As the industry awaits word from Mother HUD on what counselors may, can or should do – or not – on certain key issues, questions have arisen about the purpose and product of this forthcoming federal mandate. There is little doubt that updated regulations, which are expected to bring stronger assessment tools and a financial analysis of each client “will bring a new role for the counselor,” said Daniel Fenton, Senior Housing Director for Money Management International (MMI).
Fenton expects the new rules to change the essential counseling function “from a purely educational, supportive role to where the client has to prove something to the counselor to get the certificate” necessary to procure a reverse mortgage. “Now that counselors are allowed to charge for their services, what should a client expect from a counseling session?” Fenton asks rhetorically.
“The use of counselors is always a positive but it needs to be monitored,” offers Cliff Auerswald, president of Garden Grove, Calif.-based All Reverse Mortgage Corporation. He volunteers that “much of the subprime mess could have been avoided with tougher counseling requirements in place.” Auerswald notes that counseling by phone, “did not pose the obstacle that an in-person interview could have.”
Overall, “counseling is a requirement for reverse mortgages because of [the product’s] complexity,” explains, Linda Bridges, assistant vice-president, reverse mortgage servicing for Wells Fargo Home Mortgage. Impressed by the importance of counseling, Bridges even wondered aloud, somewhat casually during a panel discussion on servicing earlier this year, if the forward mortgage world ought to embrace it. “These days, with the credit crunching, maybe we do need some counseling on the forward side – that’s my personal opinion.”
Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade, currently specializing in the reverse mortgage sector. He can be reached at [email protected]