HECM Counseling

We want to alert members that FHA plans to issue guidance to the counseling agencies regarding client payment for counseling.

This NRMLA Member Alert describes a "Best Practice" that NRMLA recommends Members consider adopting in this area, as a way to increase uniformity and efficiency in the administration of the borrower paid billing process for the benefit of all industry stakeholders and, especially, the seniors we all serve.

HUD announced May 23 that it had revised the HECM Counseling Certificate to conform with Mortgagee Letter 2008-12, which permits borrower-paid counseling.

Today, HUD published Mortgagee Letter 2008-12 to permit counseling agencies to charge seniors a fee for counseling services.

HUD has confirmed to us that they have instructed counseling organizations that it is absolutely impermissible to ask clients calling to schedule counseling sessions if they have a “lender ID number” and telling them they will have to wait several weeks for the counseling if they do not.

NRMLA members may be receiving communications from organizations that are attempting to implement the final FHA rules on borrower paid and lender paid counseling.

On September 28, HUD issued a Final Rule (see rule below) prescribing procedures and requirements for its Housing Counseling program.

The U.S. Department of Housing and Urban Development distributed $44 million in new funding to pay for counseling services, including $3 million specifically for HECM.

NRMLA submitted comments earlier this month in response to a proposed rule published by FHA to create a counselor roster, thru which FHA will mandate standards and institute quality control procedures to be followed by all HECM counselors.

While there's still room for improvement, the overall quality of reverse mortgage counseling has improved dramatically since the nationwide telephone counseling network was created last fall, according to a panel of experts who addressed NRMLA's Annual Meeting & Expo.

The U.S. Department of Housing and Urban Development published Mortgagee Letter 2006-25 to clarify who must receive HECM counseling, and what activities a HECM lender may perform prior to a prospective HECM borrower receiving HECM counseling.

The following memo was published by NRMLA's General Counsel, Weiner, Brodsky, Sidman, Kider, P.C.

Arguably the most important consumer protection built into the reverse mortgage program is the requirement that a prospective borrower must first meet with an independent third-party counselor approved by the U.S. Department of Housing and Urban Development (HUD) before signing a loan application or incurring any fees.