New HECM counseling fee guidelines announced by Department of Housing and Urban Development (HUD) lift the previous $125 cap on counseling services and allow counseling agencies to determine the appropriate fees charged for their services based on several criteria.
In a letter to mortgagees and counseling agencies, HUD explains that counseling agencies may now charge a fee for HECM counseling services as long as the cost
- is reasonable,
- is commensurate with services provided,
- does not create a financial hardship for the client, and
- meets the other requirements of the regulation.
If a client receiving HECM counseling services has an income level that falls below 200 percent of the Federal Poverty level at the time of the HECM counseling session and the counseling agency may defer collection of payment until closing. In those situations, the counseling agency and the borrower must document the amount of the counseling fee and show proof of the client’s income.
The time spent on HECM counseling sessions increased last year after HUD announced a new HECM counseling protocol, including use of the Financial Interview Tool (FIT) and the Benefits Checkup.
See the entire mortgagee letter here.
Written by Elizabeth Ecker