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Real Estate

2007-12-01 10:04:00

“I read your article last month”...

You are not alone, we have had several calls asking that very question. The answer is a simple one yet the industry is currently trying to complicate it. You see, the process all hinges on the “Reverse Mortgage Counseling”. HUD requires all homeowners considering a Reverse Mortgage to complete this counseling session. Nothing can be started until the counseling is completed and a certificate of completion has been given by you to a Loan Officer. The counseling is an important step in the process. This helps in the education of the homeowner to the Reverse Mortgage programs. This concept was designed to allow the homeowner to get questions answered, gather information, and determine eligibility without being sold or required to buy anything. This is to make sure the Loan Officer has explained it thoroughly and secondly, to keep the dragons with briefcases from praying on our Moms and Dads. I believe it is important for seniors to do the counseling and loan officer interviews face to face. HUD does allow phone counseling and doesn’t require a face to face interview, but I’m sure you will agree we need to know who we’re dealing with. This education by the HUD counselors and Loan Officers is very important. I have said this many times and will say it many more, “A reverse is not for everyone but the education is.” Get your education! Geez, I sound like my father! In addition to this two-step safety net, HUD also required one of the two steps, either the filling out of the initial application or the counseling, to be done face-to-face and the other could be done over the phone or through the mail. The industry became increasingly frustrated with the time it took to get through this process and in January of this year convinced HUD to change the ruling, no longer requiring any aspect of buying a Reverse Mortgage to be done face-to-face. The face-to-face aspect is now just an option. This has opened the door for every company regardless of their location to do a Reverse Mortgage without ever having to meet the individual. These companies will visit with you on the phone and then mail out the 50+ page packet to fill out, sign and send back with no one there to explain what you are signing. I doubt you bought your home over the phone or through the mail, so why would you trust someone to do a reverse that way with your biggest asset? After the counseling is completed we begin to establish the value of the home, and determine how to structure the mortgage to best serve the needs of the homeowner. Keep in mind that income and credit are not used to qualify for a Reverse Mortgage; the equity in the home is the main factor. We still believe that education comes before the sale. Reverse Mortgage is as important tomorrow as it is today; therefore, you should know the people you are working with. The sad part is that the homeowners are mostly unaware of all this. The answer? More education. Ruth, I thank you for your question. I applaud your desire to learn and your courage to ask questions. More next month...