Peter Bell, the president and CEO of the National Reverse Mortgage Lenders Association (NRMLA), testified on a panel of witnesses in the HUD and NeighborWorks Housing Counseling Oversight hearing on Wednesday, requesting support for HECM counseling funding.
In his prepared testimony, Bell focused on what he called a relatively small niche in the whole scheme of things: pre-application counseling that’s required for older homeowners who are contemplating getting a reverse mortgage. With housing counseling funds due to run out in the next couple of weeks, ensuring a continuation of funding is paramount.
“Counseling has become a hallmark of the HECM program,” Bell said in his written testimony. “It is a very effective consumer safeguard and its impact can be seen in the limited and isolated number of instances where there has been evidence of fraud or elder financial abuse within the HECM program.”
Wednesday’s hearing had two panels of witnesses, which, in addition to Bell, included Deborah Holston, Acting Deputy Assistant Secretary for Single Family Housing for HUD, Eileen Fitzgerald, CEO of NeighborWorks America, Candy Hill, Senior Vice President of Social Policy and Government Affairs for Catholic Charities USA, and other leaders of organizations that provide housing counseling.
Holston called HUD counselors an “invaluable resource” for seniors hoping to obtain reverse mortgages, pointing out that there is no other federal funding source dedicated to these types of counseling.
“Without continued support from HUD, agencies will be left with no choice but to significantly scale back these counseling services, lay off housing counselors, and in some cases close their doors. As more Americans retire and decide to “age in place,” tapping home equity will become an increasingly popular means to fund retirement,” she said, adding that HUD-approved counselors play a critical role in ensuring these services are provided to seniors at low or no cost.
Back in April, when the fiscal year 2011 budget was passed, $88 million in funding for housing counseling was slashed, including funds that would have gone toward reverse mortgage counseling. Since then, a broad spectrum of people have requested funding restoration, ranging from the Mortgage Banker Association’s chairman, Michael Berman, to the Federal Housing Administration’s acting commissioner Carol Galante, to a group of bipartisan senators, to a coalition of housing counselors.
“All in all, the cost of providing this type of HECM counseling for those who cannot afford it is small. The cost of not providing it could be great,” Bell said.
He ended his testimony by urging the members of this Subcommittee to continue to support adequate funding for HECM counseling, saying that “the counseling, both upfront before loan application and remedial counseling are critical components of the HECM process. It is important to make sure funding is there to keep this intact.”
View his testimony here.
Written by Alyssa Gerace