgages. They see ads on TV and in the mail. They talk to family, friends, and neighbors. They watch segments on the news. They watch DVDs. They search the Internet. They look at the AARP website and use its calculator. They read booklets from AARP and NCOA. They seek the advice of trusted professional advisors and on and on it goes. So who gets this critical “teachable moment?” It will rarely be the counselor.

      My explanations may be different than a counselor’s but responses differ between counselors as well. Most of the issues we cover with seniors before they meet with counselors are the generic matters not about the aspects where our products differ from those of our competitors at least generally not before meeting with a counselor. Most need an idea if they should be looking at a HECM as an answer. We find that counseling takes far less time and is more productive if we provide some preparation to seniors in advance of counseling.

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