Requiring counseling through an approved HUD counselor provides a neutral third party and an additional layer of protection for the borrower. This is why you must attend a counseling session through an independent HUD counselor prior to applying for a reverse mortgage. HUD wants consumers to be fully educated and informed about the reverse mortgage.
Please note that you are not required to complete counseling prior to meeting with a loan officer. In fact, it makes much more sense to meet with the loan officer first to see if you qualify and whether the loan makes sense for your situation.
Who is required to get counseling?
All borrowers, co-borrowers and non-borrowing spouses are required to complete the counseling.
Guardians, conservators and Power of Attorneys are required to attend the counseling as well. Heirs are encouraged to attend, but are not required to do so.
Counseling Face-to-Face or over the phone?
You have the option of face-to-face counseling or phone counseling. Face-to-face options are much easier for those in larger cities. If you live in a rural area, you need to decide if traveling to do the face-to-face option is worth it or not. This is especially true if you have physical disabilities or have trouble driving.
Where can I find a list of HUD counselors?
You can find a list of HUD-approved counselors by visitinghttps://entp.hud.gov/idapp/html/hecm_agency_look.cfm. Your reverse mortgage loan officer can provide you with a list of agencies as well.
How much does reverse mortgage counseling cost?
Cost for the counseling will vary with each provider. However, you should expect the counseling to cost between $100 to $175. Some agencies may waive the fee if your household income falls within the poverty guidelines. Others may allow you to pay for the counseling through the close of escrow. And others may require payment in full prior to commencement of the counseling session.
How long is the counseling session?
The counseling session typically lasts about an hour. However, depending on the number of questions you have, it can last longer.
Part of the counseling is also a benefits checkup. They want to make sure you are taking advantage of the various resources that are available to you as a senior.
At the end of the counseling there is a verbal quiz. The counselor wants to make sure you were listening and understand. If you do not pass the counseling or do not finish it, you will not receive your counseling certificate and you cannot apply for a reverse mortgage.
Just as a heads up, some of you are thinking “Oh my gosh! There is a quiz!” Don’t worry. I have never had a client not pass it. It really is there as more of a barrier for those that have cognitive issues such as dementia or Alzheimer.