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HUD TO UNVEIL NEW HECM COUNSELING PROTOCOL
BOSTON -- The Department of Housing and Urban Development is expected to unveil a new counseling protocol next month that features stronger assessment tools to ensure borrowers fully grasp the reverse mortgage transactions they have entered into and are made aware of alternative programs that may be more beneficial based on their financial status.
Concurrent with the release of the protocol, HUD will announce the creation of a new HECM Counselor Roster. All counselors who wish to continue counseling seniors will need to pass an exam, thus demonstrating their knowledge of reverse mortgages.
According to Christopher Cline, a senior housing program specialist at HUD, counselors will be required to conduct a thorough financial analysis of each client to better understand the person's unique circumstances and financial situation. Counselors will have the authority to withhold counseling certificates if they feel the borrower fails to comprehend basic reverse mortgage concepts.
To measure the borrower's knowledge, counselors will ask 10 questions from a list of 20 items published in the protocol. Borrowers who do not answer at least five questions correctly will not be eligible to receive a certificate. They will have to wait a minimum of 7 days and then undergo a limited counseling session to address the topics missed on the test. If the borrower goes back to the same counseling agency, Cline indicated the person should not be charged a new counseling fee, even though the issue is not addressed in the protocol. If the borrower goes to a new counseling agency, then the borrower would be charged.
To keep the test from intimidating borrowers, Sue Hunt, a housing counseling manager with Consumer Credit Counseling Service of Greater Atlanta, said that her agency will carefully integrate the questions into the discussion.
The goal of the protocol is to standardize reverse mortgage education among the ranks of approved housing counselors. "This will put all counseling agencies on more or less the same footing," noted Hunt, who participate on the same panel discussion in Boston. "I'm excited for there to be a new protocol. It gives counselors specific guidelines to work with."
The 150-page protocol covers:
· The role and responsibilities of counselors, · The steps of counseling, · Client needs and circumstances, · The features of reverse mortgages, · Financial alternatives, · Reverse mortgage counseling tools, and · An appendix of HUD counseling policies
HUD is also mandating that consumers be given handouts prior to the counseling session, including a loan comparison sheet, amortization schedule and a booklet published by the National Council on Aging titled Use Your Home to Stay at Home. The booklet was published in 2005 from a grant provided by NRMLA and several of our largest members. Consumers can obtain the booklet either from a counseling agency or directly from a lender. Allowing time for these documents to be read prior to the counseling session means that it will take longer for counselors to schedule meetings with borrowers, Hunt said. Currently, CCCS Atlanta can schedule clients for sessions in as quick as 72 hours, but that will most likely be extended to a week or so once the new guidebook is issued.
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