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FHA Reverse Mortgage Counseling

November 16, 2016

154-hudWe addressed FHA reverse mortgages in a recent blog post, discussing several aspects of these home equity conversion mortgages. One thing that makes the FHA reverse mortgage program unique from FHA refinance loan options is that these types of loans (also known as FHA HECM loans) are only for qualified borrowers age 62 or older who own or almost own their homes outright.

The FHA official site describes HECM loans as follows:

“If you are a homeowner age 62 or older and have paid off your mortgage or paid down a considerable amount, and are currently living in the home, you may participate in FHA’s Home Equity Conversion Mortgage (HECM) program. The HECM is FHA’s reverse mortgage program that enables you to withdraw a portion of your home’s equity. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.”

FHA HECM loans also require all borrowers to be obligated on these reverse mortgages to take reverse mortgage counseling as a condition of loan approval. The FHA official site says without the counseling, the loan cannot be approved.

But how can potential FHA reverse mortgage borrowers find this counseling?

The FHA/HUD official site states, “FHA funds housing counseling agencies throughout the country who can provide information to you for free or at very low cost on reverse mortgages”, and because of this maintains a database of approved counseling sources. TheHECM Counselor Roster at the FHA official site can help you find a HECM counselor near you, and borrowers also have the option of getting assistance by phone with this roster at (800) 569-4287.

The FHA/HUD official site adds, “You may also contact a HECM counselor from FHA’s National HECM Counseling Network. These counselors provide both face-to-face and telephone counseling nationwide”.

What does the counseling include? According to the official site, borrowers and the counselor will discuss “program eligibility requirements, financial implications and alternatives to obtaining a HECM and repaying the loan. Counselors will also discuss provisions for the mortgage becoming due and payable.”

The goal of this required HECM counseling is to help potential borrowers make, “independent, informed decision of whether this product will meet your specific needs” according to the FHA.

FHA Reverse Mortgage
Joe Wallace - Staff Writer

By Joe Wallace

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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