Reverse Mortgage Counseling Faces New Challenges in Funding Change

Changes outlined in a notice of funding availability released by the Department of Housing and Urban Development indicate that the process by which reverse mortgage counseling funds are granted and distributed will work differently going forward.

Both an effort to incentivize counseling intermediaries toward partnering with smaller agencies as well as the elimination of a separate category for reverse mortgage funding allocation will change the landscape for the funding.

Intermediaries right now are working to determine how much grant funding they will apply for, but the impact of those changes is unknown until the grants are actually made by HUD, say the agencies. In some ways, the quest for funding will be more challenging, but in other ways, it stands to become much simpler, they say.

“There is not a separate source of funds specifically for reverse mortgage counseling as in previous years, which means reverse mortgage counseling will have to be filtered through the same comprehensive funding source as all other types of housing counseling, like pre-purchase, mortgage delinquency, rental,” says Setina Briggs, housing program manager for GreenPath Debt Solutions. “This could present a challenge because less funding is available and agency may have to choose which types of housing counseling will be funded through their grant and which services will be client-pay.”

Counseling funding has presented heightened challenges in recent years with funding having been wiped out all together as the result of a budget deal in 2011, then reinstated at a lower level than requested in 2012. Agencies have been sensitive to those changes, at times being able to offer reverse mortgage counseling for free, and at other times having to reintroduce and even raise fees.

Some see the new process as simpler for the intermediaries, however, as it rolls to separate applications into one.

“It simplifies the application process because now you are only making one request versus having to make two requests,” says Martha Viramontes, housing director at ClearPoint Credit Counseling Solutions.

Additionally, the incentives for partnerships between intermediaries and smaller agencies may prove to make services more available for consumers.

“This may be a positive development because you’re able to provide more consistent services when you partner with other organizations,” she says.

The agencies expect to know more once the grant process is carried out this year, but largely they are encouraged.

“The National Council on Aging is encouraged by the streamlined application process for housing counseling funding,” says Amy Ford, director, Reverse Mortgage Counseling Services Network for NCOA. “According to the NOFA and our discussions, HUD indicates they remain fully committed to supporting reverse mortgage counseling, despite the removal of the Supplemental funding category.”

Written by Elizabeth Ecker

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