The Department of Housing and Urban Development (HUD) now requires that a third-party counselor be involved in every FHA insured Home Equity Conversion Mortgage (HECM).
Why is this so important in the protection of the borrower’s interests? Because in the old days older homeowners were getting into loans that were poorly understood and, prior to 2013, were as many times as not the absolute worst product for them. And those loans lead to a great deal of heartache.
Now, with the changes to HECM loans by HUD, borrowers, co-borrowers and non-borrowing spouses must attend independent borrower counseling, whether in person or by phone. Heirs are also encouraged to take the counseling course, which can take from 60 to 90 minutes. Why should you include your heirs? If they are indeed going to be heirs, the last thing anyone wants to hear from an executor is… there’s a mortgage on your parent’s property”.
How do you know where and when? The loan originator will provide a list of approved counselors, however, in protecting the borrower even further, the originator is forbidden from recommending any particular counselor to the borrower. They are all FHA/HUD approved, but your mortgage originator just cannot recommend one over the other.
What happens during the independent borrower counseling session?
The counselor makes sure that the HECM loan is well understood, that the borrower understands the risks of the product and what the borrower’s responsibilities are to make sure the loan does not unintentionally come due… Just like any mortgage.
So, what are those items that can cause the loan to come due?
- The last primary occupant borrower vacates the home for more than 12 months.
- Taxes, insurance, other required property fees (HOA, Flood insurance, etc,) are not paid.
- The home is not kept in good repair.
Other than the first bullet, all these items are typical of any mortgage. Liens and lack of maintenance directly impact the lenders collateral and can cause a default on a mortgage. Remember, it’s still your house and still just a lien against the property that has to be satisfied at the end of the loan.
Maybe you, or someone you know, needs a success story but still thinks the new HUD/FHA Home Equity Conversion Mortgage is too good to be true? As with any loan product, there is always additional information to discuss. Give Richard McWhorter of Central Florida Reverse Mortgage a call, text (404-313-9785) or email (Richard@CFReverse.com) and find out why what you use to know about reverse mortgages is keeping you from one of the best and safest long term financial products on the market today.
Simply reach out to us at Central Florida Reverse Mortgage and let’s discuss how we can help you with a product designed specifically to meet your needs for a lifetime of happiness… while enhancing long term cashflow and quality of life. Feel free to call, text (404-313-9785), or email firstname.lastname@example.org and find out more.
Richard W. McWhorter, NMLS 1618644, with McWhorter Mortgage, LLC, NMLS 1486483, dba Central Florida Reverse Mortgage is an independent reverse mortgage specialist and Certified Mortgage Planning Specialist® exclusively serving Florida (FL LO-44137) and Georgia (GA Mortgage Residential Licensee 57530). Follow him on LinkedIn, the Central Florida Reverse Mortgage website or contact him directly at Richard@CFReverse.com.
McWhorter Mortgage, LLC provides an Equal Housing Opportunity. Information is subject to change without notice. This is not an offer for extension of credit or a commitment to secure a loan. Some restrictions may apply. McWhorter Mortgage is licensed in Florida and Georgia, call for originator recommendations in other states. This material is not from HUD or FHA and has not been approved by HUD or any government agency.