What is the Purpose of Reverse Mortgage Counseling?
A reverse mortgage can be complex mortgage instrument. As a safeguard for consumers, HECM counseling is required by HUD (Housing and Urban Development). The HECM counselor is an independent party not affiliated with your mortgage transaction and is there to offer information and alternatives. No fees and no processing can be initiated on your loan until HECM counseling has been completed. FHA and mortgage lenders need to be sure that reverse mortgage applicants truly understand what a reverse mortgage is all about and that no pressure has been placed upon you to apply for a reverse mortgage. NOTE: For jumbo or proprietary loans, reverse mortgage counseling is also required. You will receive a list of reverse mortgage counselors from your loan officer.
You can attend your counseling in person at a local HUD-approved counseling office or you can receive Reverse Mortgage Counseling by phone. Your Reverse Mortgage counselor is familiar with the basic Reverse Mortgage products. There is a fee for Reverse Mortgage counseling, typically $150-$175. Check with each counseling agency regarding this fee as it may be waived if you qualify for a waiver according to your finances. To find a HECM counselor in your area, click the red HUD.gov link below.
What to Expect When You Attend Reverse Mortgage Counseling. You will be counseled by an independent HUD approved counselor who will review your financial situation and your reasons for considering a reverse mortgage.
"The role of the reverse mortgage counselor is to educate the client about the features of reverse mortgages, the appropriateness of a reverse mortgage, and other financial options that might meet the client’s needs, provide guidance and resources to enable the client to make an informed decision, and provide ongoing support to the client throughout the process. It is not the role of the counselor to tell the client whether or not to proceed with a reverse mortgage, or which reverse mortgage product to use."
"The reverse mortgage counselor must become familiar with the client’s financial situation by working with the client following the requirements of HECM Protocol 7.B.12 and provide the client with a discussion of reverse mortgage products and other financial, social service and housing options within the context of his/her financial situation, counsel the client on reverse mortgage features covered in HECM Protocol 5.D, and provide an overview of financial and/or housing alternatives." https://www.hud.gov/sites/documents/7610-0_1.PDF HECM counseling will last about one hour, and depending on your questions, may take longer. Be sure to make a list of your questions and concerns prior to your counseling appointment.
