MLS Reverse Mortgage

 Understand Reverse Mortgage Counseling

 Be Prepared:

HUD released a new counseling protocol that became effective in September, 2010. This new protocol made it required that borrowers be provided certain documentation 24-48 hours in advance of their counseling session. The items will be provided by the counselor, however, the lender can provide them as well.

The required documents are:

• Loan Comparison - The reverse mortgage calculator results provide a side by side comparison of available reverse mortgage products. It summarizes the estimates of available proceeds, fees, rates and margins. 
• Total Annual Loan Cost Disclosure - The total cost of any reverse mortgage loan depends on how long you keep the loan and how much your house appreciates in value. Generally, the longer you keep a reverse mortgage, the lower the total annual loan cost rate will be. The total annual cost rates are based on the total charges associated with this loan. These charges typically include principal, interest, closing costs, mortgage insurance premiums, annuity costs and servicing costs (but not disposition costs--costs when you sell the home).
• Amortization Schedule- The amortization schedule shows a year by year comparison of your loan. It will summarize the interest rate accrual, MIP accrual, available line of credit as well as estimated remaining equity for the estate. It's important to remember that it is an estimate and actual numbers will vary based on the loan program chosen.
• The NCOA's booklet, Use Your Home to Stay at Home
• HUD's Preparing for Your Counseling Session

Counselors are now required to:

• Review the client's level of understanding
• Discuss the client's needs
• Review the features and costs of reverse mortgages
• Examine the borrower's obligations in a reverse mortgage and alternatives to reverse mortgages
• Provide the client wit information regarding purchasing annuities with reverse mortgage proceeds
• Review the client's level of understanding of the information covered in the counseling session

 What are your next steps after counseling?

After counseling is complete, you will receive a counseling certificate signed by the counselor. You should sign the certificate and return it to your lender. The lender is not allowed to do any work for you that would incur a fee prior to receiving the signed counseling certificate.

*National Counsel on Aging (NCOA) has a fee that ranges from $0 - $125. When borrowers call in, they will determine the fee based on income.