Finding a Counselor

The easiest way to find a counselor by far is to go online. There are a few counselor listings, but you can save yourself time by going straight to www.hud.gov/offices/hsg/sfh/hecm/hecmlist. cfm. If you're uncomfortable with computers, just ask a friend or family member to guide you, or use the computers at your local library (they're always willing to lend a hand). You can also call the Department of Housing and Urban Development (HUD) at 800-569-4287 for counselors near you.

Another easy way to find a counselor is to simply ask your originator (Chapter 9). They know who's out there and who can help. Until recently, originators were not allowed to recommend counselors. In 2005, regulations changed to allow originators to give you a list of five counseling agencies in your state.

Don't despair if you don't see a counselor in your area. While they certainly prefer to spend an hour with you in person, counselors will also conduct phone meetings. It may take a little longer — probably two or three calls — but it's worth the time if there aren't any counselors near you, or you are unable to get to their offices. If you live in a less-populous state or rural area, there may only be a handful of counselors around, so a phone meeting may be in your future.

Before you can go see a counselor, you must request counseling — they don't let just anyone take up their time! The application simply verifies that you are actually eligible for a reverse mortgage and that you understand the basics. They won't turn you away unless you are underage (when's the last time you were carded for anything?) or do not show sufficient comprehension. This is very rare, so don't worry. Anyone who is reading this sentence and is over 62 is likely to be eligible.

If you just want to speak to a counselor but aren't ready to set up an appointment, you may be able to get a counselor on the phone to answer a quick question or two. This is also a good opportunity to feel them out to see if you will be compatible.

Here are some great picks for finding counselors:

i HUD counselors: No matter which loan you think you want, we recommend visiting a HUD-approved counselor. Although it's HUD that offers one of the loan options (the Home Equity Conversion Mortgage, or HECM), their counselors have undergone extensive training and are virtually guaranteed to be the best in the business.

Most HUD counselors are paid through a government grant. They get a dollar amount based on how many counseling sessions they've held. That's why almost all HUD counselors are free — be sure to ask if they charge a fee before you visit. If they do, find a different counselor. Costs are usually around $75 — it's up to you whether or not it's worth it to spend that money, but it's usually unnecessary. You don't get a better counselor for a fee, and there's no reason for you to pay.

The best place to find a HUD counselor is at, you guessed it, the HUD Web site. Follow this string of letters to an easy-to-navigate site: www.hud.gov/offices/hsg/sfh/hecm/ hecmlist.cfm. Then just click on your state and you'll find a whole slew of information about the counselors in your state. Take some time to read through the list, visit their individual Web sites, and narrow it down to one or two. You can also call 800-569-4287 and ask for a reverse mortgage counselor in your area.

1 National Center for Home Equity Conversion's (NCHEC) "preferred" counselors: These are counselors who work for non-profit or public agencies and have all the same detailed information and unbiased policies that HUD counselors have. You can find an NCHEC counselor by visiting www.reverse. org. Take your time and explore this site — they are a virtual "wealth" of information.

1 The AARP network: If you want to go one step up from these very qualified professionals, the AARP Foundation (affiliated with AARP but not the main organization) created a counselor network with the best of the best HUD-approved counselors in the country. These counselors scored the highest on a test administered by AARP's Reverse Mortgage Project, and they must operate in keeping with the project's policies and standards. There are only about 90 in the whole country, but they're spread out, so you should be able to find one in your state.

Aside from scoring high on their AARP exam, network counselors are an actual network of counselors (it's not just a fancy title). Every week, all of the network counselors hold a conference call where they share recent experiences, help each other troubleshoot, and discuss ways to make the network's counseling sessions consistent from Washington to Florida and everywhere in between. They also keep up-to-date on any changes in the loan products, financial regulations, and eligibility requirements.

To find a certified AARP Project counselor, start at www. hecmresources.org/requests.cfm. On the left-hand side, click on "USA Map" and then click on your state. You'll see a brief explanation of services, and then a table of all the Reverse Mortgage Project "network" counselors listed by city. You can also call 800-209-8085 and ask for information about reverse mortgage counseling.

For those who know without a doubt that they will need a Jumbo Cash Account (your home is worth around a $1,000,000 or more) counseling is required as well. The counseling on the Cash Account program will be done during the time your application is being processed. Your originator requests that an independent third party counselor calls you to go over the program. This counselor may be HUD approved, but not always — it's worth it to check (you can always request a HUD counselor from your originator as well). The counselor will review the disclosure forms you were provided at the time of application to ensure that you understand all the aspects of the loan (have a look at Chapter 9 for more on application forms). If after the counseling session you feel you need more input, you may seek additional advice from a financial professional of your choice, such as a financial advisor, senior attorney, or a CPA.

Knowing What to Expect

The reverse mortgage counselor's job is to help you find the right loan or alternative for your individual situation. That's it. They don't originate, fund, or process the loan. Counselors just help you choose it.

As a matter of fact, counselors are supposed to:

1 Assist you in making a decision on your own.

1 Keep their opinions to themselves when it comes to your personal decisions. If they ask what you want to do with your reverse mortgage money and you reply, "I'm going to open a brothel," the counselor's next question should be, "Will you need a line of credit or a lump sum?" While they may not agree with your choices, their job isn't to impart judgment on you.

1 Keep your session confidential. This means that if you don't want your family present and they call up the counselor demanding to know what went on, all he or she will ever say is, "sorry, that's confidential." The only time this may not be the case is if the counselor determines that you are not quite lucid, or if you have given your permission to tell certain people what you've decided.

1 Know the options inside and out and get enough information from you in your hour-long session. Counselors are good, but they're not psychic; when you come, come prepared. You need to have a few things ready to discuss before you make your first appointment:

  • Make sure that you are eligible (Chapter 3).
  • Develop a basic idea of the loan options and how the reverse mortgage works (see Chapters 5, 6, and 7).
  • Get a sense of your finances (how much you owe in monthly debts, how much you think you'll need per month, and so on; see Chapter 2).
  • Know approximately what your home is worth (ask neighbors who recently sold their homes, or look in the newspaper for homes listed in your area).

Coming prepared makes the counselor's job easier and gets you out of there faster.

When you meet with your counselor, you may be surprised to find that some of the options suggested to you don't involve reverse mortgages at all. That's because counselors are required to weigh all of your options and make you aware of every viable, practical choice so you can take an active part in selecting your loan. They are experts on lots of senior services and programs, and may know of one that would cost you less, or get you more.

While all counselors operate a little differently, most will follow a basic four-part counseling session: making the appointment, discussing your motivations and needs, understanding the options, and getting your certificate. You'll find a discussion for all of those parts in the sections that follow.

Making the appointment

It may seem like a no-brainer, but there are some guidelines for making your counseling appointment. First, you need to determine whether you will do your session in person or over the phone. Most counselors prefer meeting in their office, but if a phone meeting is necessary due to distance or immobility, they will happily hold a phone session.

The person who needs the reverse mortgage is the only person who can make the appointment. That means that if you feel a little tired and would rather your daughter called for you, she'll have to do a darn good impression of you to set up your session. Counselors want to know ahead of time who they will be in contact with, and what sort of mental capacity you're in. If you can't make a phone call to schedule a meeting, chances are you aren't fit to take out a new mortgage. Of course, family members are encouraged to join in on the sessions, but only the borrower can make the appointment.

Discussing your needs

Some counselors do an initial phone "interview" with you and send you all the necessary handouts and packets before your session so you have a chance to look them over. Others prefer to go over everything in person so they can get a full sense of your situation, face to face. Both ways give them the information they need, so it comes down to what you and your counselor can agree on.

Once you're inside the counselor's office (or on the phone) your counselor explains his or her role to you and then asks you about your motivations for investigating a reverse mortgage. Questions (that you should have some ready answers to) may include:

  • Why do you want a reverse mortgage?
  • What do you plan to do with the money?
  • How long do you expect to stay in your home?
  • How much money do you actually need?
  • Do you have any outstanding debts, and if so, how much?
  • Does your home need repairs that you know of?
  • How much (if any) of your estate do you want to leave to your heirs?

Start thinking about the answers to these questions now, and your counseling session can go a lot smoother (and faster).

If the questions sound invasive or make you feel defensive about your finances, take a deep breath and remember that the counselor has to know everything about your living situation to help you decide on the best loan for you. If you hold back information (or worse, lie about something) you may be sent down the wrong path . . . and that's not a place you want to be when you have your home on the line.

Your counselor will also try to assess your comprehension. It's not a test, and you don't need to start popping ginseng just to appear sharp in front of your counselor. Most seniors seeking reverse mortgages are of sound mind, but some face dementia, stroke, or Alzheimer's, which may require a durable power of attorney to be present. Still others may have a language barrier, making it difficult to explain complex lending terms (although many counseling agencies are jumping on the bilingual bandwagon). If you have hearing or eyesight problems, let your counselor know ahead of time. None of these issues are anything to be ashamed of, but it does help your counselor to be aware before you arrive.

Your counselor also won't expect you to be an expert on reverse mortgages. It helps if you know the gist of it, but counselors take the time to explain the whole kit and caboodle during their sessions.

At the end of your session, you will receive a HUD Certificate of HECM Counseling. The certificate essentially proves that you showed up at your counseling session, and that your counselor has disclosed all of the information required. It also shows how you held the sessions (by phone or in person) and how long, to the minute, you spent with your counselor. The HUD certificate (by far the most common, although non-HUD counselors may have variations) has six discussion items that your counselor should have gone over with you prior to you signing the certificate.

  1. They must tell you about other options besides the HECM (HUD's loan), including other living arrangements, social services, health benefits, and financial options.
  2. They must consider other loan programs and let you know that they're available. These may be other reverse mortgages, deferred payment loans, or property tax deferral.
  3. They have to fully explain the monetary implications of getting a reverse mortgage.
  4. They must disclose that reverse mortgages may affect your taxes, eligibility for assistance under government programs, or have an impact on your estate.
  5. They must talk about whether you signed an agreement with an estate planning service or other firm that requires, or seems to require, that you pay a fee upon closing that may exceed legal amounts.
  6. If you did sign an agreement like this, that you understand there are free resources available to you making that firm unnecessary.

If you still have any questions about any of these items, this is the time to ask — before you sign. Your signature (along with your counselor's) is required on the certificate. The counselor will probably ask you to sign three original (not photocopied) certificates. One is for the counselor, one is for you to keep, and one is for your originator. You'll need to bring the originator's copy with you to your first meeting with the originator. If your originator loses it (seriously, it happens), you can hand over the one you kept at home for just such an occasion, or ask your counselor for a new one.

You'll also see a note on the certificate that it's only good for 180 days. If you plan to speak to an originator, do it fairly soon so you don't have to go through the counseling process all over again.

Understanding your options

When he or she has a good assessment of your finances and expectations, your counselor will create computer printouts of all of your options, based on the information you've given. This boils down to a tangible summary of all your options with information on which may work best for you. This is often called a Personal Reverse Mortgage Analysis, and it's a great tool to take back to your family (if they didn't come along) to show them exactly what your choices are.

The counselor can tweak the printouts to reflect any number of different options and show you how an endless combination of loans will suit your needs. Hopefully, he or she will have such a good reading on you (because you will have been so open) that the first couple of choices will be options that you can agree on.

This is one reason why counselors prefer office sessions rather than speaking over the phone. In the office, they can keep printing out new choices as long as you keep changing your mind. Over the phone they'll have to help you agree on one to try, mail you the printout, call to go over each line, and then do it all over again if you want to see another option. In the office this can take minutes. Over the phone it could be days before you reached a satisfying loan option!

The printout will show what you can expect to receive — and give — with a particular option. It covers estimated loan costs, interest rates, maximum fees, and approximate home value and age, so what you see there should be close to what you'll see in the originator's office.

Take these printouts home and review them after your counselor has gone over them with you line by line. You don't have to make a decision in the office, and they encourage you to call them again if you have any follow-up questions. If you're completely lost or aren't satisfied with your options, schedule another session. Most people will only need to go once, but if you are utterly confused or don't see an option that would work for you, make another appointment. That's what counselors are there for.

AM* Once you and your counselor have established that a reverse mortgage is right for you, he or she will most likely provide you with a list of all the originators in your area. Counselors are not allowed to favor or endorse any of them, and as tempting as it will be to ask for a recommendation, it would be unethical for them to give you one.

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