Generally speaking, reverse mortgage counseling agencies seem to be responding very favorably to the news that housing counseling funding has been restored—even if only partially compared with the most recent years—for the remainder of Fiscal Year 2012. The funds were approved by Congress and President Obama late last week as part of a congressional “Mini-bus” spending bill that covered the Department of Housing and Urban Development, among several others.
“We’re very pleased that Congress recognizes the value of housing counseling,” said Scott Scredon, director of public relations for CredAbility, which offers reverse mortgage counseling on a national basis. “However, until they release funding guidelines, we won’t know how much will be designated for HECM counseling.”
The funding, totaling $45 million for all housing counseling, is less than was requested by the Obama administration, and is only slightly more than half of the $88 million that was cut from the Department of Housing and Urban Development’s budget for housing counseling in a last minute budget deal signed by Congress in April.
Out of that amount, HUD announced on Thursday that $40.05 million has been made available for housing counseling grants, with $4 million of that earmarked for reverse mortgage counseling.
Although the allocation is lower than in previous years, counseling agencies, which have recently been forced to reintroduce fees to most borrowers who may have previously qualified for free counseling, are happy for the return of a funded mandate.
“It’s great news,” said Daniel Fenton, housing director for counseling agency Money Management International. “The details of how much are going to reverse mortgage counseling is not known yet, but we’re happy the money has been restored.”
Even though it is not as much as was requested, Fenton said, it is a reasonable allocation, in historical terms.
“I think we might be reverting to a more historical level,” said Peter Bell, president of the National Reverse Mortgage Lenders Association, noting pre-recession counseling levels. “There is a lot more demand on counseling these days, but there [had been] a real bump up,” he said.
A deadline on the funds being used is also providing reassurance to those who will ultimately use the funds to counsel senior reverse mortgage applicants and borrowers.
“Those funds will help a lot of people,” Scredon said. And despite the unknown allocation that will go to HECM counseling, the outlook is positive. “The good news is, HUD has to use the funding within 120 days, so we’d expect the guidelines soon,” he said.
For many reverse mortgage counselors, the weeks since the start of the current fiscal year on October 1 have led to an increase in the fees clients face as well as the wait times they encounter when signing up for and subsequently receiving counseling. As of October 1, the National Counsel on Aging had reintroduced fees of $135 per session—a slight increase over its past $125 fee. Likewise, ClearPoint Credit Counseling solutions had gone back to a fee-based model in the absence of government funds.
“The funding will allow us to continue to produce free services to seniors for reverse mortgage counseling,” said Martha Viramontes, ClearPoint’s director of housing. “The funding will allow us to waive the fee,” she said, after having gone back to charging $125 during the unfunded interim. “It will probably allow us to go back to full capacity.”
Written by Elizabeth Ecker