Housing Counseling Process Evaluation and Design of ... - HUD User

and then require them to attend in-depth budget training to help them manage their money
better and hopefully keep this from happening again and if it does they have money set aside
to take care of it.” (Community action agency in OK)
“The rise in volume of Foreclosure Prevention clients has been a big challenge for our
Housing Counseling. We find that most of the clients had grossly inappropriate loans offered
to them and were not financially aware of the possible consequences of such a loan. They
often reported that assurances were made regarding re-financing that were not feasible as
housing prices dropped. They also usually have few assets and insufficient income to counter
the problems they face.” (Human services organization in CA)
Building Capacity for HECM Counseling
Between 2000 and 2005, the number of U.S. residents aged 62 and older increased by 11 percent,
almost twice the rate of growth for residents under the age of 62 and three times the rate of growth for
residents under age 55. 44 The aging of the Baby Boom generation has created new demand for FHA’s
HECMs. 45 The volume of HECMs has nearly tripled since 2004, with approximately 107,000
HECMs closed in 2007. 46 All HECM borrowers are required to receive education and counseling by
a HUD-approved HECM counselor before closing the loan, and so with this rapid growth in the use
of HECMs there has also been a sharp increase in demand for HECM counseling.
The challenge of meeting the growing demand for HECM counseling was not mentioned as
frequently in the interviews or comments on the surveys as building capacity for foreclosure
mitigation counseling. However, several intermediaries, SHFAs, and counseling agencies cited the
growth of HECMs as an important trend that the industry needs to be prepared for and also voiced
concern about the current quality of HECM counseling.
In order to meet the demand for HECM counseling, HUD has worked aggressively to expand the
network of HECM counselors and the means by which counseling is delivered. In 2005, HUD
increased the number of intermediaries permitted to provide face-to-face and telephone counseling
nationally for HECM clients. More recently, HUD has allowed all HECM counselors to counsel
HECM clients by telephone if face-to-face counseling is not feasible and has permitted agencies and
lenders to share information and referrals for HECM counseling electronically through a third party
vendor. In FY 2007, HUD awarded a total of $3 million in supplemental funding for HECM
counseling to two intermediaries—NFCC and MMI.
44
45
46
U.S. Census Bureau, 2000 Census and 2007 population estimates.
Because of the insurance provided by FHA, the HECM is the most common type of reverse mortgage in the
market. Fannie Mae also offers a reverse mortgage product, the Home Keeper Mortgage, that requires
counseling as well.
Statement of Meg Burns, Director, FHA Single Family Program Development, U.S. Department of
Housing and Urban Development, Hearing before the Special Committee on Aging, United States Senate,
December 12 2007.
Chapter 9. Policy Considerations 143