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Posts Tagged ‘reverse mortgage counseling’
Monday, October 12th, 2009
 This weekend Gov. Arnold Schwarzenegger signed AB 329 into law in California. The bill finally establishes the Reverse Mortgage Elder Protection Act of 2009. The bill prohibits cross-selling, requires the lender to provide the borrower with no fewer than 10 nonprofit HUD-approved counseling agencies, and requires the lender to provide the borrower with a checklist of issues to discuss with the reverse mortgage counselor. The loan application will be unable to be approved without the signed checklist. However, given that the first two requirements are included in national legislation, the main feature of the bill will be the addition of the checklist to the reverse mortgage counseling process.
The provisions of the bill will be administered by both the California Department of Real Estate and the California Department of Corporations.
The bill can be found at: AB 329
Tags: AB 329, Arnold Schwarzenegger, bill, California, law, reverse mortgage, reverse mortgage counseling, reverse mortgages, Reverse Mortgages Elder Protection Act of 2009
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Friday, October 9th, 2009
 Today marks the one week anniversary of the shift to the new HECM roster. The new roster means that the new requirements for reverse mortgage counselors have gone into effect. Only counselors that have met these requirements will be permitted to provide HECM counseling. As a result, the number of agencies providing HECM counseling have, for the time being at least, decreased dramatically. Some states, such as Delaware and Hawaii, do not have any local counseling agencies that have met the new requirements and are on the HECM roster. However, since many counseling agencies provide counseling on a national level by phone, borrowers in these states are unlikely to feel any ill effects.
The list of new counselors can be found at: https://entp.hud.gov/idapp/html/hecm_agency_look.cfm
Tags: hecm, HECM counseling, HECM roster, reverse mortgage, reverse mortgage counseling, reverse mortgages
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Tuesday, August 4th, 2009
 Following in the footsteps of Money Management International (MMI), the National Council of Aging (NCOA) announced that they will also begin offering free reverse mortgage counseling through September 30, 2009. The counseling will be offered through NCOA’s Reverse Mortgage Counseling Services (RMCS) network.
Again, although lenders cannot steer borrowers towards a particular counselor or set up the counseling session for the borrowers, free counseling is always a good option for seniors to be aware of.
Normally, the RMCS counseling would cost $125. It will be interesting to see if any other lenders will follow MMI and RMCS in offering free services in order to stay competitive.
Tags: free counseling, MMI, Money Management International, National Council of Aging, NCOA, reverse mortgage, reverse mortgage counseling, Reverse Mortgage Counseling Services, reverse mortgages, RMCS
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Friday, May 8th, 2009
 The Hyatt Regency Grand Cypress, where the conference was held. I got back last night from the NRMLA Reverse Mortgage conference in Orlando, and I am already in withdrawal. The conference was wonderful and far more exciting than Chicago. In addition, the weather was about 20-30 degrees warmer, and the hotel had a pool, a fake “beach,” and a talking macaw. While the setting was hard to beat, the information at the conference once again proved to be quite informative.
Some highlights:
- The session on “Making Counseling More Effective,” which pulled from a large variety of people. While the Q&A portion got pretty heated, the clarification of the new protocol (whenever it is finally released) was quite useful. More to come next week.
- The addition of Peter Fatizzi, of Realty XPerts, to the panel on HECM For Purchase led to wonderful insights on how realtors, builders, and lenders can work together. Peter’s relationship with Jourdan Hoover (of Wells Fargo Home Mortgage) I think put forth a good model for the way lenders can potentially build a client base through interacting with others in the real estate industry–and just how much the product can help their clients. However, the panel also inadvertantly pointed out the importance of clearly explaining the product, leading to questions about the ethical obligations of the industry to make sure a senior is financially stable after a reverse mortgage. This theme was echoed throughout the conference and especially in the counseling session.
- Amanda Norvell, of TRUE Marketing, and Tara Hornsby, of the Orlando Magic, shared some very creative ways their companies are using technology. While many of the comments did not directly relate to the reverse mortgage industry, it was a good catalyst to begin thinking creatively about the opportunities presented by facebook and twitter.
- It was quite enjoyable to tweet the conference (see @hecmgirl for tweets), leading NRMLA to start a twitter account at the end (@NRMLA). Look for twitter to play an increasingly large role in the industry.
- And finally, in the free stuff category, hats off to The Reverse Review for the fantastic cupcakes, as well as Customized Lenders Services, INC. for paddleball.
Looking forward to seeing everyone at the next event!
Tags: conference, hecm, HECM counseling, HECM for purchase, marketing, NRMLA, Orlando, reverse mortgage, Reverse mortgage conference, reverse mortgage counseling, twitter
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Tuesday, April 14th, 2009
 NRMLA (National Reverse Mortgage Lenders Association) is expected to announce that in order to receive their HECM counseling certificate, seniors must pass a test given by the HECM counselor. The counselor will have a list of 20 questions to choose from and must ask 10. The borrower must not get more than 5 wrong in order to get the certificate.
Requiring borrowers to pass a test is not a good way to assess their understanding of reverse mortgages. Many seniors have not taken tests in years. Taking a test, especially if the test is given orally, requires a level of concentration that is difficult for most individuals and is a stressful experience.
While mandating counseling for borrowers has more upsides than downsides, requiring those borrowers to then pass a test is an undue burden on borrowers. Although counseling can be a helpful safeguard to ensure that the borrower understands what a reverse mortgage is, some elderly borrowers, such as those with Alzheimers or dementia, likely do not have the ability to pass a test, regardless of whether they have an understanding of the situation. Even those who do fully comprehend the situation may get flustered and fail. Often, understanding of a topic is not well summed up on paper or in an oral question and response. The better gauge of understanding should be the counselor’s conversation with the borrower. As long as the borrower undergoes counseling, a test is not needed.
Reverse mortgages are often applied for in times of hardship. Requiring a borrower to pass a test, especially an oral one, is an unnecessary requirement that will cause more harm than good within the reverse mortgage process.
Tags: counseling, hecm, HECM certificate, HECM counseling, HECM counselor, mortgage counseling, National Reverse Mortgage Lenders Association, NRMLA, reverse mortgage, reverse mortgage counseling, reverse mortgages, test, test taking
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Wednesday, April 1st, 2009
Mandatory HUD Counseling and the new HECM for Purchase Program are two topics that have been significant to the reverse mortgage industry recently. Waves appear ready to reverberate again after HUD’s recent release of Mortgagee Letters 2009-10 and 2009-11 yesterday. These two letters concern HUD counseling and the HECM for purchase program respectively. Some important points surrounding the letters can be found below:
HUD Counseling
New requirements surrounding the mandatory HUD counseling include that lenders must provide a list of no fewer than ten counseling agencies to every client. Five must be local agencies within the senior’s local area or state. At least one must be within reasonable driving distance to provide the opportunity for in-person counseling if the borrower desires it. The last five must be the National Foundation for Credit Counseling, Money Management International, CCCS of Greater Atlanta, the AARP and the National Counsel of Aging. The counselor cannot assist the borrower in scheduling counseling or pressure them to complete it.
HUD counseling must now include an overview of the senior’s financial situation, including documentation of the senior’s budget. The counselor must evaluate and discuss any appropriate alternatives to a HECM with the senior. Space to record the method of payment for the counseling session has also been added to the HECM Counseling Certificate.
HECM for Purchase
The letter surrounding HECM for Purchase provides guidance to help prevent “buy and bail,” which involves the purchase of a more affordable home in order to cease making payments on the previous mortgage. One helpful correlary is that mortgagors may only have one principal residence at a time. Thus, those wishing to use the HECM for Purchase program to purchase a new principal residence must pay off the existing FHA-insured mortgage before the new HECM for Purchase mortgage can be approved.
All major property deficiencies must be repaired by the seller by closer. Borrowers cannot apply for gap financing.
Tags: buy and bail, counseling, hecm, hecm for purchase program, HUD, mandatory counseling, reverse mortgage, reverse mortgage counseling, reverse mortgages
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Friday, March 27th, 2009
 Mandatory reverse mortgage counseling for seniors The FHA mandates independent third-party counseling for all those who are interested in applying for a reverse mortgage. While the counseling can be free, it generally costs around $125 and can take in person or over the phone. A certificate of counseling is necessary for the mortgage to close.
Few products require such education. In fact, other than skills such as driving a car or flying a plane, it is hard to think of another product that requires the level of counseling necessary to take out a reverse mortgage.
On the one hand, counseling is important to ensure that seniors are not railroaded through the process and not taken advantage of. In a worst case scenario, the counseling is a waste of $125 and an hour to tell a person something they already know. In the best case scenario, however, the counseling can prevent a senior from being forced into a reverse mortgage by a family seeking to prosper from the proceeds or a lender from committing a fraudulent transaction. There are few downsides to preventing such scenarios.
On the other hand, it is not hard for one to question whether it is possible for independent third party counselors to ever really be completely objective. And time and money are valuable. Most seniors do a fairly good job educating themselves about reverse mortgages. If they do not, no one else should be responsible. In the same way consumers can buy a faulty car or get a bad deal when making a purchase, reverse mortgages should be seen the same way as any other product.
While these arguments have merit, reverse mortgages are not the same as any other product, because the stakes are higher. There are many life events for which counseling would be or would have been useful. Rites of passage such as buying one’s first home, opening a 401(k), and developing an investment strategy, are tasks where knowledge is power and the stakes can be high. A reverse mortgage is the same way. Before making a big decision about finances, knoweldge is power. Mandatory counseling is a good way to prevent against fraud by providing prospective borrowers the same level of counseling many of us wish we could’ve received years ago when making weighty decisions.
Tags: counseling, FHA, financial counseling, HUD, mortgage counseling, reverse mortgage, reverse mortgage counseling, reverse mortgage fraud, reverse mortgage scam, reverse mortgages, revesre mortgages
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This weekend Gov. Arnold Schwarzenegger signed AB 329 into law in California. The bill finally establishes the Reverse Mortgage Elder Protection Act of 2009. The bill prohibits cross-selling, requires the lender to provide the borrower with no fewer than 10 nonprofit HUD-approved counseling agencies, and requires the lender to provide the borrower with a checklist of issues to discuss with the reverse mortgage counselor. The loan application will be unable to be approved without the signed checklist. However, given that the first two requirements are included in national legislation, the main feature of the bill will be the addition of the checklist to the reverse mortgage counseling process.
