- September 12, 2019
- By: Greenpath Financial Wellness
Excerpt from Reverse Mortgage Daily
Counseling for prospective reverse mortgage borrowers is not only required, but it’s also a critical component of understanding how a new reverse mortgage loan is created. In order to make sure that the borrower fully understands exactly what kind of a transaction they’re getting into, the counselor guides the borrower through the features and obligations that come with a reverse mortgage, in addition to helping the borrower understand how they can best meet their financial goals by employing the use of the product.
As proprietary reverse mortgages become more widely available, reverse mortgage counseling becomes even more essential due to the sometimes minute differences between certain proprietary offerings from different lenders. This also means that the counselors themselves have to take into account all the differences between various product offerings, FHA-sponsored or otherwise, to give borrowers the best information during their counseling sessions.
Still, establishing what the exact differences are between counseling for Home Equity Conversion Mortgage (HECM) loans and proprietary loans could help give some in the reverse mortgage industry some context concerning how borrowers are helped.
The divide between HECM and proprietary counseling
While the prevalence of proprietary products is increasing as evidenced by lenders continuing to roll out either entirely new products or new variations on existing products, it’s worth noting that the ratio between proprietary and HECM loans might have very different proportions between different counseling organizations. This is according to Kathy L. Conley, stakeholder engagement specialist at GreenPath Financial Wellness in Farmington Hills, Mich.
“I would say probably, and it’s a rough guess, 70/30. [The reverse mortgage counseling sessions are divided between] 70 percent HECM and 30 percent proprietary, right now [in our organization].”
While there is some similarity and crossover content between the two types of counseling, they are still designated differently and can’t be discussed interchangeably, Conley explains.
“They are different types of counseling. So, the proprietary, each of them, and the HECM each have their own content. The sessions are not interchangeable, nor are the certificates,” she says. “There are similarities because they’re all for reverse mortgages, so reverse mortgages have some features that are very similar in how they work, so that content is the same. And then, from there the counseling would expand to talk about [attributes] that are specific to that particular product, whether it’s proprietary or HECM.”
While proprietary counseling sessions unsurprisingly deal primarily with borrowers who have higher home values, moving into the realm of both the appraisal(s) required and borrower eligibility help to paint a more distinct picture of the proprietary business landscape.
“There’s little details like that about the client eligibility, as well as the property eligibility that differs [on the proprietary side],” Conley says. “That’s why they’re not interchangeable, and why we do need to be specific with what type of proprietary [we’re discussing], or [if we’re counseling for] the HECM itself.”
Conway and GreenPath also have to tailor individual types of counseling into no less than five different variations: one for HECMs, and an additional four for the different kinds of proprietary products they’re approved to provide counseling for.
Continue here to read the entire article at Reverse Mortgage Daily.
GreenPath Offers Reverse Mortgage Counseling
In order to qualify for a reverse mortgage, you must be at least 62 years of age. The federal government also requires that you participate in a reverse mortgage counseling session with an approved non-profit agency. GreenPath is certified and our reverse mortgage counseling can be completed over the phone or in person. Our goal is to help you understand all your options so you can feel confident and make an informed decision.
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