The U.S. Department of Housing and Urban Development has proposed a rule that would amend HUD's Home Equity Conversion Mortgage regulations to establish new testing standards to qualify counselors as eligible to provide counseling to prospective HECM borrowers.
Home equity conversion mortgages are popularly referred to as 'reverse mortgages,' and are designed to enable elderly homeowners to convert the equity in their homes into streams of income.
This proposed rule would establish regulations to ensure that third-party information sources are properly trained and qualified to provide adequate counseling to elderly homeowners applying for a HECM loan.
The rule would also establish a roster of eligible HECM counselors. Among the qualification requirements proposed by the housing agency, counselors must be employed by a HUD-approved housing counseling agency. Additionally, a counselor must pass a standardized HECM test that assesses minimum competencies. To remain eligible to counsel applicants seeking a HECM loan insured by HUD, approved HECM counselors must continue to receive training and education.
Under the proposed rule, HUD HECM qualification could be revoke for failure to comply with eligibility requirements, civil rights requirements, applicable statutes, regulations, or other written instructions or standards issued by HUD; and failure to maintain any registration or certification requirements of a state or local authority. A counselor may also be removed from the roster for steering clients to a particular lender, HUD said.
The department said in a statement that it believes that this proposed rule would contribute to improving the quality of HECM counseling, which is intended to help elderly homeowners to make more informed decisions when considering whether to pursue a HECM loan.
LINK: the full docket on the proposed rule can be accessed here