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Required Pre-Education?


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Reverse Mortgage Counseling Pre-Education

Reverse Mortgage Counseling Pre-Education

Require Pre-Education Before Counseling? One group suggested to the Consumer Financial Protection Bureau (CFPB) that a ‘third party’ provide upfront education about the reverse mortgage BEFORE the borrower get’s HUD counseling or meets with a lender. Who would these ‘third parties’ be and who would supervise them?

Watch the video for more. and see the entire report from the CRL here.


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  1. For sure, the threat of more counseling before grandma can contact a lender puts loan originators even more on notice than they are now. The way it works now, grandma cantacts the loan originator and then has to get counseling before an application takes place. Another level of counseling will just reduce the number of seniors getting a reverse mortgage. Is that the intent? How ’bout helping the loan originator do a good job of representing the reverse mortgage. What an idea, and less fees for grandma, wouldn’t you say? As a matter of record, borrowers are not as unhappy with the RM product as they are represented to be. Maybe what’s happening is working pretty well already given the amount of negative comment about it now. Is that possible?

  2. My thoughts would be that there are already so many requirements that the seniors come away feeling that they know nothing.

  3. This is crazy. The “third party” already in place is the HUD counseling. That is why they call it third party counseling. This is just more tax payers dollars wasted. These NEW bureaucratic entities do not have anything to do, so they have to make things up.

    These people need to find real jobs. And then when they retire then can get a reverse mortgage.

    They seem to know so much about this mortgage, that they can espouse about new regulations to save, what the obviously think are, people with no brains.
    How entirely wasteful! I can hear them saying,

    ” Why do I need to do that? You (the lender) and the counseling is enough for me to make this decision. ”

    Heck and I can hear some of my past clients saying, “I don’t need counseling. I have made my decision.” Smart and smarter the clients are becoming.

    Another “watchful eye” to make sure we all can manage our own businesses and lives. So much complete and total wasteful nonsense.

    • Robin,

      The issue is not whether counseling is a third party, it rarely is not; however, is counseling independent? According to people like Jim Veale, that issue is now in play with the issuance of ML 2011-09. If the only way that a counseling agency can collect a fee is by the HECM funding, then that seems to be a legitimate question. Even if it is never used, one would still have to review the compensation agreement to ensure that counseling is independent. If a counseling agency does not submit its claim until late in the closing process, an originator might never know.

      We need another way to fund counseling.

  4. Shannon,

    Your presentation has about the tone. In line with its prestige, CRL should be given as little recognition and comment as possible. But their ideas are not new although their recommendations are.

    If the counseling executives are right that “THE most teachable moment” exists with prospects and that moment should be preserved for an independent third party recognized by HUD as having the level of knowledge and skill needed to provide the education seniors require, then as to its recommendation, CRL is exactly right. By issuance of ML 2011-09, until the payment arrangement has been settled, counseling agencies may or may not be independent; thus another source must be utilized for education such as AARP. (Perhaps they will only charge an additional $75 for this “service”?)

    BUT the most teachable moment ideal is a fantasy in all but a few cases. By the time we are brought into the picture, a senior has found out some (if not a lot of information) about reverse mortgages which may have come through TV ads and related DVDs, articles, seminars, workshops, radio programs, neighbors, friends, relatives, social events, financial advisors, Realtors, mailers, luncheons, dinners, Internet searches, or any other source. “The most teachable moment” for the vast majority of seniors was gone before we enter the picture many times just moments before.

    For far too long industry leaders have coddled counseling agency executives regarding the most teachable moment. It now seems to be used in a way never intended by even counseling executives.

    Brace yourself for how CRL might propose how to make this work. What about the idea of banning all contact with lenders until they have three documents ready to provide the lender? The first is a document signed by the borrower attesting to the fact that they have never contacted anyone (including counseling agencies) or read or heard anything about reverse mortgages before contacting AARP (or other agreed upon organizations). The second would be an education certificate and the last, a counseling certificate. By that process (only seniors with the most teachable moment still available can qualify) our endorsements might reach 10,000 in a great fiscal year.

    The worse part of the recommendation (not covered by Shannon) is changing the function of counseling into financial advising. While I agree that the function of counseling should change it should be to one of more consumer protection, not financial advisor. The so called “new” (2 years old now) counseling protocol emphasizes education and financial assessment. But the intent of counseling was not to emphasize the means of providing consumer protection but rather consumer protection itself. Counseling should be focused on ensuring that the senior is competent to contract, has a good grasp of the product being chosen and that the product is reasonably (not necessarily the best, a matter of opinion) suited to meet the goals the senior has in mind. Counselors should verify if the senior(s) understands how other reverse mortgages differ from the one selected and if they have considered alternatives including those provided through BCU. Counseling should come after application!!

  5. being 75 myself i wish all these young people would quit thinking anybody over the age of 62 is dumb and needs to be protected,,,,,i wonder how many under the age of 62 could even pass the L. O. exam

    • Cliff,

      I am not sure the people at CRL making these recommendations have ever met anyone 62 who did not have a major handicap. As a Boomer who is over 62, their recommendations are the recommendations of the sophomoric with the emphasis on the “moric.”

  6. More government. This is another layer of government and an expense that the country does not need. Worst yet, the expense gets passed on to our seniors. Why not take the existing program and if the CRL feels necessary, make some changes? Take the counseling already in place and see what might need to be adjusted to make it more effective. Insure the counseling is independent and that counseling agencies are paid regardless if the loan closes. We don’t need more layers, we need what we have to work effectively.

  7. Hi cliff, I totally agree with what you are saying! Who do they think managed companies,raised and educated their children, went to war, survived a depression, managed their financial affairs WITHOUT computers etc. . Now, just because we are older we can;t understand a mortgage program?? Wow, how insulting!!

  8. Come on! Enough is enough! If I may, I’d like to mimic J. Hanson’s closing comment…”how insulting!”

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