As reported by Reverse Mortgage Daily, HUD recently issued Mortgagee Letter 2007-08 basically eliminating the requirement for potential borrowers to have a face-to-face counseling session prior to getting a HECM reverse mortgage:

FHA will now allow prospective HECM borrowers the option to meet face-to-face with the lender and/or HECM counselor or to participate in loan origination and counseling activities by telephone….Prior to this change, HUD HECM loan origination procedures, (required) that prospective HECM borrowers must make every effort to meet face-to-face with either a housing counseling agency approved to provide HECM counseling or a mortgage lender approved to originate HECM loans.

In the letter, HUD states its policy change was motivated by the fact that face-to-face counseling can be “a hardship for some prospective HECM borrowers, particularly those living in rural areas or with limited mobility.” We suspect, too, that the surge in HECM applications in the last several months has overwhelmed available counseling resources in many parts of the country.

We fear that many potential borrowers will choose to forgo a face-to-face meeting not because its truly a “hardship” but, rather, because it’s a “hassle”. Its possible that some busy counselors and/or lenders might not protest too strongly if a borrower chooses to go this route. But we think borrowers would be wise to insist on a face to face meetings with both counselor and lender, whenever physically possible.

Reverse mortgages have always been tricky to understand and counterintuitive to the way people think. In recent months the confusion and complexity has multiplied. The HECM variations alone (HECM 150, HECM 125, HECM 100, fixed or variable rate, monthly or annual, etc.) have grown exponentially and are just too confusing to be adequately understood by getting a bundle of papers in the mail and reviewing them over the phone. Add to this the vast number of non-HECM options, and it’s not hard to see the potential for information overload leading to hasty, imprudent decisions.

Be aware that the HUD letter also includes this important statement:

All HECM lenders and counselors should have the capacity to conduct face-to-face interviews with all prospective HECM borrowers and must routinely offer to conduct face to-face loan applications or counseling respectively (emphasis added).

As a borrower, consider it your right to have face-to-face meetings with counselors and/or lenders and do not take this right lightly or squander it in the name of expediency.

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A Few More Related Articles of Interest:

HECM Growth Projections from CBO

HUD Expands Reverse Mortgage Counseling Network

Lessons In Reverse Mortgage Fraud

Reverse Mortgages vs Delayed Social Security

Reverse mortgage counseling backups