A story about Money Management International’s (MMI) free reverse mortgage counseling in California was recently published on RMD, and GreenPath Financial Wellness reached out after to tell us that free counseling is also available through their agency. The availability timeline is similar, but counseling services through the National Mortgage Settlement will run at least through June.
GreenPath has also noted that counseling related to the prevention of reverse mortgage foreclosures has increased recently.
Similar to MMI, GreenPath Financial Wellness is also offering free reverse mortgage counseling services to California residents. In addition, the company has noted an uptick in sessions related to foreclosures, according to Jennifer Fraser, director of stakeholder engagement and contact center operations at GreenPath.
“At GreenPath, we’re also waiving fees in California for our reverse mortgage sessions currently,” Fraser said. “Regarding reverse mortgage foreclosure prevention counseling, we’re finding that many reverse mortgage clients are continuing to struggle with maintaining their obligations, especially the insurance or property charges and not seeking help.”
A reverse mortgage loan can accelerate to due and payable status if a borrower does not keep up with mandatory obligations. For GreenPath’s part, making borrowers aware of the options available is key to its response.
“We’re counseling them on strategies to budget for those payments and focusing on opportunities and options that may be available to them,” she said. “[We’re informing them of resources] like the Homeowners Assistance Fund (HAF) to help bring those charges current and prevent moving forward into foreclosure if they’re already delinquent.”
Communicating options is a challenge
HAF funds were made available when the American Rescue Plan was signed into law in early 2021, and are available to reverse mortgage borrowers if they are behind on their mandatory obligations due to a financial hardship created by the COVID-19 pandemic.
“We never charge the client a fee for foreclosure prevention counseling services,” Fraser said. “But with such a high prevalence of reverse mortgages in California, it pairs well with the mention of the required session prior to close as well. Not all agencies provide foreclosure prevention counseling for reverse mortgages, but it can really help relieve some of the stress weighing on the homeowners when they’re able to speak with someone about their challenges.”
The mortgage industry has had issues connecting with impacted borrowers about the availability of HAF funding, which was further complicated by the fact that each state has set up its own administrative program for HAF funding. This has reportedly caused chaos for mortgage servicers.
The reverse mortgage industry has also faced problems with informing clients of the availability of HAF funds. In a recent episode of The RMD Podcast, Celink SVP of Client Satisfaction Gail Balettie discussed some of the issues that have persisted for servicers with regard to informing borrowers about the HAF option. There are ongoing signs of progress, however.
“I think we have found a way to operate with the states that is finally seeing some real differences,” Balettie said on the podcast in November. “We have collected over $2 million on behalf of senior borrowers at Celink. The HAF program was originally almost $10 billion awarded through the American Rescue Plan Act to the states. The challenge with the program is that it was like you were administering 50 different loss mitigation plans, because all of the states had different rules, guidelines and processes.”
CalHFA on the counseling program
CalHFA spokesperson Eric Johnson offered details about the program that has made free reverse mortgage counseling possible.
“The funding for California’s National Mortgage Settlement Counseling Program runs through June, and although we have already added more money to the original allocation, we are looking to work with our Board of Directors to see if it makes sense to continue the contract with the counseling intermediaries beyond June,” Johnson said. “Please note that the NMS Counseling program funds all kinds of housing counseling, and to date we’ve helped fund counseling sessions for more than 44,000 California households.”
When asked about reverse mortgage counseling sessions as a share of the total served, Johnson said, “As of Sept. 30, 2022, our most recent quarterly report, we’d provided 8,987 reverse mortgage counseling sessions.”
California is the top state for reverse mortgage business activity in the nation, with 12 of the top 20 lenders recording most of their volume in the state, according to data compiled by Reverse Market Insight (RMI).