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Expert Answers on Reverse Mortgage Counseling
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Question From Julie W.
Hi I will be 62 in Oct can I start the paper work for the review mortgage? Thank you
HUD allows you to begin your application 60 days prior to your 62nd birthday. You can do the counseling any time but it is only valid for 6 months so you would not want to complete it too soon or you would have to repeat the course.
How long does the reverse mortgage counseling take?
The protocol states that the reverse mortgage counseling session should last about an hour as they go over the programs, what happens when you pass and your financial picture to be sure that even with the reverse mortgage you are still not placing yourself in a bad position (after all, if even with the reverse mortgage you cannot achieve the goal of being able to live in your home comfortably for the rest of your life, it is probably not the best option). However, I have known people who finished the counseling more quickly because of the extensive research they had done before they ever took the counseling and their high level of familiarity with the program and its features, and I had one customer who told me that they spent 3 ½ hours with the counselor!
The borrowers in the case of the very long session told me that they sought their counseling before anything else and had no basis of knowledge when they first went in. They were not even familiar with the basic concepts of a reverse mortgage and knew none of the terms when they went for counseling but wanted to talk first with someone who, in their words, “would teach them about the loan but would not try to sell them one”. They told me that in retrospect, they would not recommend that course of action and would do more research before the counseling session if they had it to do all over again, but you can get your counseling before you have even spoken with a lender if you so choose. The actual session time will depend a lot on you and your knowledge of the program before you start the session.
I understand that counseling is required before entering into a reverse mortgage agreement? In what year did that become required? Is it a legal lien if the counseling never was received?
HUD teamed up with AARP in 2001 to train and establish a counseling protocol for all borrowers. The counseling requirement at that time was not a requirement in order to make the lien a “legal” lien, but one that HUD required in order to insure the loan. Since that time, HUD implemented rules that allowed borrowers to waive counseling requirements in some instances (for example, if they were refinancing an existing reverse mortgage on which they had received counseling within the previous 5 years and for which the borrower received certain concrete benefits with the new loan). Some states now require counseling as a part of their state laws so even in the instances where HUD would allow the borrower to waive the counseling requirement, the counseling would need to be completed for that loan in that state regardless of prior counseling.
However, HUD will not insure the loan if the borrowers did not receive reverse mortgage counseling, either at the time of the loan’s origination or at some point in the previous 5 years on a previous HUD HECM loan if the current loan was a refinance of an existing reverse mortgage. Proprietary or private reverse mortgage programs are not insured by HUD and the counseling protocol of these programs may be different.
After receiving counseling can I change my mind and cancel my reverse application?
You absolutely can! In fact, you have the right to cancel the transaction all the way up until the time the loan closes. But there is no reason you should go to the expense of ordering an appraisal if you know you don't want to proceed. The lender cannot charge you a cancellation fee if you know this is not the right loan for you I would recommend that you cancel this point in time. Good luck with whatever you decide to do.
We called a counselor to make an appointment and they said that we were supposed to get a "packet" from you all. Do you know what they are talking about and can we access online and if so how? Thank you, Degolia
The counselor is "kind of right". Borrowers do not need to contact a lender for anything prior to a session with a counselor and in fact, many borrowers choose to talk to a counselor before they even choose a lender. However, if you do know who your lender is going to be, then the counselors want to see the Loan Comparison Page, the Amortization Schedule and the Total All Loan Costs (TALC) from the proposal that you received so that they can go over the actual numbers you received. If you have never gotten these items, then they have to send them to you in the mail before they will even schedule the appointment and it slows down the process.
There are a number of ways to get the necessary documents to the counselor. Here at All Reverse Mortgage, we set up a website and when we prepare a proposal for our customers we also give you the website address and an access code for you to give to your counselor. They can then log on to the website and by using the code you supply to them, they can pull the forms they need right off their computer. For those few who cannot access external websites, we also offer to have them contact us directly and we can send them the forms they need so as not to delay your appointment.
So if you have already obtained a proposal from us, you have the forms they require in the information we sent to you. You can either give them the counseling access code and website address, you can just forward the proposal to the counselor directly from your computer and the forms they require are included, or you can have them contact us and we will be happy to help by sending them the specific forms listed above that they require.