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Loan officer responsibilities and HUD Counseling
A quick look at how you can increase your success and build trust with your potential borrowers before and after required HUD Counseling for their reverse mortgage.
4 Comments
Hey Shannon, What mortgagee letter states HECM counseling is required before app? My understanding is that Metlife is requiring counseling before app, but I understand that this is not a HUD requirement and it is state law in only a handful of states.
The FHA requirements for getting a case number assigned to an application have been and remain two things: 1) a completed application and 2) a certificate of completing counseling. Counseling has always wanted prospects to take counseling before application; some counseling executives are so strong about this that they have inappropriately tried to rename HECM counseling to pre-application counseling; it has always been and remains “pre-assignment” counseling.
Some talk about the need for the counseling to occur before originator education because it is the most teachable moment. Shannon coined a great term for what most seniors get before they contact originators and that is “urban” education. Some seniors also attend excellent seminars and other presentations on HECMs. Even HUD presents a basic senior education on HECMs. While counseling may be begging for what might be better termed as the more teachable moment, why do they deserve it? We need to take advantage of the FIRST moments with prospects to let them know who we are and what our products offer them. Counseling is a consumer protection to ensure we are providing the right information, not the initial education.
Some counseling executives believe counseling is less biased and more suited to educate. If counseling paid for the marketing costs of getting prospects to become counselees, they might have some grounds to pursue this line of reasoning. BUT with a product which has historically had an over 90% approval rate, why is there a need for such change?
One counselor complained recently that prospects are coming to counseling with far less screening and little to no education from originators. The counselor said because we have not done our job the dropout rate between counseling and endorsement has gone up. With less funding for counseling and counselees more likely to pay for a service they do not need, we should be doing the job we did in the past and that is providing the initial education and screening in the lending process.
We and our companies have invested considerable time and incurred considerable costs to create a prospect. If you do not want to lose the prospect, screen them and go over basic financial information, using TALC, the loan comparison sheet, the amortization schedule, and the list of upfront costs BEFORE counseling. Try to bond with the senior as much as possible. We need to be the expert to the senior, not the counselor.
Counseling is not getting better. With as much as 30 counselees on a single muted education phone call, the education portion of counseling is not getting better. Worse, counselees are being asked birthdates on the call with the other counselees. In this age of identity theft, this last practice needs to be condemned by us all.
Shannon I was under the impression that we could take an application before HUD counseling but could not order an FHA number until we had the sign original counseling cert.
Ken,
True. I should clarify it is some states that require (or strongly imply) that counseling must take place prior to an application. Then comes the question of what constitutes an application….technically it is the essential elements as outlined in RESPA. My intent was to show the loss of influence or responsibility in some cases that loan officers experience with their prospective borrowers when counseling can take the forefront above loan officers educating their clients.