Reverse Mortgage Guide

In case the original message below was not sufficiently clear, the FHA has issued a clarification, to wit:

FHA Home Equity Conversion Mortgage (HECM) Counseling Services: To clarify the previous message sent on 11/20/07 regarding HECM counseling, prospective HECM borrowers may not pay for HECM counseling services until FHA issues guidance. Lenders may continue to pay for these services, either on a case-by-case basis or through a lump sum contribution to a HUD-approved housing counseling agency.

Since counselors exist to provide independent and unbiased information to reverse mortgage borrowers, how are they helped by lender payments? Imagine if defendants were allowed to pay judges….

The original message is below:

“On September 28, 2007, a Final Rule was published in the Federal Register at 72 FR 55638 and codified at 24 CFR Part 214 establishing new regulations for the Department of Housing and Urban Development’s (HUD) Housing Counseling Program. Included in the final rule is a provision authorizing housing counseling agencies to charge fees for counseling and education.

“HUD is in the process of finalizing a mortgagee letter to clarify HUD policy regarding reverse mortgage counseling fees in light of these regulations. Until the mortgagee letter is published, agencies must not charge fees for reverse mortgage counseling.

“Agencies may charge fees for pre-purchase, non-delinquency post-purchase, and rental counseling and education, provided they conform to the criteria in the final rule.

“However, no fees may be charged for clients needing homeless counseling or default counseling.”

The view here remains — still — that while counselors can be paid for their efforts they should not be paid by lenders.

This entry was posted on Friday, November 23rd, 2007 at 3:56 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.