California Reverse Mortgages by your Sacramento Reverse Mortgage Provider

Borrower Paid Reverse Mortgage HUD Counseling

by Jeffrey L. Bangerter
September 17th 2008

The Department of Housing and Urban Development (HUD) published Mortgagee Letter 2008-28 which prohibits mortgagee funded HECM/reverse mortgage counseling.

The mortgagee letter implements the section of the Housing and Economic Recovery Act of 2008 which restricts reverse mortgage lenders from paying for reverse mortgage counseling.

HUD requires that the HECM/reverse mortgage must be executed by a mortgagor who received counseling from an independent third party that is not either directly or indirectly associated or compensated by a party involved in:

  1. Originating or servicing the reverse mortgage.
  2. Funding the loan underlying the reverse mortgage.
  3. The sale of annuities, investments, long-term care insurance, or any other type of financial or insurance product.

Reverse mortgage lenders can no longer pay HUD-approved counseling agencies, directly or indirectly, for reverse mortgage counseling services through either a lump-sum payment or on a case-by-case basis.

According to the mortgagee letter, HUD prohibits reverse mortgage lenders from funneling payment for reverse mortgage HECM counseling through a nonprofit, foundation, association or any other entity or organization that is a branch of, affiliated with or associated with a reverse mortgage lending institution.

Department of Housing and Urban Development (HUD) announced that $50 million in housing counseling and counseling training grants that will go out to nearly 400 national state and local agencies.

A portion of the grants will help fund reverse mortgage counseling for seniors.

Housing counseling organizations will continue to help families make more informed choices before they purchase a home and counsel families facing foreclosure.

Now, more than ever, it is critical that Americans better understand how to manage their money.

According to a press release the counseling agencies will use $4 million to help assist senior citizens seeking reverse mortgages or Home Equity Conversion Mortgages (HECM).

In certain parts of the country seniors have been struggling to receive counseling if they are unable to afford it so this should help a bit.

To see a state-by-state breakdown of grant recipients is available on the HUD website.

Remember, you can trust us to follow the letter of the law and safely get the funds you so richly deserve…Contact Us…