HECM Counseling - Consumer Safeguards and Education with a Reverse Mortgage
This is frequently referred to as Reverse Mortgage Counseling
As I've said on another page, a reverse mortgage is simpler than a regular mortgage. People do regular mortgages all the time without learning how they work. It is because of that there are numerous problems with regular mortgages and people are upset that someone didn't explain it properly. I believe all borrowers should understand how any loan they do operates and the implications of the details. If regular borrowers has educated themselves in the same way reverse mortgage borrowers are required to be educated we would not have the financial crisis we have now. OK, I'll get off my soapbox.
Learn as much on your own as you feel comfortable with. You have obviously taken that step because you are here.
Before a lender can start the application process, there is a requirement by HUD (Housing and Urban Development - a branch of the U.S. government) that you attend what is referred to as "independent third party counseling". The agencies are typically non-profits (consumer credit counseling agencies or government agencies (city and county housing agencies). The individual counselors (Reverse Mortgage Counselors) are specially trained to discuss the HECM Reverse Mortgage. They have no relationship with the lenders.
Appointments with the counselor can be done in person (the preferred method) or over the phone. A list of HUD certified counselors can be found at the HUD Network Counselors by State. It is unusual for the counselor to be available when the first call is made. It is usually necessary to make an appointment, even for a phone counseling.
For the longest time, this counseling was free. Changes were made allowing counselors (they are non-profits or local government agencies) to charge up to $125 for a session. Most do charge that although they are allowed to waive that fee for anyone they determine cannot afford it. That doesn't happen often.
The counselor is working from a specific agenda with the details HUD wants to make sure the borrower hears. They will ask occasional questions to make sure they understand the borrower's situation and motivation for a reverse mortgage but most of their time will be spent educating the borrower on these specific points. They will also answer questions. This session usually takes about an hour.
Once they have completed the counseling, they will give the borrower an original counseling certificate. If the counseling was done over the phone, they will mail it. The lender will need this original certificate in order to take the application.