Reverse mortgage counseling is an essential component of the full reverse mortgage transaction, and while some counselors perform customary check-ins with their borrowers after the initial session, the idea of more concerted post-closing counseling is something to consider for borrowers.
This is the perspective shared with RMD by counseling professionals at two different national counseling organizations, however it’s not a concept which is universally agreed upon. At least one counselor expresses that additional sessions after a loan’s closing may unnecessarily complicate the situation for the borrower, according to outreach conducted by RMD.
How post-closing sessions might help reverse mortgage borrowers
Mortgages on both the forward and reverse sides present products of significant complexity, and because of that, revisiting some of those concepts with borrowers after closing to ensure that a particular borrower is set up for success in keeping their loan in good standing could be beneficial according to Jennifer Fraser, director of stakeholder engagement and contact center operations program at GreenPath Financial Wellness in Farmington Hills, Mich.
“The goal [of any counseling session] is to set you up for success – not just to get you to closing,” Fraser tells RMD in an interview. “In the future, I’d love to see some sort of planned outreach or counseling on the part of some of these lenders to just do a check-in.”
A regulation-compliant, specific counseling session designed to ensure the client’s continuing success in maintaining their loan obligations can be very beneficial, a point driven home for Fraser as she was in the midst of her own forward refinance. Adding the additional complexity of reverse along with other concerns for the senior demographic seems daunting, she says.
“So, I would encourage anyone in the industry to think about creating something to help sustain the understanding as they go forward,” she says. “And, I am wildly confident that it would improve performance as to the value of these loans.”
Fraser’s point was well-taken by Kathy Conley, stakeholder engagement specialist at GreenPath. A post-closing reverse mortgage counseling session could be helpful for seniors just in terms of making sure that all the specific details are fully digested by the client after there has been some established distance between the closing of the loan and living with it, she says.
“Six months after you’ve got the reverse mortgage, let’s now talk again,” Conley explains. “Let’s make sure you understand everything. Let’s make sure you’ve got all of that fine tuning done, you get all the resources lined up for yourself, and you understand your obligations and how you’re going to carry those through. What’s your plan to actually fulfill them? That’s the type of thing that we’re talking about here.”
An additional counseling session: overkill?
A customary check-in after the initial session is already being done in some areas, and mandating an additional session may actually work against the interests of the borrowers in some respects according to Jennifer Cosentini, housing director at Cambridge Credit Counseling Corp. in Agawam, Mass.
“As counselors, we are required to follow up with our clients 6 weeks after counseling and then again after 6 months,” she tells RMD. “These are the perfect times to touch base and see if they have any additional questions or want to discuss any aspects of the reverse mortgage further. I don’t feel that an additional counseling session is necessary.”
The customary check-in that is performed by Cosentini’s organization is typically oriented around obtaining an outcome to close a client’s file, but to also learn potentially helpful information about how the process of the loan with the lender and property appraiser went, as well as how the closing proceeded. Asking a client to be a part of an additional post-closing session may not be beneficial for them, since it could add yet another obligation, Cosentini says.
“I think it would be overkill,” she explains. “If the first session is done thoroughly and correctly there should be no reason for a second session.”
Sometimes, a post-closing check-in with a borrower can’t proceed since a loan’s whole process may not be finished yet according to Jackie Boies, senior director of housing and bankruptcy services at Money Management International (MMI) in Sugar Land, Tex.
“As part of HUD’s housing counseling requirements, we reach out to our clients 45-60 days after their initial counseling session. Historically, reverse mortgage borrowers have had a higher rate of engagement with us for these follow-up sessions,” she says. “Unfortunately, at the 45-60 day mark, often we find that the loan hasn’t yet closed, so it is hard to determine how the reverse mortgage is working for the borrower.”
Post-closing session could help further assess borrower needs
However, MMI supports post-close counseling for mortgage borrowers of all types, and that extends to reverse mortgages as well, Boies says. In addition to the heightened levels of activity this type of counseling garners from reverse mortgage borrowers, the amount of information related to such a borrower naturally accentuates the potential that an additional session can have in helping them remain successful.
“A post-closing session would allow the counselor and borrower to evaluate the initial usage of the reverse mortgage proceeds and discuss future needs,” Boies tells RMD. “It would serve as an opportunity to review the budget developed in the initial counseling session, make adjustments where needed and ensure that the senior is availing themselves of any assistance for which they qualify.”
Additionally, such a session could help to refresh seniors on the situations which cause a reverse mortgage to become due and payable, giving the borrower and counselor another opportunity to solidify the understanding surrounding taxes, insurance and home maintenance.
“[This] would be invaluable,” Boies says. “While all this is covered in the initial session, there is so much information provided to a reverse mortgage borrower to obtain a reverse mortgage, restating the ongoing requirements at a future date is desirable.”
Desirable though it may be, some counseling agencies may also find the prospect unrealistic due to very practical concerns, she adds.
“Many housing counseling agencies already struggle with staffing for initial sessions and funding; so, adding an additional session to the requirements could be problematic for some,” Boies says. “One solution would be to advocate for HUD to change their follow-up requirement to allow that session to occur farther into the future and always after closing.”