HECM Reverse Mortgage Counseling Protocol

8/10/2009

posted by N. Sioris

Stumble It!

The Federal Trade Commission (FTC) is recruiting the assistance of HUD approved HECM Reverse Mortgage Counseling agents to help them in their efforts to detect fraudulent and misleading offers relating to FHA reverse mortgage lenders and loans.

While conducting the required HECM reverse mortgage counseling session, the FTC is asking reverse mortgage counselors to look and listen for false or misleading claims relating to reverse mortgage offers that the borrower may have received. They are asking HUD reverse mortgage counselors to be on the alert for unscrupulous lenders that may try to mislead potential reverse mortgage borrowers about the key features of this type of loan.

When reviewing the paper work provided to the borrower from the reverse mortgage lenders, the counselors are being asked to look closely at the key features of the loan, like the interest rate, fees, loan payments and total reverse mortgage costs. If they see a large discrepancy between the terms being offered and what would typically be offered, the counselors are advised to view this as a sign of possible deception, and request permission from the borrower to report it to the authorities.


Keep an Eye Out For Intentional Misrepresentation

Other areas of concern that the HUD reverse mortgage counseling agents are being asked to be on the alert for are; company names, logos, seals and other representations of the lenders' that may give the impression that the lender or broker are affiliated with a government agency or a government program.

The counselors are being asked to inquire whether the borrower has been pressured in any way to use their reverse mortgage loan money to buy other products or services such as an annuity, long-term care insurance, home improvements, or investments. The FTC's concern is that some reverse mortgage lenders may try to convince senior borrowers to get this type of loan just so that the borrower will have the ability to purchase other products that they are selling in addition to reverse mortgages.


The FTC Business Alert can be read in its' entirety here.