As part of the new counseling protocols from the US Department of Housing and Urban Development, counselors are required to use the National Council of Aging’s web based Financial Interview Tool (FIT) to create a budget for the client based on their income, assets, debt and expenses.
Using FIT, counselors will ask a series of questions to help the client report income, debt, and expenses to illustrate their current financial situation and determine how a reverse mortgage might assist them in meeting their needs and goals.
“The tool will help the client and the counselor better understand various issues that the client will face in the future and provide a deeper understanding of whether the reverse mortgage will assist the client in aging in place over the long term,” said Sue Hunt, Reverse Mortgage Program Manager for CredAbility.
The tool is available online (surprisingly) and can be accessed by anyone here. Through a few key questions, FIT will help you discuss life factors such as declining health, limitations in the home environment, or recent life transitions according to the website. These issues (marked with yellow flags) can affect the financial sustainability of the borrower and make it hard for borrowers to stay at home and benefit from the loan.
FIT provides a summary of these factors, which can help counselors to identify features of a reverse mortgage that might benefit the client, assess the impact of their financial needs on remaining equity over time, and consider other options. The FIT review number reflects the total number of yellow flag issues that were raised during the counseling session. The lower the FIT review number, the more carefully clients should consider a reverse mortgage.
In addition to using FIT, counselors are required to complete a BenefitsCheckUp for clients whose income falls below 200% of the Federal Poverty Level (FPL) or who are disabled. Using BenefitsCheckUp, counselors can quickly screen more than 1,800 public and private benefits programs from all 50 states and the District of Columbia.
“These benefit programs include tax relief, energy assistance, health care and in-home services, prescription drugs, nutrition programs, housing, and programs for which a client may be eligible, and provide contact information to help them apply for these benefits,” said HUD in the counseling protocol.
The decision to obtain a reverse mortgage is the client’s decision regardless of the budget results according to HUD. The tool hasn’t been rolled out to HECM counselors, but agencies expect it to be implemented on Sept 11, 2010, along with the other new protocols.
