Is the Reverse Mortgage Financial Interview Tool Starting to Pay Off?

When the Financial Interview Tool (FIT) was rolled out as part of the new reverse mortgage counseling protocols in August 2010, many in the industry felt the Department of Housing and Urban Development had gone too far

Developed by the National Council of Aging (NCOA), the tool is a guide that counselors use to ask a series of questions to create a budget for the client based on their income, assets, debt and expenses. It’s also meant to help discuss life factors such as declining health, limitations in home environments, and other issues that are important considerations when taking out a reverse mortgage.

Some claimed the process would be cumbersome and even a bit  “Big Brother,” saying that borrowers don’t need to lay out their budgets or tell a counselor when the last time they fell was in order to take out a loan. But whether or not you’re a fan of the FIT, we’re starting to see how the data can help inform the industry about its borrowers.


For the first time, a lender—MetLife—worked with NCOA to publish a report on how the profiles of reverse mortgage borrowers are changing—specifically getting younger. While data showing borrowers getting younger has been available from HUD for quite some time, the report goes deeper than any Excel spreadsheet the agency provides by asking why borrowers are obtaining reverse mortgages.

For example, the study shows borrowers who used FIT in 2010 were not using a reverse mortgage in the same way as people in 2006, when AARP conducted its own study and asked the same question. In 2006, AARP found that 70% of the survey respondents indicated that one reason they considered this loan was to improve their quality of life. Today, things are much different.

“Among HECM counseling clients in 2010, only 27% were considering a reverse mortgage to enhance their lifestyle,” said the report. “Even fewer (23%) saw the need to plan for the future as a reason to take out this type of loan. Instead, most of these homeowners wanted to lower household debt.”

Most originators might say this is nothing new; we see this with clients every day. But for the first time, the industry has a way to tap into its borrower demographics to show exactly how the clients it serves are changing without the need for AARP to do a study.

More to Come

The first report with MetLife is just the tip of the iceberg, according to those at NCOA.

“We want to spend more time analyzing the data to help HUD, counselors and the industry to better understand this dynamic population,” said an executive working on the project at NCOA.

While sources wouldn’t give me any specifics about what they have in the works, expect more to come after HUD just announced additional funding for the agency earlier this week.

For the first time, the industry has a steady stream of data about what consumers plan to do with their reverse mortgage and insight into why they’re taking out the loans. It will no longer have to rely on surveys from AARP every five to 10 years; it can see the changes sooner and adapt as needed. Lenders can also use this data to help meet the needs of borrowers that the HECM can’t.

MetLife has been rumored to have a private product in the works for the last two years, so it shouldn’t be too surprising that they’re the one interested in using this data.

Even if you’re not a big fan of FIT, hopefully a study like this shows you how the data can be applied to help inform the public about reverse mortgages and why they’re an important option for retirement.

Join the Conversation (11)

see all

This is a professional community. Please use discretion when posting a comment.

  • I am a reverse mortgage counselor. At first, I didn’t think the people I was counseling would like being prodded for additional information than we already require. But I believe the FIT Assessment has become a valuable tool to discuss the future needs of the borrowers, especially since the borrowers I have been counseling lately are younger, some are still working. They probably feel okay today, but that may not be the case in 10-20 years. But I agree with The Cynic that the FIT Assessment doesn’t talk about budget items.  It only asks about income and how much of their income comes from Social Security.  The BCU discusses their monthly budget items, such as mortgage, utilities, medications, etc., which isn’t required for everyone.  I think the budget items should be incorporated into the FIT Assessment.


    • wicklar1219,

      The Financial Assessment program is absolutely backwards. Send out the FIT report before any data can impact it (send it blank) or just dump it.  Then ask the income question.  Based on that or the desire of the counselee to participate in BCU, go to BCU then and there.

      Based on the financial data gathered in BCU, a much more relevant discussion can begin in FIT.  Expand FIT.  Make it dynamic instead of the narrow, static, stilted questionnaire it is.  Use the ideas from questionnaires which CFPs have so highly refined and made very useful.  Go beyond the ideas of social engineering and borrow from real financial planners who know how to tie in future plausible events into planning today.

      Yes, some FIT questions have significant merit but most are meager excuses for questions to determine so called “financial risk assessment.”  As my father says if it is worth doing, it is worth doing right the first time.

  • Cynic,

    Your comment is a good one. I feel you have touched on most of the critical points about FIT.

    I am with Cynic and feel that FIT should not be part of the counseling process at all what so ever. John Smaldone

    • Atare,

      We have been hearing this line for almost two years.  It is the easiest argument to make because it has little to no accountability.  Look, if something is expected to result in one thing and doesn’t, what would you call that?

      Asking non-financial questions that impact financial matters is not new.  CFPs refined that art decades ago.  So what is so great about FIT which ignored progress to go back, keep the wheel, but create the cart calling it a SUV.

      FIT is not about questions.  Its conclusion is a mathematically driven report; it is supposed to result in a budget.  So is it about the numbers or not?  Get rid of the report, do a real budget, and then we can begin to discuss qualitative value.  Before that, it is all about the numbers.

      • The Cynic —

        It is true that asking non-financial questions that affect financial matters is not new. What is new and important is its application to reverse mortgages as a common standard of practice.

        Have you talked with counselors and with seniors about FIT questions? What is wrong with trying to understand an older borrower’s life situation before lending other people’s money? “Know your customer” is a good rule in business; why should it be different in the reverse mortgage business?

        As always, your comments are thought-provoking.


      • Hello Atare,

        I too am a counselor, and like Jim, I have a lot of problems with the FIT.  First and foremost, the name.  It is not a Financial Interview Tool, it is, at best, a HECM readiness assessment tool (and I think it fails at that as well).

        Let’s start from the very beginning:

        “The following questions are designed to help counselors and assist clients in identifying the features of a reverse mortgage that may be appropriate to meet client goals, assess the availability of remaining equity against the client’s financial needs over time and consider alternative options to a reverse mortgage.”

        The designers may have thought of it that way, but it doesn’t work that way.  By the time I have gotten to the FIT portion of my counseling session, I can usually fill out all of the questions without even talking to the clients in front of me.  Now, I understand from a lot of people that I may be unique in that, but I really don’t think so.  A true counseling session should involve discussions about what the clients need the money for, information about their home, how long they have lived their, how long they plan to live there, what other investment tools that the clients are using and/or may use, what their home, family, and health situation is like, the repair needs of the house, etc.  To be honest, on average before I even get to answering the questions in the FIT and Benefits CheckUp (I require all clients to do it regardless of income, that I find useful), my counseling sessions are usually an hour and fifteen minutes to an hour and a half.  Counselors should really be doing that within their sessions.

        I have some more specific problems with the FIT though.  In the Client goals section people are encouraged to check off all that apply, the problem is that with the exception of the HECM to Purchase or Refinance, all of these apply to everyone if they are really honest.  The question should really focus on what is the most important reason to get the HECM.

        I am curious why the gender of the homeowner even matters?  Or how does it fit into the determination made by the FIT to assign a score?  Or, is it just a data gathering question?

        Questions such as has the client stayed in a hospital or fallen in the past 6 months are very problematical to me.  These questions don’t take into account whether or not the fall was a result of simply tripping over something, or something more serious which might indicate severe health problems.  Similarly, the hospital question doesn’t take into account the reason the person was in the hospital, which could be anything from simply having a hemorrhoid removed to a quadruple bypass.  Seemingly, the FIT gives these issues all the same weight and they are extremely different.  Similarly, a bed bound client may not have either stayed in the hospital or fallen, but their score would be better than a reasonably healthy person in the same circumstances.

        Questions 12 through 14 would be best answered by creating a budget with the client.  15 and 16 can be very useful, but without allowing for follow up explanations can be problematical.  For example, a client who never missed a payment but did because they were in the hospital?  Should they really be penalized for that?

        Question 19 is a bit redundant since it was asked above, but I will admit that it does give me the chance to talk to people about their other debts.  I can give them ideas about bankruptcy, seeking a compromise on their debts, or even just ignoring them depending on the nature and age of the debt.

        Who came up with the great idea of even mentioning an RV in question 20?  That almost becomes comedic relief when people are answering these questions.  Besides, if you are trying to convince everyone that these are loans of last resort, is even bringing up the idea of an RV a good idea?  Heck, why not just ask them if they intend to do a high rollers’ week in Vegas?

        Why isn’t 1uestion 21 up with questions 3 & 4 which ask how long they have lived in the house and how long they plan to remain?  It seems very strange down here all by itself.  Besides, looking at question 3, I can answer this one half the time.  If the client has lived in the house for 25 or more years, then it must obviously be older than that.

        Question 22 is one of the questions that is the most problematical in the entire FIT.  It asks, “Does the house have stairs, a steep pathway or other barriers that could make it hard to stay at home over time?”  And, it is looking for a simple yes or no.  The problem is that there are no shadings on this question.  Why not include sub-questions that give real help to the computer to determine scores?  Things like, are there ways to avoid the stairs, is there a chairlift or elevator already installed in the home, can the barriers be repaired and/or removed, or is the client bed bound and it doesn’t matter?  I have yet to see a single FIT score of higher than a 3 when a person checks “yes” to this question.  Here in Massachusetts it is very rare to find a home that does not have stairs.  Most have basements, many are two floors and most have two or three steps just to get into the house.  Without some context, this becomes a really problematic question in my mind.

        The questions regarding repairs should really be part of the main counseling dialogue, as we should be discussing the need for repairs at that time.

        I know this was long, and it only begins to describe my issues with the FIT.  (I won’t even get into the fact that there is a place for counselor’s notes, but when it prints to Acrobat I cannot put notes into the document.)  The FIT was put together by many well meaning people, but it is not doing what it should be doing.  In many respects, I think it is worse than nothing because it can encourage a counselor to be lazy in the actual counseling and to rely on a tool that really doesn’t do what it says it does.

        Frank J. Kautz, II
        Staff Attorney

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

  •  Hello Matt,

    I passed it along to our local HUD contact when these issues first arose.  I have also mentioned them to people at trainings, but the general consensus has always been that this is the way that HUD wants it.

    By the way, my initial letter to HUD was not quite as detailed as the above.  That was an initial letter, this is after more than a year of working with it.

    Frank J. Kautz, II
    Staff Attorney

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

  • Frank’s post highlights why the scoring is the most absurd and indefensible part of FIT.  In almost all of the comments, he’s not saying that the topic is unimportant, merely that the question is too simplistic, or the way the question is asked is faulty.  The conversations that FIT can provoke (with a good counselor who is given time to actually have the conversation) are extremely valuable.  Frank was probably already having those conversations before FIT ever came along, as were many other good counselors.  The problem is that not all counselors are like Frank, and not all have the degree of control over the time the session takes that Frank has.  FIT serves the purpose of at least raising some important questions, even if the session is not as long as it really needs to be.  It’s not a perfect solution, but I do actually think it’s better than nothing.  I urge NCOA and HUD to modify the questionnaire, now that there has been significant experience with it, to make it do more of what it is really good for.

string(113) ""

Share your opinion