Be Prepared for your Counseling Session

Use this reverse mortgage calculator to receive a complete reverse mortgage analysis including essential pre-counseling documents.

HUD has released the new HECM Counseling Protocol that will go into effect September  11, 2010 requiring certain documents to be provided to the borrower(s) 24-48 hours prior to counseling. These documents will be provided by the counseling agent but may also be provided by the Lender. Before you attend your counseling make sure to have these items handy...

Calculator Loan Results  > View Sample Document

TALC - Total Annual Loan Costs  > View Sample Document

Explains that the cost of any reverse mortgage loan depends on how long you keep the loan and how much your house appreciates in value. Generally, the longer you keep a reverse mortgage, the lower the total annual loan cost rate will be.

Amortization Schedules > View Sample Document

An amortization schedule provides a year by year summery of what to expect in interest accrual, compound interest, available credit line, as well as net equity to be left in the estate. Actual interest charges and property value projections may vary from different programs or cash advances

 

Guides / PDF Downloads

Preparing for your Counseling Session (PDF file, 4 Pages) What You Can Expect from Your Reverse Mortgage Counselor (4Pgs)

Use Your Home to Stay at Home™ (PDF file, 26 Pages) Expanding the Use of Reverse Mortgages for Long-Term Care: A Blueprint for Action

Understanding the Reverse Mortgage

Counseling agents are required to withhold the counseling certificate if they determine that the borrower(s) lack an understanding of the HECM products and financial implications of getting a reverse mortgage.  The counseling agent will then reschedule an additional session to give borrowers a chance to better prepare.

General Questions about Reverse Mortgages and HECMs

• When you have a reverse mortgage, who owns your house (whose name is on the title/deed)?
• There are several "payment options" or ways to get money from a reverse mortgage. Which payment option do you think will best meet your needs? What other choices do you have (if applicable)? What happens if you change your mind later and want to change your payment plan?
• When you have a reverse mortgage, do you have to make a monthly payment to the bank?
• Does the money you get from a reverse mortgage ever have to be paid back?

Questions about the Implications of a Reverse Mortgage

• When does the reverse mortgage have to be paid back?
• What homeowner responsibilities will you continue to have after you get a reverse mortgage? What may happen if you do not keep up these responsibilities as a borrower?
• What happens if you use up all the money that is available from the reverse mortgage? Offer an example tailored to client's circumstances, e.g., "What if you took all the money from the reverse mortgage in a lump sum and spent every bit of it? What would happen to you? Would you be able to go on living in your house?"
• What happens if the amount you owe under a reverse mortgage gets to be greater than your home is worth at that time? Would you have to move out of your house? Would you have to take out another loan to pay the difference?
• If you get a reverse mortgage, how does that change the amount of money that you will have to leave to your children (or other heirs)? Will your children or other heirs inherit more or less after you die, than they would have without the reverse mortgage?
• How does a reverse mortgage change the amount of money you would have left to take with you if you moved somewhere else like into a retirement community? Will you have more or less left over to spend if you move somewhere else?

Additional Questions for HECM Refinances

• If you refinance your current HECM, will you still have to pay mortgage insurance? How does this work?
• What are some of the additional costs you will incur with a refinance?

Additional Questions for HECM for Purchases

• When you purchase a home with a HECM, will the HECM be held on your existing home or your newly purchased home?
• How will the lender determine how much money you will need at closing? What sources of funds (money) are allowed when you purchase a home with a HECM?
• Why is it important to get a home inspection?
• When you are working with a real estate professional, what are some of the questions you should ask him/her?

Other changes to the HUD counseling protocol include the following:

• If a Power of Attorney is being utilized, the counseling agent must have a copy of the POA on file.
• If there are other persons on the phone during counseling session, counselors are required to document their names and relationship to the borrower.
• Counseling agents must determine the borrowers' comprehension of the HECM products by asking 10 questions throughout the session.  The borrower(s) are required to answer 5 correctly.
• Counseling agents are required to discuss other options with borrowers during the counseling session. For example: selling, moving into a retirement community, renting out part of their home, refinancing their existing mortgage, etc.

What happens after Counseling?