Need Reverse Mortgage Counseling? Get in Line, Or Pay Up

HECM counseling funding will be cut off on October 1 with the onset of Fiscal Year 2012. Now, consumers are beginning to feel the effects of an unfunded mandate.

For some consumers, it means waiting twice or three times as long for HECM counseling appointments. For others, it means the cost is going up—as early as next week.

While lenders say the wait times can slow down the loan process overall, it is the senior borrowers who are suffering most in trying to complete their counseling in a timely manner.


“As of the last three weeks or so, we’ve been hearing lots of complaints that this dynamic exists,” says Reza Janaghiri, CEO of American Advisors Group. “We’re hoping that we reestablish counseling funds for 2012 and it’s looking pretty good right now. That should help address this delay.”

Janaghiri says while it used to take two to five days for borrowers to schedule an appointment, current times are more like 10 days to three weeks.

“It’s not good for the borrower,” he says. “It’s not good for the seniors.”

Some counseling agencies have reported seeing the delay occur, in particular for those borrowers who cannot afford to pay the cost of counseling upfront. With funding getting tighter as counseling agencies use scarce funds they were allowed to roll over from the previous year’s funding allocation, one major counseling agency will cut its free counseling services as of Monday.

“We have up until now continued to offer free counseling or pay at closing,” says Barb Stucki, vice president of Home Equity Initiatives at the National Council on Aging. “Come Monday, we will be charging clients upfront.”

The upfront fee will be $135, Stucki says, which is a slight increase from the traditional $125 cost that most fee-paying borrowers have faced in the past.

For those who meet certain hardship criteria, there will still be a free option, Stucki said. Those clients, however, will have to document their hardship.

“That will take time,” she says.

NCOA will continue to hold out until funding runs out, the timing of which remains to be seen, but is inevitable, lacking funding from Congress.

“This is a classic case of ‘penny wise and pound foolish,'” says Kathleen Day of the Center for Responsible Lending. “Why would you get rid of a low-cost, effective mechanism that explains to people in English what’s impossible to understand?”

“If there is no more HUD funding, we’ll have to think of some more creative solutions,” Stucki says. “We just have to make sure it does not compromise the quality of the counseling.”

Written by Elizabeth Ecker

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      • REVGUYJIM,
        Three days old and you are just now complaining?  You have to be kiddin’.
        REVGUYJIM, I would put Raymond’s knowledge of the industry up against most people’s including yours.  Even RMD seeks out his opinion.  When is the last time it published your opinion in an article or that of The_Cynic, pray tell?  Raymond is extremely knowledgeable about the industry.
        If that question hurt Raymond’s feelings (LOL), he can speak up and I would apologize.  If it cut down on the respect people have for him, I WILL apologize.  My brother and I kid each other using that kind of language a lot.
        Look this is a blog and unfortunately I think you are just looking for a fight.  Forget it.  The question was not directed to you or at you.  It was specifically written to a guy I blog with far more than I have ever blogged with you.  His NAME is RAYMOND Denton.

        From a grouchy old cynic.

    • HUD allows agencies to charge a fee that reflects their actual cost of providing counseling.  If that is higher than $125, that is fine, as long as the agency can document the costs.  Now that sessions are taking longer and longer, and HUD keeps imposing more onerous data-collection and record-keeping requirements, it’s only right that agencies should be able to charge more.

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