What to Expect from Reverse Mortgage Counseling

A recent Government Accountability Office (GAO) undercover investigation found that some reverse mortgage counselors aren’t thoroughly discussing options available to elderly homeowners. The GAO report said undercover investigators participated in 15 counseling sessions. In 14 of those cases, reverse mortgage counselors did not completely explain the financial impact of getting a reverse mortgage. The report also said that in seven of those cases, counselors did not tell seniors about alternatives to getting reverse mortgages, which is required.

If you plan to get a Home Equity Conversion Mortgage (HECM), you must get counseling. Some other reverse mortgage programs do not require counseling, but it’s a good idea to get it anyway. So what should you expect from a reverse mortgage counseling session?

• Reverse mortgage counseling can occur over the phone or in person. Mortgage lenders are required to give borrowers a list of at least five counselors in their state that are approved by HUD. One of those counselors must be within driving distance, and you may want to take the time to meet in person.
• Counseling sessions usually last about an hour, but if you do it by phone it may take two phone calls.
• Some counseling sessions are free while others may run up to $125 depending on the borrower’s financial situation.
• Reverse mortgage counselors who provide HECM counseling must pass a HUD-approved exam with high scores.
• Reverse mortgage counseling can be requested by homeowners who are 62 and up, as well as their legal guardians or individuals with durable power of attorney.

Your counseling session will involve going over your finances and putting together a budget based on your income and expenses, debts, etc. Your counselor should help pinpoint exactly why you think a reverse mortgage will help you and the pros and cons of getting one.

This entry was posted on Friday, September 4th, 2009 at 2:49 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.