While counseling for both Home Equity Conversion Mortgage (HECM) products and their proprietary counterparts largely follow the same guidelines, some specific differences and lingering issues in borrower education prior to counseling can make the process more difficult for borrowers, lenders and counselors alike.
This is according to a panel discussion between counselors and reverse mortgage professionals held at the National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting in Nashville, Tenn. last week.
The discussion allowed originators in attendance at the event to dialogue directly with counselors that offer certifications for both HECM and proprietary loans, with both the counselors and loan officers (LOs) learning about pain points that can have an effect on prolonging the counseling process and certificate dispersion for borrowers, along with the frustrations that can crop up for both counselors and LOs alike.
One recommendation for easing that process revolved around lenders that offer proprietary reverse mortgages coming to a consensus on a universal counseling certificate among all the different product variations, as opposed to different certifications that require counselors to charge separate fees for borrowers that seek a certification for different products.
“That’s a trend we’re seeing,” said Jennifer Cosentini, housing director for Cambridge Credit Counseling Corp. in Agawam, Mass. “If we do [FAR’s] HomeSafe for one borrower, [they may shop around] and come back for [One Reverse’s] HELO counseling. Then, they call us a week later with [RMF’s] Equity Elite, and each of those creates a different session each time.”
The necessity to attend different sessions means that they charge a counseling fee for each separate instance, making the costs for borrowers add up. Additionally, counselors shared that all the certificates are good for 180 days regardless of HECM or proprietary certificates.
Providing product update information to counselors
Counselors also recommended that lenders who offer private reverse mortgages should be proactive in providing more education to them ahead of product changes, since counselors are often not made aware of any changes until after they take place. This can create some additional stumbling blocks when a product is altered while counseling a borrower about the product that may have just received changes.
“What we’ve run into is that when new products have been released or updated, we don’t know about [any changes] until afterward,” said Justin Lally, reverse mortgage director also of Cambridge Credit Counseling Corp. “If I’m counseling a new borrower, sometimes I see they have a product feature that I don’t know about. It makes me think that it’s a mistake. So, I recommend more communication between lenders and counseling agencies [about product changes].”
If a borrower is looking around for the best product that fits them between multiple proprietary products, then a counselor receiving a call to provide a certificate for another product can be disruptive. This is according to Mohan Lalwani, program manager at ReverseMortgageHelper.org and DebtHelper.org in West Palm Beach, Fla.
“The borrowers also shop around, and sometimes we’re dealing with Lender A’s comparison when we get a call where I need to provide certificate for Lender B or C,” he said. “It takes away time.”
Loan documentation reminders
There is also an issue related to loan documentation that can stall the counseling process, the counselors said.
“In terms of documentation, there are required pre-counseling materials,” said Lally. “Having documents in front of the borrower for the initial counseling call is necessary. Sometimes, we’ll get them on the phone and it’ll take 10 minutes for them to get their documents [in order].”
Because of that, it would be beneficial for clients to be notified that there are certain documents they will need to have on hand before receiving a call from their counselor. These documents typically include the Total Annual Loan Costs (TALC) form, a Loan Comparison and an Amortization Schedule.
“We think it would be helpful to have clients reminded over a call about what documents they’ll need on that call,” Lally said. “That way, they’re not searching for it during [the call itself].”