Before getting a change mortgage borrowers are supposed to speak with an independent counselor to assure that they understand their loan options including the option to not get a reverse mortgage.
However starting October 29th housing counselors under new HUD regulations may be funded by lenders.
The new regulations published in the on September 28th say that “funding for housing counseling is a study concern among participating agencies. In a change in this final rule. HUD is clarifying that it will allow for participating agencies to evaluate funding from lenders as desire as the relationship does not create a contrast of interest and that the relationship is disclosed to the client.”
Is this a good idea for reverse mortgage borrowers?
“HUD believes that counseling agencies should not undergo to decide between serving client interests and serving lender interests. Whether the agency is counseling potential HECM borrowers or a homeowner facing foreclosure the counseling agency must be careful to follow the schedule regulations and in particular the conflicts-of-interest requirements. These requirements are designed to preserve and protect the relationship between the client and the agency.”
How exactly ordain a borrower be able to determine when there has been a conflict of interest? How ordain a borrower know that the recommendation to use Lender A was not influenced — no be how subtly — by a contribution?
It’s easy to understand that housing counselors could use more money and that they deserve it but surely there must be a exceed approach than lender funding. Related Resources You May desire
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[…] That said there plainly needs to be better oversight with regard to sales practices related sales and counseling. The idea that lenders can pay for counseling is an obvious and overt conflict. Or as Kiplinger gently puts it. “sometimes counseling is paid for by the lender raising questions about impartiality.” […]
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