The US Department of Housing and Urban Development (HUD) is seeking public input for a proposal to standardize and improve counseling for its Home Equity Conversion Mortgage (HECM) reverse mortgage program. HUD has a longstanding requirement that requires all senior homeowners wishing to participate in the HECM program to have a counseling session with a HUD-approved counselor. The counseling requirement is intended to ensure borrowers are making informed decisions.

The new proposal is aimed at standardizing qualification testing for HECM counselors and, also, looks to establish a nationwide roster of HUD-qualified counselors:

SUMMARY: This proposed rule would amend HUD’s HECM regulations to establish testing standards to qualify individuals as HECM counselors eligible to provide HECM counseling to prospective HECM borrowers. The rule also would establish a roster of eligible HECM counselors and provide for their removal for cause. HUD believes that this proposed rule would contribute to improving the quality of HECM counseling. HECM counseling helps to enable elderly homeowners to make more informed decisions when considering whether to pursue a HECM loan.

Notice of the proposed changes was posted in the Federal Register on January 8, 2006. HUD is seeking general public comments on the changes as well as comments on two more specific issues:

First, the Department is seeking input from housing counseling agencies and counselors concerning the implementation of the HECM roster for HECM counselors who have already passed the HECM counseling exam. Specifically, should HUD adopt a delayed implementation for those counselors that have already passed the exam, or alternatively, should those counselors automatically be included in the roster for a period of time before they must repeat the exam?

Second, HUD invites comments that address whether a counselor should be required to take the exam on a regular basis, for example, every 2 years, in order to remain on the roster, and, if so, how often should housing counselors take the exam to remain on the roster.

Public comments on the proposal are due March 9, 2007 as follows:

Regulations Division
Office of General Counsel
Departmentof Housing and Urban Development
451 Seventh Street, SW.
Room 10276
Washington, DC 20410–0500

Interested persons also may submit comments electronically through The Federal eRulemaking Portal at www.regulations.gov. HUD strongly encourages commenters to submit comments electronically in order to make them immediately available to the public.

The proposed rule will strengthen the quality and consistency of HECM counseling. Reverse mortgages are inherently complex and hard to comprehend. Required counseling is a very important part of the HECM process and we believe this effort to further improve a crititcal consumer safeguard deserves quick implementation.

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