MortgageReverse

New Requirements For Reverse Mortgage Counseling

image The U.S. Department of Housing and Urban Development (HUD) published Mortgagee Letter 2009-10 to clarify several issues regarding HECM counseling for prospective borrowers.  According to ML 09-10, FHA wants to ensure that prospective borrowers initiate the request for HECM counseling.  Lenders may not contact a counselor or counseling agency to refer a client, discuss a clients personal information, including the timing or scheduling of the session.  

The ML states that HUD is aware of instances where lenders have dialed a counseling agency’s phone number and then handed the phone to the borrower to schedule counseling or the lender entered the borrower’s contact information into a web-based system which automatically put that borrower’s name in a queue to be called by a counselor. 

Other new requirements from ML 09-10:

  • Lenders are required to provide every client with a list of no fewer than ten (10) HUD-approved counseling agencies that can provide HECM counseling, five of which must be in the local area and/or state of the prospective HECM borrower with at least one agency located within a reasonable driving distance for the purpose of face-to-face counseling.
  • HECM counselors are required to review a client’s unique financial situation during a HECM counseling session.  In order to conduct this review, a counselor must document a client’s budget based on financial information (e.g. income, assets, debts, monthly expenses) provided by the client.
  • Form HUD-92902, Certificate of HECM Counseling has been updated.  The revised certificate provides a space to record how the session will be paid, – either “Upfront Fee for Counseling Session” or “Financed Fee for Counseling Session” – and a box to check if the fee has been waived. See copy here

To learn more about the ML-10, click the link below.

Mortgagee Letter 2009-10

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