Bill to Require in Person Reverse Mortgage Counseling Introduced

California reverse mortgage borrowers may be required to obtain HECM counseling in person if a new bill becomes law.

Introduced by Assemblymember Susan Bonilla (D-CA), AB 2010 follows the Department of Housing and Urban Development’s guidelines but goes one step further and requires the prospective borrower meet with a counselor face-to-face.

“A lender shall not accept a final and complete application for a reverse mortgage loan from a prospective applicant or assess any fees upon a prospective applicant without first receiving a certification from the applicant or the applicant’s authorized representative that the applicant has received counseling in person from an agency,” says the bill.


The bill comes at the request of the California Senior Legislature, a nonpartisan senior organization, a spokesperson for Bonilla told RMD.

“It was one of their top 10 proposals and they came and requested the assemblywoman to support their effort,” said Luis Quinonez, Bonilla’s spokesperson.

Massachusetts passed a similar law that requires certain reverse mortgage borrowers to obtain face to face counseling in 2010. The state has run into problems due to the lack of availability of reverse mortgage counselors to perform face to face sessions. But as far as California encountering similar problems,  it’s not expected to be an issue, according to Quinonez.

“We have done some preliminary inquiries and don’t see any concerns about the lack of resources to conduct [these counseling sessions] in person,” he says.

The bill may be heard in committee on March 25.

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    • Raymond,

      But what will be the cost of going to the home of the counselee?  If there are sufficient counselors, I like the idea but how will lost time in commuting and the transportation costs themselves be compensated.  Perhaps California will be the first $400 counseling fee state if counselors are required to visit counselees.  I doubt if that counseling will be for free.

      I have customers who will not drive more than a few miles and some who will not drive at all.  Face-to-face counseling would seem quite difficult but who knows???

      Massachusetts is a very small state area wise.  California is much much larger with many areas where traveling is difficult at best.  So how is it that face-to-counseling will be easy in California?  Trust a politician to be, well, a politician.  

  • There are 26 HECM counseling agencies listed by HUD in California (some of which are actually branch offices of the same larger agency), with 100+ HUD HECM Roster counselors in the whole state.  As you might expect, these counselors are not equally distributed around the state.  It may not be a problem for clients in San Diego or other large cities to get a face-to-face counseling session, but it may be a big problem for clients in more rural areas.  Speaking as a counselor in North Carolina, the only state which has been providing face-to-face counseling near-exclusively since the inception of the HECM program, I think that the legislator is vastly underestimating the difficulty of providing face-to-face counseling in a state as large as California.

    I do think there is tremendous value in face-to-face counseling, having had extensive experience with both telephone and in-person approaches, but it is not at all easy to make this happen for every client.  I hope that, if this bill passes, some thought will be given to how it can be implemented, when and how to make exceptions, etc.  In particular, I hope they think about funding for counseling agencies, so that they can afford to do things like make home visits for clients who are unable to travel.  A face-to-face session takes longer than a telephone session, and a home visit takes longer than a face-to-face session in the office, even if you don’t count the travel time.  Once you add in the travel time, it is not unusual for me to spend 5 hours doing one counseling session if I’m doing a home visit.  Clients can’t afford to pay for that.

    •  There are actually only 85 individuals on the roster (Springboard in Riverside is listed twice with the same 15 names).    I think we can all agree that, in an ideal world, face to face is best.  But it is naive to believe that it is even possible.   At the end of the day it is the quality of the counseling, not the method of delivery, that is important

  • Hi Eric,

    Since you ask, I have been doing face to face counseling sessions for more than six years.  I am doing nearly a hundred a year (we are a small agency and I only do HECM counseling 2 days a week), so I can say that I have a reasonable amount of experience to answer your questions.

    “So now we are going to ask our seniors to drive to a counselor or the counselor will have to drive to the client?”

    I have been having people meet me in my office for the past 6 years.  The vast majority of people have not had a problem with this.  I have gone out to visit two people who are house bound and within my agency’s normal area of service.  However, since our offices are in a Senior Center which is accessible, it is very rare that we do go out.

    “How many are they going to be able to do a day?”

    I do three counseling sessions a day.  I set aside 2 hours per session, with one in the morning from 9:30 to 11:30, one from 1pm to 3pm, and one from 3pm to 5pm.  It usually takes me about ninety to a hundred minutes for a counseling session.  (I had two that lasted forty to forty-five minutes, but one was with a man who sold these loans for a living who knew as much or more than I did and the second was with a bank vice-president who did know more than I did about them.)  I have had a couple of people that went close to two hours in one session, but I always will stop it at that point and get them to come back.  Senior fatigue (not too mention counselor fatigue) is a reality that any good counselor should account for and deal with in session.

    “What will the cost be and who will pay for this?”

    The cost is the same, $125.00.  However, if I was going from door to door, it would probably be a lot more as I would have to cover gas and additional time.  Ultimately the client will pay for it or it will have to come from the government.

    “Can anyone explain how doing counseling in person is more effective than over the phone?”

    Yes.  When I counsel over the phone I have no control of the situation.  I cannot look into a person’s eyes and see that they understand.  I do not know who else is present or on the phone with them (unless I am told), so I don’t know if someone is feeding the client answers or if someone is threatening the client to make sure they answer in an acceptable way.  In short, I know that when people leave my office that they understand what they are getting into when they take out a reverse mortgage.  I could never say that with the same level of reliability when it came to phone counseling.

    “Maybe it should be required that the LO deliver the application and disclosures in person to be signed?”

    Maybe, but ultimately I still think in person counseling is the best choice.  I recognize its limitations in some places (where people have to drive 200 miles to see a counselor), but it remains my preferred method.  I wouldn’t mind trying it via a web cam conference or something similar, but I still like having a person in front of me.

    “How is doing counseling in person going to make them more transparent?”

    It doesn’t really, what it does do is make sure that the person taking the HECM knows what they are getting into before they get into it.  That is the real goal of counseling.

    “How much more transparent does our Industry have to be, what is it that they do not understand?”

    This is really two questions, so as to how much more transparent does it have to be?  As transparent as possible.  You are dealing with a population where a significant percentage are vulnerable to being cheated, coerced (either by brokers or by their own family members or friends), or otherwise taken advantage of.  That, in itself, requires more safeguards than normal.  Further, looking at the current mess the forward mortgage industry is in, I am of the belief that counseling should be required on every mortgage for over fifty thousand dollars, if not on every loan, period.  Way too many consumers have no clue what they are getting into when they sign a loan note, whether it be for a mortgage, a HECM, a payday loan, or a car loan.  They don’t really understand the terminology, the costs, or the payments.  They just know that they need money right now and they can worry about paying it later.  However, I cannot change the whole industry and I am not sure that I would if I could.  People, in general, have to take some personal responsibility.  When it comes to specific populations, such as Seniors, I can see where the extra step is vitally important.

    As to what there is that people don’t understand?  There are a myriad of things that people don’t understand.  Look how many myths still, after more than twenty years, still prevail.  Look how many brokers push fixed mortgages when, for at least 75% of the population, they are an incredibly bad deal.  Heck, not even all of the brokers I have met really understand the difference between fixed rates and adjustable rates when it comes to HECMs, they are still thinking in the terms of forward mortgages.  Ultimately, HECM’s are a far newer product than a standard mortgage and they have not yet hit that critical mass where they are as understood by the general public.  Someday that will happen and counseling may no longer be needed, but until it does, we must still jump through the hoops.

    Frank J. Kautz, II
    Staff Attorney

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

  • Reverse Mortgage counseling groups in California should ask the bill’s authors and sponsors to appropriate state funds to support the    in-person reverse mortgage counseling requirement. To mandate face-to-face counseling (a good thing) without the necessary funds to support the process is counterproductive.

  • Frank,

    you for the well thought out response to my somewhat knee jerk rant (the
    monitor has already admonished me). I do understand what you are saying to some
    degree, the problem I have is that this puts a lot of pressure on the
    counseling system and I do not believe that the reason this bill is being
    introduced is for these reasons. Too many bills are written and voted on
    without merit and only for political posturing. I doubt very much that Ms.
    Bonilla knows much if anything about what we do or how we do it. I am with you
    on the part about looking someone in the eyes as that is how I meet with 90% of
    my client’s, face to face to make sure I go over everything and they understand
    it. One thing that you did not address is how far out are your appointments
    scheduled? If a senior calls in today when would be the soonest you could see
    them? As it is now even with phone counseling they are 3 to 10 days and when we
    get an urgent deadline (like MIP changes) it can be 2 weeks or more. I am
    against more bills, more layers and delays, and more costs. As to your remark
    about LO’s themselves being completely educated, I would agree as I see this
    more and more when I come up against competition. I have always been for
    specific licensing for all (including federally chartered banks) Reverse
    Mortgage professionals. I do believe we are as transparent as we can be and
    need to be at this time, there is no need to create more rules which at this
    point will only cloud the vision. Also, I do thank you for not addressing my
    part on the lender delivering the cash to the borrower in an armored car,that
    might have been a little much!

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