Tom MacDonald - Reverse Mortgage Consultant






       Reverse Mortgage Consultant

      Tom MacDonald


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HECM Counseling - Consumer Safeguards and Education with a Reverse Mortgage

This is frequently referred to as Reverse Mortgage Counseling

As I've said on another page, a reverse mortgage is simpler than a regular mortgage.  People do regular mortgages all the time without learning how they work.  It is because of that there are numerous problems with regular mortgages and people are upset that someone didn't explain it properly.  I believe all borrowers should understand how any loan they do operates and the implications of the details.  If regular borrowers has educated themselves in the same way reverse mortgage borrowers are required to be educated we would not have the financial crisis we have now.  OK, I'll get off my soapbox.

Learn as much on your own as you feel comfortable with.  You have obviously taken that step because you are here.

Before a lender can start the application process, there is a requirement by HUD (Housing and Urban Development - a branch of the U.S. government) that you attend what is referred to as "independent third party counseling".  The agencies are typically non-profits (consumer credit counseling agencies or  government agencies - city and county housing agencies).  The individual counselors (Reverse Mortgage Counselors) are specially trained to discuss the HECM Reverse Mortgage.  They have no relationship with the lenders.

Appointments with the counselor can be done in person (the preferred method) or over the phone.  A list of HUD certified counselors can be found at these two websites: National HECM Counseling Network. These are national organizations. Or if you'd like to find a local agency, go to HECM Counseling Agencies. I'd suggest searching by state. If there isn't an agency in your city or zip code, it will NOT show the next nearest agency. It is unusual for the counselor to be available when the first call is made.  It is usually necessary to make an appointment, even for a phone counseling. 

For the longest time, this counseling was free.  Changes were made allowing counselors (they are non-profits or local government agencies) to charge up to $125 for a session.  Most do charge that although they are allowed to waive that fee for anyone they determine cannot afford it.  That doesn't happen often. Occassionally, they get a grant and may offer the counseling at no cost to the borrower. So ask what they are charging.

(Update as of 9/11/2010) Congress has mandated that counseling agencies now do more than an educational overview of what a reverse mortgage is. This used to take 45 minutes to an hour. The counseling is now much more detailed. The counselor used to do most of the talking - educating the potential borrower. Now they will be asking a lot of questions about your specific situation, including details about your finances.

Before the counselor can begin, they have to make sure the borrower has seen the NCOA booklet Use Your Home to Stay at Home. They will use NCOA's Financial Interview Tool to cover the details they are now required to ask about. It will cover questions similar to this Financial Tool. In addition, for those with incomes below 200% of the Federal Poverty Level ( $22,340 per year for a single person and   $32,260 for a couple in 2013) will be required to complete the process at Those above 200% of the poverty level will be offered the Benefits Check Up but it is optional. The Benefits Check Up helps people determine what programs and benefits may already be available to them.

Once they have completed the counseling, they will give the borrower an original counseling certificate.  If the counseling was done over the phone, they will mail it.  The lender will need this original certificate in order to take the application. 

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