The federal reverse mortgage program acts as a lifeline for some older homeowners, but consumer protections and comprehensive counseling are critical to protecting seniors and their home equity, the National Council on Aging (NCOA) told Congress yesterday.
“The Department of Housing & Urban Development has made it easier for homeowners to learn about public benefits by requiring that HECM counselors conduct an NCOA BenefitsCheckUp screening for clients with incomes under 200% of poverty,” said Ramsey Alwin, senior director of economic security. “This has helped more than 103,000 seniors find over $378 million worth of annual benefits, helping some defer or avoid a HECM altogether.”
Access to unbiased counseling ensures that consumers are protected as they consider all of their financial options, Alwin said in testimony before a Senate subcommittee with oversight of the HECM.
Older homeowners consider HECM loans for many reasons, including additional income, to plan ahead for emergencies and to pay for home repairs or improvements, according to NCOA. But about 44% of reverse mortgage borrowers have incomes under 200% of the federal poverty level, or $22,980 for a single individual, so changes to HECM should not come at the expense of seniors of modest means.
Increasing the sustainability of HECM requires greater collaboration for counselor training, NCOA said, and adequate resources for HECM training are critical for counselors to keep up with changes in the industry.