Government Raises the Bar for Reverse Mortgage Counselors

The Federal Housing Administration has set new standards for housing counselors who want to work with seniors taking out FHA-insured reverse mortgages. To provide these services, counselors have to pass an AARP-approved examination and apply to be on FHA's new roster for Home Equity Conversion Mortgage counselors. "Only those counselors on the HECM roster can provide HECM counseling to potential HECM borrowers," according to FHA mortgagee letter 2009-47. FHA created the HECM roster in response to criticism that some counseling sessions are pro forma — conducted by counselors that are not knowledgeable about the product. The Government Accountability Office identified problems and Congress directed FHA to take corrective action. Darryl Hicks, a spokesman for the National Reverse Mortgage Lenders Association, noted that the new standards and roster have been a work in progress for the past two years. "We think it is great for the industry because it will establish a higher bar for counseling," Mr. Hicks said.