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Reverse Mortgage Glossary

HECM Counseling

HECM CounselingThe Department of Housing and Urban Development (HUD) requires all HECM reverse mortgage applicants to attend a counseling session before submitting an application.

If you decide a reverse mortgage makes sense for you and wish to get the ball rolling, one of the first steps is to get a counseling appointment set up. You can find a licensed counseling agency on your own (see the links below) or you can ask the lender you’re working with to provide a list of agencies.

The counseling needs to be completed near the beginning of the application process because the lender is not allowed by law to proceed too far into the application process without proof the counseling is complete.

HUD prefers that the counseling be done in person, but most people choose to be counseled over the phone.

Most counseling sessions tend to last about an hour, but they can sometimes be longer or shorter depending on the counselor’s procedures and your level of knowledge about the reverse mortgage program. Expect the counselor to cover your current financial situation and goals, what a reverse mortgage is and how it works, and any alternative options for financial assistance.

Once your counseling session is complete, the counselor will issue a certificate that is good for 180 days from the counseling date. The lender will need a copy of this certificate to proceed with the processing of your reverse mortgage application.

Why HECM Counseling is Required

A reverse mortgage is very different from a traditional home loan. HUD requires the counseling to make sure applicants have a good understanding of what a reverse mortgage is, how it works, and whether or not it’s suitable for your financial situation and goals.

Counseling is also important to make sure that applicants are at least reasonably competent to manage their own financial affairs and aren’t being taken advantage of by unscrupulous relatives or lenders.

How Much Do Counselors Charge?

Many counseling agencies are nonprofits that receive government funding, so it’s possible you may not be charged for the counseling session. If you are, it’s usually in the neighborhood of $125.

If the counselor is charging, they may be willing to invoice the lender so it can be paid out of the loan proceeds.

Lenders typically cannot pay the counseling fee upfront on your behalf.

Legal Incompetency

If an applicant lacks legal competency, the counseling session may be attended by an individual holding a power of attorney or a court-appointed conservatorship or guardianship. Expect both the counselor and  lender to request the power of attorney, conservatorship, or guardianship documentation.

How to Find Licensed Counselors

If you’d like to find a licensed counselor in your area, you can find them at the following links.

The lender you’re working with can also provide a list of agencies.