CredAbility Sees Increasing Success Among Reverse Mortgage Default Counseling

Anticipating an increase by year’s end in the number of reverse mortgage borrowers in default, Atlanta-based CredAbility is ramping up its counseling efforts to assist these struggling homeowners and is seeing more success in helping troubled borrowers. 

The company’s statistics show that it will help approximately 2,000 homeowners this year—a more than 10% increase from 1,800 in 2012. CredAbility’s Director of Reverse Mortgage Counseling Sue Hunt Brown attributes this increase to the likelihood that more reverse mortgage borrowers will require assistance with tax and insurance payments as a result of new program changes from the Department of Housing and Urban Development (HUD).

“We continue to see 8% to 10% of homeowners with reverse mortgages struggling to pay property taxes and homeowners insurance,” said Hunt Brown. “We want to support these homeowners to age in place.”

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The average homeowner in default CredAbility serves is $4,771 behind on his or her property taxes and homeowners insurance, according to company data. HUD guidelines call for homeowners to pay back the amount they owe within 24 months.

In its counseling efforts, CredAbility has helped reverse mortgage borrowers increase their income, reduce their expenses, or both. Incomes for those the company has counseled have increased by $245 a month, while those that need to cut expenses are reduced by about $141 per month, according to data the agency provided to RMD.

“We’re seeing on the HUD end, as well as some of the servicers and GSEs, interested in having consumers work with counseling agencies to get benefits and better budgets in order to stay in their homes,” Hunt Brown said.

To address the increase in borrowers seeking counseling services in the past months, CredAbility currently has eight counselors providing reverse mortgage counseling on a regular basis, including two who were recently added to the team. Additionally, the company has also cross-trained four other housing counselors to move into the reverse mortgage counseling programs.

Looking ahead to 2014, Hunt Brown anticipates the recent program changes to the Home Equity Conversion Mortgage (HECM) program will signal an increase in the number of borrowers the agency will help.

While the changes proposed by HUD aim to reduce the number of homeowners that go into default, the impact this will have on CredAbility’s counseling efforts will not be seen until the program changes take effect.

The agency, however, is planning to expand as needed once the changes are underway, and if it sees a demand among homeowners still struggling with tax and insurance default.

“If they call us, we will be here,” says Hunt Brown.

In October, CredAbility announced it had signed a definitive agreement to merge with ClearPoint Credit Counseling Solutions.

Effective December 31, 2013, the merger of the two companies will create the second largest nonprofit credit counseling organization in the nation, with 50 offices in 15 states.

The name of the new organization will be ClearPoint Credit Counseling Solutions and its headquarters will be in Atlanta. Chris Honenberger, chief executive officer of ClearPoint, will be the CEO of the combined organization, while CredAbility CEO Phil Baldwin will become the organization’s president.

“By combining our strengths—ClearPoint’s credit card repayment plans with CredAbility’s housing and bankruptcy counseling—we have created a stronger, more robust full-service counseling and education organization,” said Honenberger.

The merger will also allow the organization to invest in new technology as more people seek financial counseling and education online and by phone, Honenberger said.

“This merger provides us with the financial resources to grow, which will help millions of low- and moderate-income households across the nation,” said CredAbility’s Baldwin. “In addition to helping people in financial distress, we now have the resources to provide people with new services that will help them build financial security.”

Assisting reverse mortgage borrowers who are struggling to remain current on their taxes and insurance is a growing concern on a national scale.

In November, the Florida Housing Finance Corporation introduced a program geared toward helping homeowners in the state who are facing foreclosure due to tax and insurance default following the complete draw down of home equity through a reverse mortgage.

The program is part of the state’s $1 billion Hardest Hit Fund and looks to help around 1,250 senior homeowners living in the state. Florida’s Housing Board of Directors have already approved up to $25 million to be used to aid reverse mortgage borrowers.

Written by Jason Oliva

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