In 2012 HUD began fine tuning its HECM (Home Equity Conversion Mortgage) program to make it more senior friendly. At that time they instituted the requirement that you complete mandatory HECM counseling seven days prior to starting any paperwork for a Reverse Mortgage.
What is HECM counseling?
Mandatory HECM counseling provides seniors with the necessary exposure to make an informed decision about getting a reverse mortgage. Like originators, a HECM counselor’s job is also rooting in education. HECM counselors help prospective borrowers more clearly understand the inner workings of reverse mortgages. It also gives seniors the chance to ask questions they might not feel comfortable asking their reverse mortgage loan officer.
You will still own your home
“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.
“They are always surprised to learn they still, in fact, own the home even with a reverse mortgage,” she said.
Are Reverse Mortgages too good to be true?
“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.
A Reverse Mortgage sounds too good to be true. Borrow money and I don’t have to make payments? Our internet driven world has created some information that borders on unbelievable and Reverse Mortgages are no exception. But spending an hour, whether in person or on the phone with a HECM counselor will help you get the peace of mind knowing the decision you make about The New Reverse Mortgage is the right one.
What is the HECM counselor’s job?
Tetreault’s job is to clarify that the funds obtained from a reverse mortgage must be repaid at a later date. Just because borrowers aren’t required to make monthly payments toward the loan balance, they are still required to maintain property taxes and homeowner’s insurance.
“We talk about what their responsibilities are as reverse mortgage borrowers. We want to make sure they do not put themselves at risk of foreclosure,” she said.
When should I get HECM counseling?
You have to complete HECM counseling and receive the certificate of completion before your Reverse Mortgage loan officer can begin processing your loan request. Your loan officer will give you a list of the certified HECM counseling agencies, along with their contact information. You will also receive a packet of documents explaining the process. These documents will need your signature and date showing you received the information prior to scheduling your HECM counseling.
The New Reverse Mortgage isn’t for everyone…but it could be!
How do I know if The New Reverse Mortgage is right for me?
If you’re still wondering if a Reverse Mortgage is the right solution for you but you’re not ready to sit down with one of our Reverse Mortgage Experts, then we’ll be happy to mail (or email) you Use Your Home to Stay at Home which is the official federally approved consumer booklet for those considering a reverse mortgage.
Some of this information first appeared on ReverseMortgageDaily.com