HUD Warns Reverse Mortgage Counseling Agencies of Marketing Violations

The Department of Housing and Urban Development sent a notice to counseling agencies warning them of prohibited marketing practices it has seen recently.

According to HUD, a number of agencies that provide Home Equity Conversion Mortgage (HECM) counseling are marketing their services directly to lenders and requesting they place their name at the top of the list lenders are required to provide to borrowers.

“Marketing to lenders in this manner is a violation of program requirements,” said HUD in an email obtained by RMD. “As Mortgagee Letter 2011-26 states, lenders are prohibited from steering a prospective borrower to a particular HECM counselor or agency for counseling. This marketing gives an appearance of a conflict of interest between the HECM counseling agency and the lender.”


Borrowers who obtain counseling from agencies using these methods are often not receiving adequate counseling said HUD.

“HUD has determined that in many of these cases, the length of the counseling session is 30 minutes and is not effective counseling,” said the agency. “The client does not get the quality of service for which they are paying. The information in the HECM Counseling Protocol that is required to be covered during the counseling session cannot be conveyed by the counselor and understood by the client in less than 60 minutes.”

The agency has not taken action against counseling agencies for these types of marketing practices said a spokesperson for HUD in an email to RMD.


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  • With 30 minute counseling it is now more certain than ever that FIT is doing its job and helping counselors engage in a more holistic approach to discussing the overall financial picture of seniors.  In that 30 minutes there is no question but that strong and appropriate budgets are being produced from which seniors can manage their finances.  If it were not so serious I would note this as LOL.

    Is there any question why some have expressed alarm about the fallout rate in certified counselees?  I just read the next article in which some are claiming that 2012 will be the year we get past 70,000 endorsements again.  Based on current trends, will we even hit 60,000 endorsements for either year end?

    While FIT is not the most significant cause for low endorsement volume it is no help either. Are seniors really being helped by it?  This is something the HUD Inspector General should be investigating.  Once again counseling seems less than adequately managed. 

  • I’ve had more than my share of folks ask me “are you kidding me” with the childlike discussion they had with their counselor.  NOT ALL have said that and I commend those organizations that can break it down in the logical sense- so maybe it can be done in 30 minutes.  But maybe WE are doing a good job educating them as well- I’d like to think that anyway.

    • weathone,

      This is not a question about who is doing what but rather based on the required protocol, are counselors putting in sufficient time to cover it?  Just because we might be educating, that does not necessarily mean seniors are absorbing it.  

  • This e-mail
    from HUD also stated you can’t tell anyone you can provide counseling within 24
    hours. Why wouldn’t you want at least one agency on your list that could get to
    your client within 24 hours? What if it’s a senior in foreclosure and waiting
    for counseling will cost them their home? Why wouldn’t you want at least one
    agency on the list that could finance for the senior and counsel them within 24
    hours? Some seniors don’t start the process until it’s almost too late. Isn’t
    this supposed to be about what’s best for the seniors?


    Please tell
    me the issue with providing good customer service in a timely manner?  I can’t speak for everyone but the way
    most of these agencies are doing the actual sessions in 30 min is that they are
    having certified counselors do the input. When the input takes place it takes
    about 25mins and covers most of the time consuming and data entry of the
    session. Then they set a time within 24hrs to have another Sr counselor to call
    back and do the rest of the required information.

    This takes
    an additional 30-60 mins depending on how many questions the senior and family
    have. This allows us to maintain the clients attention throughout out the whole
    process without it being a miserable experience. However when the Sr counselor
    creates the actual cert they are only including the actual time that they spoke
    to the customer, not the time the client spoke to the first counselor that did
    the input and half of the session which is why HUD believes these sessions are
    only lasting 30 minutes total because that’s what is reflected on the
    certificate. The real issue here is that there are some agencies out there
    looking at trying to make these sessions more efficient for the senior and are
    under fire because of it.. Unfortunately, the national intermediaries out there
    that are getting the majority of the fed funding and are required to be on
    everyone’s list and can’t compete with the service. Therefore, they use their
    influence on HUD and the industry to push their agenda. They can’t do it in
    24hrs they can’t have the certs to the lender’s within an hour of the session
    being done and e-mailed or faxed to the borrower if they have that capability
    and out in the mail the same day. So the intermediaries go to HUD and accuse
    the ones who can of doing it “wrong” or having an inappropriate
    relationship with the lenders (i.e. Steering) and in reality it’s good customer
    service and an agency answering when the customer calls. If they are going down
    the list and one agency says it will be 2 weeks, the next one they call says 24
    hours, they are going to use that one. That’s not steering, that’s good
    customer service.


     Maybe if the national intermediaries weren’t
    doing so many different things they could focus on being better and more efficient.
    Why would it be wrong for a valid agency to advertise or request to be added to
    the top of the list? It’s because the national intermediaries are already on
    the top of everyone’s list and they don’t like a agencies getting in on their
    turf. HUD lays out everything that has to be done and covered and says it can’t
    be done in thirty mins but there are better ways other than forcing a 80 year
    old to stay on the phone and pay full attention for over 60 min at one time.
    Crazy. Doesn’t work. They are totally burned out. The bottom line is that the
    big guys can’t compete with the service and don’t intend to. They are trying to
    get Internet sessions and large conference call sessions approved to compete.
    You can’t tell me the majority of seniors prefer to do a conference call or a
    Internet session rather than speaking one on one with a trained professional
    where they can stop at any point and ask their questions.

  • No one says you have to stay on the phone for more than 60 minutes at a time, if that’s too much for the senior.  There is nothing to prevent you from breaking it up into whatever time periods work best for that client.   However, you can’t possibly cover everything that HUD is asking us to cover in a session, if you are spending less than 60 minutes, even if you are not counting the intake time.  Period.  The only sessions that take less time than that are the re-counseling sessions where the certificate has expired and the client still remembers all the information (rare).

    I would be happy to observe one of your counselors doing a session and I will tell you what you are leaving out.  Seriously.  I think that agencies doing short sessions, as it is clear that you are, mostly just don’t realize how much they are omitting.

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