Counseling cuts: Will it scale back new protocols? - Skip to content

Counseling cuts: Will it scale back new protocols?


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  1. There is so much we do not know about how this provision could be applied. Is a domestic partner a spouse for this purpose? What if the surviving non-borrowing spouse remarries and is survived by a new spouse, could HUD be restricted from displacing the new spouse? If so for how many remarriages could this rule apply?

    Upon coming into the industry there were several issues which did not match practice. The displaced spouse was one of those provisions.

    Congress did away with another in HERA. That provision was never implemented but it would have reduced upfront MIP for those who used HECM proceeds to acquire LTC insurance. Hopefully Congress will rescind the displaced spouse rule quickly but no one is sure. Right now no HECM reflects the displaced spouse rule. As to litigation, this case could take years.

    All HECM borrowers should be notified of the displaced spouse rule and the AARP lawsuit. so that if their spouse could potentially be impacted by it, they are aware of the provision and the uncertainty of the outcome of the AARP case. If they have questions, they should be advised to seek the advice of legal counsel.

  2. It is time to bring counseling back to its fundamental basics. If HUD is considering income and limited asset underwrites, that in itself speaks of the level of confidence HUD has in the FIT portion of counseling to reduce default rates.

    If FIT did what the HUD Handbook on Counseling required, then the data needed for the income underwrite could flow from FIT to underwriting. Per the HUD counseling handbook, FIT is supposed to result in a budget. If this budget had value, then it should have been mandated that consumers receive a copy of it. Not even HUD showed that much confidence in the ability of counselors to create any semblance of a budget of any real value from the FIT questions alone. If HUD wants to keep some of the “brilliant” questions that are in FIT that supposedly no counselor would have considered talking about with any consistency in counseling (as some have claimed), then keep them. Just get rid of the financial ones. Have the originators gather budget information just as it is done on the forward mortgage side and provide a copy of that data to both borrowers and counselors for counseling purposes. The relevance of the “most teachable moment” concept to counseling as to why counseling should come before any discussion of HECMs with originators was known to be an unreal expectation from the day it was first promoted; it is a farce. No lender or originator would ever defer prospect questions about HECMs until after counseling.

    Counseling has gone from a service which (per GAO) failed to cover the most fundamental HECM issues less than 2 years ago to one where most HECM counselees are asked the value of their revocable burial trusts and their irrevocable burial trusts and the value of their cars. What does any of that have to do with HECM fundamentals?

    Ignoring FIT, why is BCU even in counseling? BCU is a great way to initially find out about possible financial help but should it be incorporated into a mortgage counseling session? That is not to say it should not be recommended and the benefits of a BCU session discussed with HECM counselees but to spend government resources or precious counseling time of more than three minutes on BCU seems way out of line for a program which is supposed to provide mortgage counseling.

    Let’s get back to essentials, get rid of FIT, and decouple BCU from counseling NOW.

  3. yes,,,,,,,,,yes,,,,,,,,,,YES

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