If you’re planning on getting a reverse mortgage, you’ll likely need a reverse mortgage counselor. In most cases, such a counselor is required.

Here are answers to some common questions about reverse mortgage counseling.

1. Why do I need counseling?
The U.S. Department of Housing and Urban Development requires a certified counseling session for a federally insured reverse mortgage, also known as a home equity conversion mortgage.

"This is a very important financial decision for a senior citizen who wants to make use of the assets they have available until they die,” says Sue Hunt, housing counseling program manager at Consumer Credit Counseling Service of Greater Atlanta.

“We certainly don’t want to have seniors making decisions that aren’t well educated and well informed,” she adds.

2. Does everyone need counseling?
If you’re part of the majority of reverse mortgage borrowers choosing a federally insured reverse mortgage, you’re required to get counseling before you apply.

If your home is worth more than the $625,000 federal limit, you may want to apply for a reverse mortgage through a proprietary lender. In that case, you may not be required to get counseling, but it's generally recommended, says Peter Bell, president of the National Reverse Mortgage Lenders Association.

Some lenders may first suggest that you speak with their own consultants to learn about your reverse mortgage options, but it’s not the same as official counseling from an independent HUD-approved counselor who’s certified to work with you on your options.

3. How do I find a counselor?
Reverse mortgage lenders are required to provide prospective borrowers with a list of 10 reverse mortgage counseling agencies.  Five of the agencies must be local, with at least one a reasonable driving distance from your home. The other five must be national intermediaries such as AARP. 

At HUD's web site you can find national counseling agencies, as well as local HUD-approved counseling agencies. The counselors can meet face-to-face or provide counseling by phone.

4. What will the session entail?
In reverse mortgage counseling, you’ll get information and advice based on an analysis of your budget.

More specifically, you’ll discuss why you want a reverse mortgage. You'll also review your current income, if any; debts, including an existing mortgage if you have one; your monthly expenses; medical expenses; planned home improvements; your current access to emergency cash and the possibility that you’ll move, either into a new home or a nursing home within a few years.

You’ll receive a projection of how much you can expect to receive from a reverse mortgage, Hunt says.  And you’ll compare which lenders and payout terms would be best for you.

Reverse mortgage counseling has to be done in person or on the phone.  It’ll take about an hour, or more if you have several questions.  If it’s over the phone, it may take more than one call.  (In North Carolina, counseling can only be done face to face.)

5. What do I need to bring to my counseling session?

“It’s a good idea, before your session is scheduled, to make some notes about how much money you’re making and how much your expenses are, including housing, utilities, food, transportation and medical expenses,” says Hunt.  You don’t necessarily need to provide your actual pay stubs or bills, she says.

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You’ll also want to know if there are any liens on your house, she says.  In addition, although you don’t need an official appraisal yet, you may want to call a real estate agent who does business in your area, or visit Zillow.com to get an estimate on how much your home is worth, Hunt suggests.

If a lender has given you a projection of your reverse mortgage payout, bring it your counseling session as well, Hunt suggests. 

6. How much will it cost?
The fee for a reverse mortgage counseling session is usually $125, but it may be waived if you’re facing foreclosure, bankruptcy, an immediate medical crisis or another hardship.

If you’re not facing an immediate hardship, but you can’t pay the fee, your counselor is required to work with you.  A counselor with Consumer Credit Counseling Services, which offers reverse mortgage counseling nationwide, for example, may look over your income, debts and expenses.  If your expenses are more than your income, CCCS will allow you to pay your fee from your reverse mortgage payout.  If that payout is less than $7,500, the fee is waived, Hunt says.

Some counseling agencies, like the Catholic Charities of the Diocese of St. Cloud, Minn., provide free, independent reverse mortgage counseling.

“You’ll have to call and ask what their policies are,” says Bell.  That may mean calling everyone on the list you receive from your prospective lender.

7. What is a certificate of HECM counseling?
A certificate of HECM counseling is written proof that you’ve received counseling.

The form cannot be filled out until your counseling is completed, and in order to process your application, your lender will have to have an original copy of the certificate signed by you as well as your reverse mortgage counselor, according to HUD. If you’ve had counseling by phone, you and your counselor may be able to send your lender separate original certificates, signed.

8. What if I’m acting as a legal guardian or have power of attorney?
A reverse mortgage counselor may require proof of your guardianship or power of attorney before conducting a counseling session.  Around 5% of reverse mortgage counseling sessions conducted by CCCS are conducted on behalf of people who have a legal guardian or someone with power of attorney, Hunt says.

9. Who can I contact if I have a complaint about my counselor?
Contact the counseling agency your counselor works for.  You can also contact your local HUD office and file a complaint with the person in charge of reverse mortgage counseling. The Federal Trade Commission also handles consumer complaints.

Related Links:

Reverse Mortgage 101: Your Questions Answered

Reverse Mortgage: How Much Can You Get?

Mortgage Modification: What to Do If You Qualify

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