The Department of Housing and Urban Development says it has received reports of steering on the part of reverse mortgage lenders who have encouraged borrowers to specific counseling agencies.
In a notice sent this week, HUD reminded lenders and reverse mortgage counseling agencies of the anti-steering protections in place that prohibit a lender from pointing a borrower to a specific counseling agency as well as a counselor from directing a borrower to a particular lender.
“The Department has received reports and concerns regarding FHA-approved Reverse Mortgage Lenders steering potential borrowers to specific Home Equity Conversion Mortgage (HECM) counseling agencies, lender representatives being present or even participating in counseling sessions, and lenders providing advance copies of borrower review questions used by counselors with potential HECM borrowers,” HUD writes.
Reminding all participants of the prohibitions, HUD notes that lenders are required to provide all clients with a list of counseling providers that includes the national intermediaries as well as five local agencies including one within driving distance of the borrower.
HUD said it has received reports of lenders providing a list of counseling questions to borrowers in advance of their participation in counseling, another practices that is prohibited and which HUD says must stop immediately.
“The Department has been advised that some FHA-approved reverse mortgage lenders are providing advance copies of the HECM counselor’s review questions with answers to clients prior to attending their mandatory reverse mortgage counseling session. …Having the lender provide the answers in advance of the session interferes with the counselor’s duties to assure that client(s) are fully engaged and understand the complex information being presented in the counseling session.”
View the notice at HUD.gov.
Written by Elizabeth Ecker