A pivotal requirement for remaining in good standing on a reverse mortgage loan is keeping the home in good condition, as well as staying up-to-date with all associated taxes, fees and homeowners insurance. Often, reverse mortgage originators work with borrowers to determine the best path forward for making sure that a borrower keeps up with all of the associated terms, but another participant in the reverse mortgage process can also help: HUD-certified counselors.
With the impact of the COVID-19 pandemic causing new difficulties for renters and homeowners alike in facing difficulties related to foreclosures and evictions, counseling agencies such as Farmington Hills, Mich.-based GreenPath Financial Wellness are receiving increased levels of inbound calls to help avoid displacements, which includes discussions related to home upkeep and maintenance.
Since maintaining the home is a major provision of reverse mortgages, counselors who are already trained to assist a wider variety of homeowners and renters may be uniquely qualified to provide assistance to older reverse mortgage borrowers in order to make sure that borrowers are in compliance with the terms of their loans and can present an opportunity for counselors and loan originators to unite to serve a borrower’s best interest in terms of their ability to maintain their home.
The place of counselors in maintaining the home
Many of the outstanding issues in the reverse mortgage industry can likely be sourced back to adequate education in some form or fashion. From basic product awareness to possible applications of loan proceeds, the industry is always actively creating educational materials and meeting opportunities to make sure that people are informed about how a reverse mortgage can fit into their financial situation.
This also extends to the terms of a loan, and counselors play a pivotal role in the educational process for reverse mortgage borrowers. In addition to making sure borrowers understand what they’re getting into, counselors can also provide an abundance of resources to ensure that a home is properly maintained according to Jennifer Fraser, director of stakeholder engagement and contact center operations program at GreenPath.
Since seniors can be very focused on achieving the end goal they’re trying to achieve with a reverse mortgage, the counseling efforts at GreenPath aim to focus specifically on the responsibilities which come with getting a reverse mortgage.
“One of the biggest components that we focus on really is that initial education on what their level of responsibility is to maintain the home,” Fraser tells RMD in an interview. “Clearly, they’re staying in their home to age in place so they’re not moving into a retirement community, where all of that suddenly becomes somebody else’s responsibility. So, we have to have those discussions, in order to be in compliance with this new mortgage product you have to maintain the home.”
It comes down to both making sure that the home, as an asset, retains its value while also making sure that nothing falls into disrepair in such a way that it could compromise a borrower’s safety while living in it, she says. In terms of the reverse mortgage-specific requirements, counselors are intimately familiar with the details of these requirements, making them uniquely suited to discuss the specifics with borrowers who have questions about them according to Kathy Conley, stakeholder engagement specialist at GreenPath.
“[Our counselors] understand what that requirement means to maintain the home,” Conley tells RMD. “They convey that to the clients in the reverse mortgage counseling sessions. Servicers are required to check, too. Just as they’re checking on occupancy, they’re going to be checking in the condition of the home, as well.”
How counselors and originators can unite
As a loan is in-process prior to closing, understandably the originator can be the go-to for a borrower in terms of being the first and last point of contact in the transaction. Oftentimes, though, if an issue crops up after closing then a borrower may reach out to their originator to find some guidance through an issue. This is where loan originators and counselors can unite to help solve a problem that may come up over the life of a loan.
“If loan originators understand what GreenPath does, with the empathy and the exploration and the listening skills that we use, [it would be beneficial for originators to] prepare their clients not to think of the counseling session as a compulsory requirement,” Conley says. “[Instead, originators should encourage clients to] go in and engage with their counselors. They’re knowledgeable people, and they’re there to help even beyond the actual counseling session that [the clients] are required to do.”
While not a universal truth, some loan originators do not prepare their clients to view counselors as an ongoing resource, Conley says. This can help both the client and the originator in properly managing future issues as they arise, she explains.
“If the loan originators have that mindset about counseling, then they can convey that to their clients,” she says. “[I would] also like for the loan officers to know that if somebody has a reverse mortgage and they’re having a bit of a difficulty, oftentimes the first person they’re going to contact is the loan originator asking questions about it.”
This is where it can become helpful for an originator to point a client in the right direction concerning additional resources the borrower can avail themselves of, like a counselor, to make sure that they remain compliant with the terms and conditions of the loan, she says.
“So, if that loan originator has [a counselor’s information] handy they can say, ‘contact these people, let them see what the issue is. I’ll tell you what I know, but also contact these people, because they’re there to help beyond just the counseling session,’” she says. “They’re going to reinforce that the counseling center and counseling agencies are there for assistance beyond the initial session.”