Ryan Baker's Mortgage Blog

Today's blog contains some useful information for those looking into a Home Equity Conversion Mortgage (HECM), also known as a Reverse Mortgage. When someone wants one of these mortgage they are "required to receive consumer education and counseling by a HUD(US Department of Housing & Urban Development)-approved HECM counselor." The problem is many non-HUD approved mortgage brokers have been providing “advisory” services in connection with HECM loans and charging very inflated fees.

According to HUD, a non-approved mortgage broker may only be compensated for providing purely educational or consultation services to the borrower. All other activities, i.e., essentially the entire loan origination process, must be performed by an approved loan correspondent (FHA approved mortgage broker). These educational activities must constitute meaningful counseling, and cannot constitute steering.

You should know that even if an “advisor” is involved, the borrower still must receive actual counseling from an approved counseling agency, i.e., someone other than the non-approved broker. HUD recently concluded that a reasonable HECM counseling fee by an approved counseling agency was $125 per session. Amounts that are considerably higher ($300 +) can be investigated by HUD and the broker can face criminal charges for over-charging, especially if they are non-approved. There are reports that some agencies charge an excess of $1,000 for these services...please report these people.

On a non-related topic, how amazing are the Olympics? Congrats to Michael Phelps! My actual highlight has been watching Usain Bolt run for Jamiacia. I know he's not from the USA, but he has put on the best performance in the history of sprinting in my opinion.

If you have any mortgage questions, I can be reached at 805-540-0866 or RBaker@PeregrineLending.com