CFPB: Essential Reverse Mortgage Counseling Needs Work

One topic that is largely stressed in the Consumer Financial Protection Bureau’s recent reverse mortgage industry report: Counseling. 

“Counseling remains a critical tool for helping borrowers understand reverse mortgages,” the CFPB writes in its report. “Counselors provide a line of defense, dispelling misconceptions and explaining fundamental concepts underpinning these products. Their services become increasingly important as borrowers face more complex choices as a result of new product offerings…On the other hand, research indicates that confusion on certain topics persists even after counseling.”

Counseling agencies are largely in agreement that there is always room for improvement, however, some of the concerns stated in the report are outdated, they say. 


In particular, concerns raised by an three-year-old Government Accountability Office report were noted in the CFPB’s study. The counseling protocol has since changed to alleviate those concerns, says CredAbility spokesman John McCosh.

“We have our counselors up to speed on the new protocol,” he says. “That said, we’d agree there is always room for improvement and making sure the counselors are educated on the protocol.”

The GAO report was based on 15 secret-shopper-style samples of counseling sessions at 11 different counseling agencies, concluding that agencies were consistently not complying with the counseling protocol. It was published in 2009. 

“Unfortunately, the counseling process as whole has become devalued by the critics when it’s a valuable piece of the puzzle for a senior trying to weigh options and need a sounding board for accurate feedback and education from an outside party,” says Jeremy Shadrick, founder of QuickCert. “They are quoting a study from 2009 about the sample of 11 out of the thousands of agencies out there and the compliance issues they had during their experience. It seems like a very small sample to represent the process as a whole.”

Another issue brought to light is the lack of face-to-face reverse mortgage counseling options available to most borrowers. Addressing the issues can be much more difficult than meets the eye, however, McCosh says.

“If you put counselors who could do this close enough to the sparsely populated areas, you’d have to charge a prohibitive amount,” he says. Further, CredAbility finds, most potential borrowers prefer phone counseling as a more comfortable and convenient option that better allows for attendance from other family members who may live out of town or out of state. 

It depends on the borrower, and is not a one-size-fits all solution, Shadrick says. 

“Telephone counseling is an effective medium for receiving counseling services, but it’s not for everyone. It’s up to the borrower, family members and agency to work together to ensure the senior understands all the material,” he says. “If the agency can’t assist the client fully, they need to assist the borrower in locating another agency to assist them face to face or with the the limitation they may have that prevents the borrower from completing telephone counseling.

Ultimately, the report raised some issues that agencies say they will continue to address. In some cases, however, there is not a clear solution for a system that relies on government funding that is not always granted, and where lenders and counselors are prohibited from having any kind of stake in the process to prevent steering of borrowers to a particular product. 

“A lot of these challenges are not new,” McCosh says. “How can the counseling agencies have skin in the game? It’s a question.” 

Written by Elizabeth Ecker

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  • We try to cover the bases, but sometimes that does mean talking with agencies that are also advertisers. If you would like to share your input for an article, please let me know by clicking on my name above. 

  • We try to cover the bases, but sometimes that does mean talking with agencies that are also advertisers. If you would like to share your input for an article, please let me know by clicking on my name above. 

  • DID anyone ever interview the borrowers?  Did anyone intreview LO’s?  My experiences as a 5 year Reverse only LO has been 100% want to do it on the phone and none have ever wanted to drive somewhere to do so. I don’t feel the report is based upon good information and feedback from the industry.  Who was polled? 

  • To say “we have our counselors up to speed on the new protocol” is to acknowledge that the management at CredAbility has no idea if their counselors are knowledgeable on Savers or not, who should get a Saver, and in what situations and when Savers should be be originated.  The protocol was released on 9/11/2010 which was accurate as of THAT date but Savers plus the new principal limit factor table were released on 10/4/2010.  No where in the new protocol is what was introduced on 10/4/2010 even mentioned.  Is it “credible” to find comfort that counselors are up to date on a protocol which was outdated less than three weeks after its introduction almost 2 years ago?  

    The problem with the CFPB Study is that it was based on outdated publications not knowledge of the current market.  It is kind of like evaluating the cancer ward of a Yuma, AZ hospital in July 2012 based on reasonably accurate but also acknowledged inaccurate and outdated  publications from between 1989 and 2009 without fully knowing what in the literature is accurate and what is inaccurate with the evaluation being performed by personal injury attorneys in Providence, Rhode Island who do everything over the Internet relying on the advice of attorneys who work for a medical consumer advocate organization in Natchez, Ms and cancer specialists in Kennebunkport, Main. 

    What is interesting is that the CFPB Study completely ignores the value of the financial assessment portion of counseling.  This oversight only adds more “credence” to the statement of John McCosh that the CFPB never looked at the 2010 counseling protocol.

  • RM Smart,

    If our industry had hundreds of choices, your point is valid but our industry is so dinky that 10 companies do over 2/3rds of all endorsements, 90 companies do about 28%, and all of the rest of the business is done by the remainder of the industry.

  • It would be more beneficial for borrowers to get counseling from RM processors or underwriters. Although there is a test to become a certified HECM counselor, very few counselors know what they’re talking about. Important questions about what happens AFTER closing are very rarely answered with something alongs the lines of “you’ll want to consult your lender on that.”

    • RM Smart,

      Here we part ways.  The once biggest asset of counseling before 2011 was that it was independent of the loan process and no compensation to the counseling agency was dependent upon the completion of the loan.  With the implementation of Mortgagee Letter 2011-09, independence is now completely and utterly clouded depending on the fee arrangement of the counseling agency and the borrower.  Could advertising that counseling is provided by an independent third party now be considered false advertising?  Since independence cannot be determined until after the fee agreement is finalized, it seems it would be.

      HUD needs to revoke this ML to preserve the unique and substantial value of counseling as the independent third party voice in the HECM process.    

      • I fully support counseling! What I don’t support are counselors who have a very limited knowledge of the product.

  • Correction to my last post, “…rarely answered without…”

    The Cynic, I don’t disagree with you and this is no disrespect to RMD because I read it religiously. But it is because of that that I would more value the opinion of an agency who didn’t just open their doors within the last year. Wouldn’t you? I do actually perfer the smaller agency’s such as QuickCert because they are easier to do business with. My question was to raise the issue of whether or not interviewing the same 2 agencies when there is an article on counseling every week made for good journalism. Shadrick made the point that the 2009 study was done on a small sample of pool. My real issue, is that I agree so much with these 2 agencies. I want to see the opposing view of the larger (more intensley regulated) agencies.

    • RMSmart,

      I am probably mistaken but I thought CredAbility is a large counseling agency.  To the best of my knowledge CredAbility has a long history with the industry.

      If CredAbility is a large well established counseling agency and QuickCert is a newer one, that seems like a good mix to me.  

  • RM Smart, I don’t know what you mean about wanting to see the “opposing view of the larger, more intensely regulated agencies.” CredAbility is one of the largest out there so don’t think they slip through any regulations, and QuickCert is growing at a pace unmatched by any agency. I respect the opinion of both of those guys because they have been in the industry several years in different areas and I think will find a way to revolutionize the way the counseling is done at some point. I’m definitely interested in all opinions out there, but everyone has heard the bigger agencies out there, let’s get some fresh opinions like from these guys or others in the industry.

  • RMSmart,

    Counseling cannot be perfect but it must be sound.  Beginning counselors just like beginning originators are bound to make mistakes.  It is hoped the mistakes will be minimal and with time and with encouraging thoughtful corrections, those mistakes will quickly fade.

    When it comes to the independence of counseling, it is not how few or how many times counselors fees are dependent on loans funding but rather the perception that even one counseling session can be dependent on a loan closing which changes the nature of the  independence counseling provides.  Mortgagee Letter 2011-9 has so clouded the issue the only right thing to do is revoke it on a prospective basis.  It is too late to clear up the past.  

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