Counseling

Reverse Loan Counseling

Before anyone can apply for the FHA Reverse loan, they have to complete counseling with a HUD approved counseling agency.

If anyone would like a copy of the list, please contact me and I will send it to you without any obligation on your part.

I haven’t been doing any video in quite some time and today I decided that I would and then post it here.  I certainly hope it works just fine.

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HUD Approved Counseling for Reverse Loans

As mentioned in my previous 2 posts, counseling by an HUD approved agency is required by the federal government prior to applying for a Reverse mortgage.

Now, that does not mean or obligate anyone who completes the counseling to apply for this loan, it’s simply an excellent option for anyone that is seeking accurate information about the HECM program and not be influenced by some of the myths that continue to circulate about it.

I can provide a list of some of these approved agencies and they do typically charge an $125 fee for their service.   But it’s worth it, plus once completed the “applicant” will receive a HUD Counseling Certificate that verifies they have completed the counseling and if they decide to move forward on a loan application, they will need to give this to the Loan Officer.

Here is the remainder of the article about counseling that I have been sharing on my blog.

“Clarifying what makes the reverse mortgage become due and payable creates some surprise among prospective borrowers, Tetreault said, but it also opens the door to other questions that seniors might not have thought about previously, such as what happens if they do not pay property taxes and insurance payments on time.

“We talk about what their responsibilities are as reverse mortgage borrowers to make sure they do not put themselves at risk of foreclosure,” she said.

The million-dollar question

HECM counseling is a necessary stepping stone in the older homeowner’s journey to get a reverse mortgage. This decision is typically prompted by a significant need, whether that is the result of an unexpected personal issue or even the intrigue of using home equity to supplement retirement wealth.

In many cases, the million-dollar question is: how much money can I get from a reverse mortgage?

One of the things ClearPoint does off-the-bat is ask counselees how they plan to use the money they receive from a reverse mortgage; whether that means using these funds for daily or future expenses, paying off debt, etc.

In understanding what the loan proceeds will be used for, Tetreault said counselors can help prospective borrowers determine if a reverse mortgage is really the right product for them, or if there are other alternatives that might fit best with their financial plans.

At the end of the day, the decision to get a reverse mortgage hinges upon education and the awareness of what other resources are available to seniors that can help them accomplish their personal needs.

“Education empowers consumers,” Tetreault said. “Whether seniors take that information and decide to get the reverse mortgage or not, at least they are educated and have an understanding of all the choices and options available to them.”

Written by Jason Oliva/Reverse Mortgage Daily

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HUD Counseling for a Reverse Mortgage

As I said in the previous post, anyone that intends to apply for a Reverse loan must first complete counseling with an HUD approved agency.

Originally this service was free and funded through Grants, but due to the increase demand for Reverse loans, it soon became very apparent that it would become necessary to charge a fee for this service.

As of this “writing”, most of the agencies charge $125.00 but it is refundable if the senior does apply for a Reverse loan.    They will be given a credit at the close of Escrow for this upfront fee and the HUD Certificate for Counseling that they receive, is effective for 6 months in the event they don’t immediately apply for the loan.

Here is the second part of the article that I shared in my last post.

“Although many prospective borrowers already have some knowledge of reverse mortgages, having done their own research prior to the counseling session, Tetreault, who has been a credit counselor for 16 years and a HECM counselor for seven years, admits that the misunderstanding about the transfer of homeownership continues to be one of the most frequently asked questions during the counseling process.

“They are always surprised to learn they still, in fact, own the home even with a reverse mortgage,” she said.

No payments necessary?

The internet provides a wealth of knowledge on just about anything. With a few keystrokes and clicks, even unsavvy web browsers can find the most basic information on reverse mortgages to aid them in their quest for knowledge.

Unfortunately, not everything published on the internet is vetted for accuracy. So it’s not beyond reason to be naturally suspicious of financial products that offer extra cash flow without requiring a monthly payment in return.

“Most of the time, when seniors are coming for counseling, they are skeptical about why they are able to get this [reverse mortgage] loan and not have to make payments,” Tetreault said.

Tetreault’s job then is to clarify that the funds obtained from a reverse mortgage must be repaid at a later date, and that just because borrowers aren’t required to make monthly payments toward the loan balance, they are still required to maintain their property taxes and homeowner’s insurance.”

Jason Olivia/Reverse Mortgage Daily

Counseling is the most reliable resource for anyone considering applying for a Reverse loan, because the Counselor has nothing to gain be giving you honest information.   Plus they cannot steer a potential borrower to any particular Lender.

If you wish a list of HUD approved agencies, please contact me and I will provide you with a list of them

I will share the remainder of this article in my next post.

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HUD Counseling for Reverse Loans

One of the best resources for accurate information about Reverse mortgages is through a HUD approved counseling agency.

As a matter of fact, no one can apply for the loan without completing a counseling session which is typically done over the telephone in about one hour.

Once it’s completed the counselor will send a HUD Counseling Certificate to the individual(s) for them to keep and use if they decide to apply for the loan.

Here is a copy of an article that was published a couple of months ago with more details about this important resource.

“From an educational standpoint, Home Equity Conversion Mortgage (HECM) counselors are the first line of defense in the ongoing struggle to dispel the most common reverse mortgage myths and misconceptions.

Mandatory HECM counseling provides seniors with the necessary exposure to make an informed decision about getting a reverse mortgage. Like originators, the job of a HECM counselor is also rooted in education as they help prospective borrowers more clearly understand the inner workings of reverse mortgages.

Despite this dual effort on the educational front, and the wide variety of positive press from the mainstream media lately, several reverse mortgage illusions have yet to evaporate into the ether.

Borrowers, in fact, still own their homes

One of the most common misconceptions of reverse mortgages is that borrowers automatically relinquish ownership of their homes once they obtain a HECM.

Perhaps the result of negative media representation in the past, the lingering effect of this myth has obscured the truth about reverse mortgages among the general public. The reality is often a pleasant revelation for seniors once they undergo HECM counseling.

“Seniors are under this misconception that they don’t own the home anymore—the lender does,” said Sherry Tetreault, a Tenn.-based certified credit counselor with ClearPoint Credit Counseling.”

Jason Oliva/Reverse Mortgage Daily

Due to the fact that this article is quite long, I plan on sharing it in two additional posts here on my blog.

If anyone would like a list of some HUD approved counseling agencies, please contact me as there are several different ones to chose from, but the counseling process is uniform.

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Reverse Loan Counseling

HUD counseling is required for all potential borrowers prior to applying for a Reverse Loan and I think that many professionals are unaware of this requirement. The Huffington Post recently published an article discussing what takes place during the session and how informative it is in helping a senior to have a better understanding of the loan program and whether or not it’s appropriate for their personal circumstances.

Overall, the article was quite good, with the exception that the writer stated that the counseling must be done “face to face” and that is not true. If that was necessary, it would require that the applicant meet at the counselor’s office for the process, as the counselors will not go to the individual’s home. And they may not be a reasonable option for a senior, especially if they don’t drive or have a medical condition.

In California, all the counseling is completed over the telephone and usually takes about 1 hour. I always prepare my potential client for it, so that they know what to expect and what kinds of questions the counselor will be asking them. It is an excellent way to research Reverse loans with a 3rd. party who would not be part of the transaction and help them to decide if it is something that they want to pursue.

There is a charge of $125 by most of the agencies and I always provide a list of the counseling agencies that are approved with HUD.

Upon completion of the counseling, the senior will receive a HUD Counseling Certificate verifying they have done the counseling that will be viable for 6 months. If they decide to apply for the loan, I would be collecting it along with other necessary documents to begin processing their loan.

If you would like the list of the agencies, please contact me and I will send it over to you. And if you have any questions about the Financial Assessment and other recent changes to the federal program.

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