Four Reasons Why Reverse Mortage Counseling Matters
4 Reasons Why Reverse Mortgage Counseling Matters June 6, 2011
The FY11 budget eliminated funding for Housing Counseling, which includes federally mandated reverse mortgage counseling.
Reverse mortgage counseling helps older homeowners explore whether a reverse mortgage could help them stay in their home longer. It also provides information about other options, services, and benefits to help seniors stay independent.
Here's why reverse mortgage counseling matters.
1. Older homeowners seeking reverse mortgages are often vulnerable.
Many older homeowners who are considering a reverse mortgage need to tap home equity due to urgent financial problems. They often face cash shortfalls due to health expenses, costly home repairs, or high existing debt. About half of these seniors have incomes less than 200% of poverty.
Counseling from an independent, HUD-approved counselor ensures that they have unbiased information to guide them.
2. Reverse mortgage counseling is more holistic than other forms of housing counseling.
It's preventative, offering help before a homeowner talks to a lender and explaining loan costs and borrower obligations, so
seniors can make wise decisions.
Counselors assess a wide range of optionsfor clients, including eligibility for other services and benefits, their ability to live independently, and alternatives to reverse mortgages such as possibly selling the home and downsizing.
Counseling may result in clients not pursuing a reverse mortgage because it’s not suitable for their particular situation.
It includes a BenefitsCheckUp®analysis, so clients can discover if they’re also eligible for public and private benefits, such as Supplemental Security Income, food stamps, home energy assistance, or local deferred payment rehab programs.
3. Reverse mortgage counseling encourages public/private solutions to seniors’ economic needs.
Counseling helps cash-strapped older homeowners access public benefits that can be an alternative or supplement to their reverse mortgage. By tapping into both public and private solutions, borrowers can live independently longer and get a better value from these loans.
4. Public funding removes the chance of undue influence and scams.
Public funding for reverse mortgage counseling—as opposed to lender funding—removes the possibility of undue influence on borrowers at a vulnerable time in their lives. Taking out a reverse mortgage is a big decision, so unbiased counseling is critical.
Those facing major life transitions can ill afford to make an irreversible mistake involving the disposition of their home equity—often their largest asset. Without timely low-cost counseling, these financially vulnerable seniors are more susceptible to scam artists.
Here is a link to the NCOA site