HECM Counseling: What Percentage Never Close a Loan? [Poll]

There is a wide range of estimates when it comes to the number of potential borrowers who go through HECM counseling but never actually close a reverse mortgage loan. The data can be skewed due to seasonal shifts in counseling as well as industry influences and changes.

Some industry estimates place the percentage of those who go through counseling without ever closing a loan at a range from 20-25% and up, but many lenders and originators have told RMD they believe the percentage is much lower.

In your experience, how many potential borrowers go through counseling but never end up closing the loan? Take our poll and tell us what you think.

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  • This is a sort of silly poll to gather from less than reliable sources.

    Industry leaders and servicers were proclaiming that 1% or less of all HECMs outstanding were in default for taxes and insurance just months ago. Their estimate was about one-fourth of the currently believed number.

    The only way this kind of information can have any kind of reliability is if we had the total number of HECM counseling sessions for a specific period and could compare that to the number of FHA HECM Case Number assignments for the same period.

    We really do not know how many seniors go to counseling before meeting with originators. Only counseling can provide the number of counseling sessions. It is important to remember that if a counselee does not complete the session no certificate is issued.

  • This is information that is tracked in FHA Connection.  57% of the “Counseling Events” i had in fiscal year 2010 ended up being “Endorsed” by HUD.  86% resulted in a case number being assigned.  67% of those that had a case number assigned ended up being endorsed.  I suspect most other counselors have similar results.  And just based on the number of nightmare appraisal stories I’ve heard when making follow up calls, I think it’s pretty naive for anyone to think less than 30% of people who go through counseling don’t close.

  • At my counseling agency, we do track counseling sessions and about 25% of them do not result in the client obtaining a reverse mortgage. I’d also like to point out that almost every client who calls us has already spoken with and obtained loan estimates from a lender. Unfortunately, if the client requests that the fee for counseling be financed, and they don’t obtain the loan, we’ve ended up providing free counseling.
    With the funds for housing counseling being cut, I imagine that this will be a much bigger issue for counseling agencies in the future.

  • I must admit my ignorance regarding the relationship of FHA with counseling.  But one thing this thread points out is that rate of endorsement coming out of counseling varies widely.  At first glance one would think that might have to do with regional issues but since the vast majority of counseling is done over the phone how could that be?  So what is the difference?
     
    What is also pointed out in this thread is the nonsense about the most teachable moment and counseling as the very first information point when it comes to seniors learning about reverse mortgages; get real.  It seems that those who speak in such terms are creating programs for things that do not exist and never could.  Seniors do not live in vacuums or bubbles.
     
    Face it, who goes to counseling before they have heard anything about reverse mortgages?  This is a myth which is damaging to the pragmatics of the program.  It is the dream of social engineers who believe we have no investment in the seniors who call us.  They have no investment in marketing and other costs so they pontificate about a make believe world of their own creation.  These are the leaders in counseling.
     
    While I strongly advocate counseling, I do repudiate the myths which are floating around by those who would dominate this arena.  They want to change something that the economic dynamics will not allow.  These individuals are the people of La Mancha (Don Quixote).  They are worrisome since they so strongly influence the make up of counseling today.  How can they enforce when a senior first learns about HECMs?  I guess they want us to drop our marketing and seminars.  They are only fooling themselves.
       

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