With counseling funding cut from the federal budget, but counseling remaining a requirement for reverse mortgage borrowers, Tom Kelly columnist for The Spokesman-Review in Spokane, Washington, is calling for private lenders to be allowed to fund reverse mortgage counseling.
Current funding for reverse mortgage counseling is expected to fund agencies through September 30, 2011. Following that, free counseling for reverse mortgage clients is expected to dry up, other than for those meeting low income thresholds mandated by HUD. The costs for the counseling sessions are also expected to increase as a result of a recent mortgagee letter. The cut in funding also suggests that HUD may have to consider raising the current threshold so fewer clients qualify for it.
Kelly acknowledges the threat of conflicts of interest in allowing lenders to provide funding for counseling.
However, in this case he argues, lenders should be allowed to help bridge the gap until funding is restored. The counseling is required, but some seniors with need may not be able to explore a reverse mortgage because they cannot afford the counseling.