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Reverse Mortgage - Counseling Information

Complying with FHA's HECM Counseling Guidelines
The most important consumer protection built into the reverse mortgage program is the requirement that a prospective borrower must first meet with an exam-qualified, independent third-party counselor approved by the U.S. Department of Housing and Urban Development (HUD) before signing a loan application or incurring any fees. Prior to the mandatory counseling session, HUD requires that all borrowers receive an information packet. This information packet must include the following materials:
Plaza's Counseling Package from Bay Docs is compliant and includes all these items listed below:
  • An informational document called "Preparing for Your Counseling Session"
  • A printout of loan comparisons
  • A Printout of the Total Annual Loan Cost (TALC) Disclosure.
  • A Loan Amortization Schedule
  • The National Council on Aging (NCOA) booklet "Use Your Home to Stay at Home – A Guide for Homeowners Who Need Help Now"
  • Plaza's Counseling Package from Bay Docs (Page 2) has an Access Code for the borrowers to give to the counseling agency.
    • This will prove to the agency receipt of the above required documents
    • This will provide the agency with your borrower's proposal as produced in our system
    • Borrower's do not need to sign the Counseling Package, only the Certificate
What are Some Important Rules that Originators Must Follow
  • A Loan Originator may not steer, direct, recommend, or otherwise encourage a client to seek the services of any one particular counseling agency. This is Steering and is forbidden.
  • As stated in ML 04-25, "before, during, or after the counseling session is completed, the lender may NOT contact a counselor or counseling agency to refer a client; discuss a client's personal information, including the timing or scheduling of the counseling; or request information regarding the topics covered in a counseling session."
  • HUD recommends that a lender refer a client to counseling prior to taking initial application.
  • Loan Originators are strictly prohibited from assisting a senior in scheduling counseling; borrowers are not to be pressured in any way and must contact a counseling agency at their own pace.
  • As mandated in Mortgagee Letter 2008-28, a lender may not pay for counseling.
Originator Discussion to Borrowers
  • Upon completion, recommend that your borrower instruct the Counselor to Fax/ email the completed certificate to your attention. Your borrower must independently provide the counselor with your information.
  • Counseling typically takes 60-90 minutes.
  • Counseling can be taken over the phone. This is the most popular method.
  • Instruct your borrower to immediately sign and date the competed certificate.
  • Contact your senior client after to discuss any questions that may have arisen during the session.