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Reverse Mortgage Counseling Fees

In order to be approved for a reverse mortgage, homeowners must agree to participate in a special type of housing counseling that will help educate them on reverse mortgage loans, and prepare them for the application and approval process. They also help the homeowner determine whether a reverse home loan is appropriate and the best choice in their situation. Once the homeowner completes this necessary step toward reverse mortgage approval, they will receive a Counseling Certificate showing they successfully completed their required counseling session.

Reverse mortgage counseling is usually provided for a fee though HUD-approved housing counseling agencies; however, HUD has set regulations to prevent these agencies from charging unreasonable rates.

The HECM Protocol document that explains reverse mortgage counseling overall, the section on fees states the following:

“Agencies participating in HUD’s Housing Counseling Program are permitted to charge clients a fee for HECM counseling services if the fee…

  • is reasonable and customary
  • does not create a financial hardship for the client
  • is commensurate with the level of services provided, and
  • meets all other HUD requirements as discussed in HECM Protocol 7.A.1.

The document also points out that agencies may charge a higher fee if the homeowner requires multiple, extended or in-home counseling sessions; however, the fee may only cover the actual cost of the counseling services, i.e. not travel time or gas reimbursement, etc.

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Agencies may collect the fee prior to conducting the counseling session(s) or they can be paid out of the reverse mortgage proceeds.

Counseling agencies that charge a fee should not collect a fee at the time of the counseling session from a client whose income is below 200 percent of the Federal Poverty level, according to HECM Protcol.

“Agencies may charge these clients a HECM counseling fee at closing provided the client has been advised during the counseling session of the amount of the fee.”

Furthermore, according to HECM Protocol, reverse mortgage counseling agencies may not turn clients away or withhold the Counseling Certificate because of a client’s inability to pay.

To learn more about reverse mortgage counseling fees, and to see more details on the reverse mortgage counseling process overall, download the HECM Protocol PDF document here: http://portal.hud.gov/hudportal/documents/huddoc?id=7610-0_1.pdf

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Please keep in mind that the reverse mortgage industry is constantly changing and some of the information contained on this site may not be current. Please ask a licensed reverse mortgage professional for up-to-date guidelines.