Though reverse mortgage counseling agencies are already struggling to keep pace with an influx of demand as a result of principal limit cuts scheduled for Oct. 1st, they also are facing having to staff and train for the recent program changes.
Earlier this month, the Department of Housing and Urban Development (HUD) issued changes to its Home Equity Conversion Mortgage (HECM) program in the form of two mortgagee letters, 13-27 and 13-28.
The changes, which include principal limit reductions of and limits on how much borrowers can draw from their reverse mortgage in the first year of the loan, as well as establishing set asides for borrowers to meet what HUD calls “mandatory obligations,” is shaking up the industry as it rushes to prepare.
For counselors, the sense of urgency as borrowers hurry to meet the September 28 deadline is heightened as the counseling window tightens, as this is the last day for borrowers to receive a case number under the program before the changes take effect.
“With the rush to beat the October 1 deadline for our clients, we’re already experiencing a slowdown on counseling,” says Dennis Smith, reverse director and a partner with counseling agency ReverseMortgagePro.
Customers in the North and Central Virginia areas that Smith’s company serves have been having a difficult time finding a counselor to fit them in before the late September deadline to receive a case assignment.
“Even those that do find an available appointment are being put two to three weeks out and closer to the deadline,” he says.
While a similar counseling backlog occurred when HUD announced it would be eliminating its Standard Fixed-Rate HECM product, clients could still find counselors that would be available for appointment two to three days out.
The counseling backlog is not just centralized to one region, as agencies nationwide are experiencing similar lags as more borrowers rush to meet the September 28 deadline.
“We’ve already seen a bump in call volume and are sure the demand will continue as borrowers try to get a case number before the September deadline,” says Tony Lopes of Massachusetts-based Cambridge Credit Counseling.
With a lot of people requesting immediate counseling, there is little chance Lopes’ company—who is not normally pushed back about a week, according to his estimates—can accommodate the increase in demand.
“In the long run the changes are good for the industry as a whole as it creates a more viable product, but in the short term there is some panic as the timeline to schedule an appointment tightens,” he says. “There’s a tight window right now.”
Even with the increase in counseling, the agencies are scrambling to train their staff as well.
This month, HUD officials held an industry call focused specifically on reverse mortgage counseling that followed an overview of the changes outlined in the mortgagee letters with a Q&A session towards the end of the call.
HUD also said counselors could expect a training session for housing counseling around the last week of September, just prior to the program changes taking effect October 1.
“As far as the counseling side is concerned, the industry is going to need to focus on getting counselors up to speed,” Lopes says. “The reverse industry is constantly changing, so we’ll have to adjust accordingly.”
While the timeline is short for counselors to adapt to the new changes outlined by the mortgagee letters totaling nearly 100-pages, additional HUD-sponsored training sessions to be held as October draws nearer will help better position counselors for the change, says Sue Hunt, director of reverse mortgage counseling at CredAbility.
The company, which is currently booked out about 3 days compared to August when it usually had same-day appointments available, notes Hunt, plans to have additional training for all of its reverse mortgage team before and after the implementation of the new changes.
“I feel confident that our team will be fully trained and ready to provide appropriate information about the changes to our clients,” she says.
Written by Jason Oliva