Reverse mortgage counseling fees
February 22nd, 2011
- FHA On Counseling Fees — Again
- What to Expect from Reverse Mortgage Counseling
- Counseling Fees on Hold
- HUD — Lender-Funded Reverse Mortgage Counselors Just Fine
- Reverse Mortgage Counseling
Reverse mortgage counselors recently got the OK to increase their fees for providing services to senior citizens seeking guidance on Home Equity Conversion Mortgages (HECM). The Department of Housing and Urban Development (HUD) outlined the changes in a letter to reverse mortgage lenders and HUD-approved counselors.
HECM counseling fee structure
Previously the fee for reverse mortgage counseling was capped at $125 for each session. However, the letter states that the cost of providing HECM counseling has increased. Now counseling agencies can establish a fee structure as long as:
- It is reasonable and customary
- It does not exceed a level commensurate with the counseling services provided
- It is not being charged to pay for the same portion of or the entire service already funded with a HUD grant
Disclosure about fees
HECM counselors are required to disclose the fee structure to clients. If you seek counseling and are unable to pay, you must not be turned away. Reverse loan counselors who choose to charge should not collect a fee at the time of the counseling session if you have an income that is below 200 percent of the federal poverty level. The fee can be charged at the closing but you must be advised of the amount during the counseling session. You would need to provide documentation that your income falls below 200 percent of the poverty level. The documentation could include tax returns or Social Security pay stubs.
Counseling with a HUD-approved agency is required before you can apply for an HECM. The counseling session should include a comprehensive review of your finances. Counselors should help you understand reverse mortgage guidelines, as well as alternatives to borrowing money.