Reverse Mortgage Counselors Outperform Others in Gaining HUD Certification

In fiscal year 2020, 70,519 clients received counseling for Home Equity Conversion Mortgage (HECM) loans, and thus far in fiscal year 2021 an additional 19,156 clients have received such counseling. This is according to statistics shared with the reverse mortgage industry by David Berenbaum, deputy assistant secretary in the U.S. Department of Housing and Urban Development (HUD)’s Office of Housing Counseling.

While there was a small overall drop in total housing counseling sessions in 2020, the drop was a little over half as severe (7%) as the drop recorded in 2019 (12%), Berenbaum explained. Challenging economic conditions stemming from the COVID-19 coronavirus pandemic could also help to make the case to seniors for the potential use of a HECM product, he said.

Counseling down, but HECM potential remains

Counseling overall was down in 2020 according to Berenbaum, but the difficulties endured by the nation will likely cause those numbers to tick upward and to have a material impact in the origination of new HECM loans, which will translate automatically into more HECM counseling sessions, he says.

“I think because of the challenging economy we’re [currently] in, the use of the HECM product represents a significant opportunity for many elders to take advantage of the benefits of the program,” Berenbaum explained during his presentation. “In the last fiscal year, we counseled slightly less than a million consumers, there was a drop, but that drop is related, I believe, to organizations moving to virtual or telephonic operations, which of course, was the norm for really our society as a whole last year. This year, we’re expecting to reach 1.2 million consumers served.”

One of the more visible ways that the HECM program appears to be making a difference in the lives of seniors is in a particular measurement related to clients’ abilities to call on information or services that help to enhance or stabilize their housing finance situations, Berenbaum explained.

“I’m happy to report that over approximately half of our consumers improve their financial capacity each year,” he said. “And that is something that we look to document more through improved data analytics, as well as reporting in our program and our systems. And then overall, in this period of time of [FY 2018-2020], we documented that close to half-million consumers have access to resources that help them with their overall financial situation, and that course is especially true in the reverse mortgage program.”

HECM counseling activity in the office

Since 2018, the Office of Housing Counseling at HUD has served over 200,000 HECM reverse mortgage clients, according to statistics cited by Berenbaum. These figures do not always correlate to closed HECM loans, but during that time the amount of HECM counseling sessions processed by the national roster of approved HUD HECM housing counselors has steadily increased.

In FY 2018, 63,371 clients were served by HECM counseling, a figure that increased the following year to 64,241 clients. However in FY 2020, the figure of served HECM clients accelerated, rising to 70,519 clients served. In fiscal year-to-date 2021,19,156 clients have been served thus far, but that number on its own may not offer up the full story, Berenbaum posited.

“I suspect that number has increased, in fact, since this [presentation] was created,” he said. “I do think we will continue to see an increasing trend of sessions moving forward.”

HECM counselors outpacing others in certifications

Since the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010, it was determined that housing counseling required under or provided in connection with HUD programs must be provided only by certified housing counselors who work for organizations approved to participate in HUD’s Housing Counseling Program. The original deadline to comply with this requirement was August 1, 2020, but complications from the pandemic caused the deadline to be pushed to August 1, 2021.

The overall progress in certification is moving along at a steady pace, and HUD has been pleased with the overall progress, Berenbaum explained.

“We’re making very good progress with regard to how we’re moving forward with […] certification,” he said. “And in fact, so far this year – this is even a little out of date – approximately 77% of the nationwide cohort of housing counselors have realized full certification under the new requirements.”

More significantly, however, is the pace of HECM counselors earning their certification, as those particular professionals are being certified at an even faster rate than the nationwide average, he said.

“In the reverse mortgage space, I’m happy to report that 86% of HECM-certified counselors are also now HUD-certified counselors,” he said. “And, we’re working very diligently to ensure that in fact, all counselors become fully certified. [We’re] taking steps as well to move forward to the next cohort of counselors.”

Counseling has understandably taken on more importance during the COVID-19 national emergency first declared under the previous administration, and additional investment in HUD due to the recently-passed American Rescue Plan legislation could end up having an impact on the rate of counselors seeking full certification, Berenbaum said.

“Congress has appropriated, under the new Biden initiative, $100 million to housing counseling, in particular to foreclosure prevention and eviction prevention activities,” Berenbaum explained. “As a result of that, we do expect to see a significant rise in the number of counselors taking the certification exam.”

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