As part of the process to apply for a Reverse loan, seniors are required to undergo counseling per HUD, to help them to better understand the loan and to see if they may have other options for funds, in lieu of those from a Reverse loan.
Generally the counseling is done over the phone and there is a $125 charge to the client. They will receive a certificate verifying that they have completed the counseling, give a signed copy to their Loan Officer and then the loan application can move forward. Without the counseling certificate, the Lender cannot start processing a loan.
HUD is in the process of making some changes to this procedure and counselors will be required to ask a series of 10 questions to the applicant to determine whether or not they understand the loan process. It’s a good idea, but I feel that it will put undue pressure on the senior, because if they don’t answer at least 5 questions correctly, they will have to wait an additional 7 days before they can do the counseling again.
They should not be put into a position of possibly failing this process. Seniors need to be protected from financial abuse, but I think that this will just make the process of applying for a Reverse Mortgage too intimidating.