HUD Says Reverse Mortgage Change Doesn’t Warrant Emergency Counseling

Upon the request of the Department of Housing and Urban Development, the National Reverse Mortgage Lenders Association this week sent a reminder of reverse mortgage counseling safeguards and protocols that apply to all HUD-approved counseling agencies. 

The reminder is timed with an anticipated influx of counseling sessions leading up to reverse mortgage program changes that are expected from HUD in the coming weeks and notes that the changes do not justify emergency counseling. 

“HUD anticipates that counseling agencies will see a short term increase in request for counseling sessions,” the HUD notice states. “….Counselors cannot use the anticipated program changes as justification for conducting emergency counseling.”

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The reminder also notes the Financial Interview Tool, Benefits Check Up, and expected 60 to 90 minutes a counseling session should require, at no less than one hour. Additionally, it reiterates the counseling protocol including anti-steering specifications. 

“As counselors are aware, lenders are not permitted to have direct contact with counselors on behalf of the client,” HUD states. 

View the protocol reminder

Written by Elizabeth Ecker

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  • Reading between the lines, this seems to reinforce the idea that the cutoff for the old products will be based on the date that the case number is assigned thus the need for this particular reminder.

  • What do you mean by HUD recinding these fixes? Are you saying this PL reduction and product merge is only temporary? I have never seen or heard anything to imply that. I understand that these are perminent.

  • hecmvet,

    In March 2013, the influx of case number assignments was high for a total of 13,613. It seems unlikely that either August or September will experience that kind of volume (maybe but highly unlikely).

    Will HUD rescind “these fixes” that soon? Perhaps HUD will modify principal limit factors and increase the percentage cap on payouts in the first year but overall HUD is unlikely to bring back closed end products (other as part of a hybrid) or Savers.

    The projected health of the MMI Fund would be much better if HUD had banned closed end products four years ago when it was clear that such products would result in losses of the magnitude which are now being projected.

    • Cynic, APPRECIATION is what drives this Hecm model. When properties appreciate it works…..when properties don’t appreciate it doesn’t. All this other tampering is only designed to pay old claims with new insurance premiums from new loans.
      By the way your comments about what the MMI fund report really means were right on, just darn near impossible for the average person to follow or grasp or put in perspective…or Congress for that matter. ha ha.

  • hecmvet,

    Even though it had not posted, I read your reply and am responding.

    While the model endured for over two decades, once again it has come up short. We already have a 1.25% rather than 0.5% rate for ongoing MIP. Principal limit factors are lower than there were from inception to the end of fiscal 2009. It was clear that the model had to be adjusted for maintenance and longevity.

    Now it is clear we have to look at the appreciation assumptions. They failed and these last almost five years will not be made up through appreciation (unless there is another bubble) or taking from Peter to pay Paul unless FHA actually owns all homes upon HECM termination so that losses can be offset by gains but that change would be particularly draconian for seniors with higher valued homes at initial funding.

    While the HECM portion of the MMI Fund may recover before the end of the decade, its net position will not be sufficient to meet its portion of the capital reserve requirement for the MMI Fund unless either HUD or Congress funds it.

    What the MMI Fund shows is that the real world is much different than its designers anticipated. That is unusual. What is unusual is how HUD has respond to the problem.

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