FHA’S NEW REVERSE: Independent Borrower Counseling … And We Encourage Heirs To Attend!

The Department of Housing and Urban Development (HUD) now requires that a third-party counselor be involved in every FHA insured Home Equity Conversion Mortgage (HECM).

Why is this so important in the protection of the borrower’s interests?  Because in the old days older homeowners were getting into loans that were poorly understood and, prior to 2013, were many times were not the right loan product for them.  And those loans lead to a great deal of heartache.

Now, with the changes to HECM loans by HUD, borrowers, co-borrowers and non-borrowing spouses must attend independent borrower counseling, whether in person or by phone.  Heirs are also encouraged to take the counseling course, which can take from 60 to 90 minutes. Why should you include your heirs?  If they are indeed going to be heirs, the last surprise anyone wants to hear from an executor is…  “there’s a mortgage on your parent’s property”.

How do you get the details behind the counseling? 

The loan originator will provide a list of approved counselors, however, in protecting the borrower even further, the originator is forbidden from recommending any particular counselor to the borrower. They are all FHA/HUD approved, but your mortgage originator just cannot recommend one over the other.  The borrowers then call as many as they would like, find out the when and how, and then book the appointment.

What happens during the independent borrower counseling session?

The counselor makes sure that the HECM loan is well understood, that the borrower understands the risks of the product and what the borrower’s responsibilities are to make sure the loan does not unintentionally come due… Just like any mortgage.

So, what are some of those items that can cause the loan to come due?

• The last borrower vacates the home for more than 12 months.
• Taxes, insurance, other required property fees (HOA, Flood insurance, etc,) are left unpaid.
• The home is not kept in good repair.

Other than the first bullet, all these items are typical of any mortgage.  Liens and lack of maintenance directly impact the lenders collateral and can cause a default on a mortgage.  Remember, it’s still your house and still just a lien against the property that has to be satisfied at the end of the loan.

Maybe you, or someone you know, needs a success story but still thinks the new HUD/FHA Home Equity Conversion Mortgage is too good to be true?  As with any loan product, there is always additional information to discuss. Give Richard McWhorter of Ridge Reverse a call, text (863-456-7810) or email (richard.mcwhorter@amerifund.com) and find out why what you use to think about reverse mortgages is keeping you from one of the best and safest long term financial products on the market today.

Next step?

Want to know more about the special protections FHA, HUD and the CFPB put in place for your HECM? Simply reach out to us at Ridge Reverse and let’s discuss how we can help you with a product designed specifically to meet your needs for a lifetime of happiness… while enhancing long term cashflow and quality of life. Feel free to call, text (863-456-7810), or email richard.mcwhorter@amerifund.com and find out more.

Ridge Reverse, powered by Amerifund, provides an Equal Housing Opportunity. Information is subject to change without notice. This is not an offer for extension of credit or a commitment to secure a loan. Some restrictions may apply. This material is not from HUD or FHA and has not been approved by HUD or any government agency.

Richard W. McWhorter, NMLS 1618644, is an independent reverse mortgage specialist and can assist in your reverse mortgage needs in most states. Follow him on LinkedIn, the Ridge Reverse website or contact him directly at richard.mcwhorter@amerifund.com.