Over 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.
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.