Counseling is an essential part of the Home Equity Conversion Mortgage (HECM) origination process, and the U.S. Department of Housing and Urban Development (HUD) has recently refreshed some of its guidance documents for HECM counselors to offer essential information.
HUD this month published a “toolkit” detailing how someone can become a HECM roster counselor. The document “outlines the steps required for HECM roster certification, including training, examination, and maintaining active status, and emphasizes the importance of providing accurate and unbiased counseling to potential HECM borrowers,” HUD said.
The document outlines the basics of the HECM program and its associated counseling requirements; details the steps for gaining HECM roster certification from the agency and offers other resources for HECM roster counselors.
The HUD housing counselor certification is separate from the HECM roster certification, though there is some overlap. A counselor “must be a HUD certified housing counselor and on the HECM roster to provide HECM origination counseling,” the document explains, meaning an extra step is required for a HUD-certified housing counselor also seeking to provide services for HECM borrowers during origination.
Standard HUD-certified counselors can provide reverse mortgage default or other types of reverse mortgage origination counseling, but require a HECM-specific certification for the origination of Federal Housing Administration (FHA)-backed HECM loans.
“HECM roster counselors must not offer or perform any services that conflict, or appear to conflict, with the best financial interests of the client,” the document said. “In turn, reverse mortgage lenders may not steer, direct, recommend or otherwise encourage a client to seek the services of any one particular counselor or counseling agency.”
A second, smaller document was also issued this month designed specifically for HUD-approved counseling agencies. It provides guidance on what agencies need to know about HECM and reverse mortgage counseling.
It reiterates some of the requirements outlined in the first document, adding that HUD-approved counseling agencies “may also provide general group education on reverse mortgages, but this does not take the place of one-on-one counseling required for the HECM certificate,” it reads. “There are a few key steps an agency must take to provide reverse mortgage and/or HECM counseling.”
The document also offers information about adding HECM counseling to an agency’s work plan; addressing the method of delivery for counseling services (i.e. virtual, telephonic or in-person); communicating fees and disclosures; supporting HECM roster certification and compliance; and maintaining client file documentation.
Last month, nonprofit counseling agency Credit.org announced it will offer more prospective reverse mortgage borrowers a new e-learning course that aims to demystify reverse mortgages for interested parties.
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