Wednesday, April 27, 2011
Reverse mortgages allow individuals 62 and over to receive money from a bank in return for their home upon their death. Counseling for reverse mortgages is mandatory due to their complexity and the possibility that these individuals may destroy their nest eggs if something goes awry with the loan. The Department of Housing and Urban Development allocates $9 million of its yearly budget to provide reverse mortgage counseling programs that assist borrowers in understanding the costs, risks, and benefits of such loans. Advocates for the elderly, however, have been lobbying hard for broader and better reverse mortgage counseling.
These advocates will be disappointed if the latest federal budget proposal for the current fiscal year is approved in Congress. This proposal cuts $88 million from HUD’s budget for loan counseling, which includes the money reserved for reverse mortgage counseling. Borrowers will have to pay for the counseling themselves, so those who can’t afford the counseling should seek it before the new fiscal year begins on October 1, 2011.
See Ann Carrns, Budget Deal Cuts Reverse Mortgage Counseling, N.Y. Times, Apr. 26, 2011.
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.