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Senior Citizen's Guide to Connecticut

What is Reverse Mortgage Counseling?

Home Equity Conversion Mortgages (HECMS), more commonly known as reverse mortgages are focused on consumer protection. The industry, as a whole, wants to insure the senior homeowner is fully informed about the workings of a reverse mortgage.

This task is accomplished by requiring the senior homeowner to participate in a counseling session. The senior chooses the counselor from an approved list. Most of the counseling is completed over the phone. The senior is encouraged to have a family member or trusted advisor participate in the counseling session. A fee is charged for the counseling and varies from provided to provider. A senior cannot be denied counseling if he/she is not financially able to pay for the counseling.

The counseling is conversational in nature and the counselor asks a series of “general knowledge questions” to ascertain the senior’s comprehension of how a reverse mortgage works. If the counselor detects during the counseling session, that the senior does not fully understand a reverse mortgage or is being coerced into applying, the counselor may refuse to issue the certificate.

An example of some of the general knowledge questions are: when you have a reverse mortgage, who owns your home; when does the reverse mortgage have to be paid back and what are the homeowner’s responsibilities after you get a reverse mortgage?

The senior is issued a Certificate of HECM Counseling. The certificate is signed by the counselor and senior. The original signed counseling certificate is given to the lender as part of the reverse mortgage application. Until the senior has taken the counseling, no services, such as an appraisal can be ordered on the senior’s behalf.

The counselor will also offer to complete a “Benefits Checkup” for the senior. Based on information provided by the senior, the counselor enters data into the National Council on Aging’s secure website.

Counseling has played a vital role in the reverse mortgage industry. It provides peace of mind to the senior and ensures the lending institution the senior understands the complexities of a reverse mortgage.

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