HUD Also Provides More Input on HECM Counseling Rule

HUD issued another mortgagee letter that reiterates its policies on counseling for seniors who apply for a government-insured home equity conversion mortgage and adds several new requirements. That letter (ML 2009-10) repeats the admonition that lenders are "strictly prohibited" from assisting would-be borrowers in scheduling counseling. HUD says it is aware of instances in which lenders have dialed a counseling agency and then handed the phone to the borrower to schedule counseling. In other cases, the lender has entered the borrower's contact information into a web-based system, which automatically put that borrower's name in a queue to be called by a counselor. The letter says borrowers must take the initiative when it comes to contacting a counseling agency. Contact must be on the borrower's "own terms, when he or she is comfortable," HUD warns. Lenders are allowed to provide a list of possible agencies, but if they do so, the list must contain at least 10 choices and be given to each and every client.