Reverse Mortgage Counseling is a mandatory requirement when obtaining a reverse mortgage and must be completed before an application can be taken in most cases. Reverse mortgage counseling serves a valuable purpose both to the lender and the consumer. For the consumer, counseling offers an unbiased opinion. The counseling costs about $99 to $125 dollars and the counselor gets paid whether or not the borrower completes the reverse mortgage so there is no reason to steer. For the lender, counseling assures that the borrower understands the basics of a mortgage / reverse mortgage and takes the majority of the responsibility of deeming the client mentally fit off of the loan officer and lender.
The counseling session itself can take as little as 20 minutes or as much as an hour and a half depending on the counselor and the number of questions the potential borrower has.Personally, I think the longer the better. Obviously quick is good but I want all my clients to be as informed as possible about a reverse mortgage. Having a good loan officer like myself will assure all of your questions get answered but you don’t always know who you’re dealing with. Trust is very important and the counselors are there to protect you so if your loan officer seems nervous about the counseling or tries to “over prepare” you it may be a red flag and indicate that they either don’t know what they are doing or that they are doing something they shouldn’t be doing.
There is also a new rule that was just put in place in California that creates a “cooling off period”. The new rule is called AB-1700. While it may have its heart in the right place it does little more than delay the process and cause the borrower to have to wait longer for their financial freedom. The new rule implemented January 1st 2015 says that the customer must wait a full week from the counseling session before any services can be ordered. This means that we can do an application right after the counseling session but we have to wait a full week before we can even order an appraisal, title, escrow etc. The law was designed to give the borrower more time to think but by the time the client has completed the counseling and an application they have usually thought about it for several months in most cases and have been consulted by a professional loan officer and a non-biased counselor so there is really no need for more thought. Especially when the government is forcing it.
To sum up, counseling is a very important part of the reverse mortgage process. It protects the loan officer/lender as well as the borrower. Counseling should be viewed with friendly eyes. Remember to be aware of loan officers who act or sound funny when a counseling session is to be conducted. A reverse mortgage is a wonderful tool to make your retirement what it should be and allow you to live life on your terms. Counseling is essential. Call today (1.800.598.6265) if you need help or have any questions. I look forward to speaking with you!