The U.S. Department of Housing and Urban Development (HUD) Office of Housing Counseling (OHC) has made a series of updates to its Housing Counseling Program Handbook, including extensive additions, consolidations and reorganizations to a section focused on the Home Equity Conversion Mortgage (HECM) program.

This is according to a January meeting of the Housing Counseling Federal Advisory Committee (HCFAC), where the changes were detailed by OHC Office of Policy and Grant Administration specialist Terri Ames.

David Berenbaum, HUD’s deputy assistant secretary for housing counseling, also expressed an ongoing desire to work with the reverse mortgage industry and educate the public about the HECM program.

Consolidation efforts

Many of the handbook updates related to the HECM program revolved around consolidating and streamlining guidance to make it less confusing for counselors seeking to find the right information, Ames explained.

“[We sought to] to lessen confusion and separate reverse mortgage counseling and the HECM protocol,” she said.

The HECM protocol is now found in appendix one of the handbook. It “provides all requirements for conducting the HECM counseling session and all the handouts and resources that counselors will need to have a successful session,” she said.

Among key HECM-related updates, Ames noted that there is more inclusion and more references to other HUD guidance — including the Single Family Housing Handbook, which received extensive, years-in-the-making reverse mortgage updates last year. This helps the counseling handbook avoid both inconsistent and duplicative information.

Several subsections were consolidated into separate sections related to more general reverse mortgage counseling and HECM-specific counseling, while other sections were reorganized to make clear that overarching counseling guidance is also applicable to reverse mortgage counseling.

Product information and more

The handbook adds information about the differences between subsets of reverse mortgages, including between traditional HECMs and proprietary products offered by lenders independent of the Federal Housing Administration (FHA)-backed program.

Clarifying language was also added to ensure that readers understand that reverse mortgage counseling “must be provided by a HUD-certified counselor,” Ames explained.

The revisions also contained specific guidance for counselors related to the HECM for Purchase (H4P) program, as well as qualifying “mystery shopping” — in which “trained personnel act as prospective clients” — as a “potential agency quality control method.”

Specifically in the HECM section of the handbook, the revisions broadened modalities to include virtual or remote counseling methods, in addition to phone-based counseling, in an effort to reflect more modern communication technology.

There is also more specific contact information for “concerns or complaints” regarding reverse mortgage lenders or counselors, which now includes the FHA and the OHC itself. And there is added information regarding the issuance of a HECM counseling certificate.

Need for education

In a closing “member comments” section of the January meeting, Berenbaum explained that there is a need to perform public outreach about certain HUD programs, and he cited reverse mortgages as an example.

“Looking further ahead, we do foresee reaching out to the public in other areas,” Berenbaum said. “At the National Reverse Mortgage Lenders Association (NRMLA), I expressed interest in collaborating with that trade association and its members to educate the general public [about] the reverse mortgage product.”

Berenbaum also briefly spoke about the reputational challenges of the reverse mortgage industry, and how some of them are rooted in either bad or misunderstood information about the product category.

“There is a lot of misinformation out there about reverse mortgages, and as more baby boomers age in place without adequate resources in retirement, I think it’s a critical product moving forward for those baby boomers to have information about,” he said. “[That way], they can make more informed choices about [reverse mortgages] through the housing counseling community.”

These statements echo much of what Berenbaum said at the NRMLA Annual Meeting and Expo in Nashville last October, both in prepared remarks delivered to industry professionals and in an interview with RMD conducted on-site at the event.

The expectation in his office is that as the American population ages, reverse mortgage volumes will rise. This will require additional collaboration between his office and members of the reverse mortgage industry, Berenbaum said at the event.

“First, we want to increase our collaboration with NRMLA and all of you as industry professionals,” he said during his presentation. “This is a priority for us. As Americans are aging, we know that, in fact, there will be an increase in the number of reverse mortgages originated, and we’ll see an increase in the reverse mortgage for purchase side of the equation as well. There’s a critical role of housing counseling there.”

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