Legislation is scheduled to pass Congress which would eliminate all funding, totaling $88 million, for the U.S. Department of Housing & Urban Development's (HUD) Housing Counseling Program. These cuts include all funding for federally mandated reverse mortgage counseling. This budget was zeroed-out as part of the FY 2011 Continuing Appropriations Act (HR 1473). In order to obtain a Federal Housing Adminsitration (FHA)-insured reverse mortgage, which currently represents 95 percent of the market, federal guidelines mandate that all borrowers must first go through HUD-approved reverse mortgage counseling. The National Council on Aging (NCOA) is one of eight home equity converstion mortgage (HECM) Intermediaries that provide this counseling service nationwide.
"This unique counseling helps older homeowners understand the costs, benefits, and risks associated with these loans," said Barbara Stucki, vice president for Home Equity Initiatives at NCOA. "Without this funding, the older Americans who can least afford it may have to pay for this critical advice out-of-pocket."
Over the past three years, NCOA has worked with HUD and the reverse mortgage industry to improve the quality of counseling sessions. In addition, the loss of the counseling funding will impact counselors' ability to help reverse mortgage borrowers who are in default and at risk of foreclosure.
"In these difficult economic times, people have to increasingly tap their home equity to make ends meet," said Stucki. "This new budget proposal is a major setback and increases the financial vulnerability of all older adults looking to use their home to stay at home."
