WHAT IS HECM COUNSELING?

Because Home Equity Conversion Mortgage (HECM) loans are insured by the federal government and the loan is age-specific, the Federal Housing Administration (FHA) requires applicants to complete a counseling session with an independent third-party counselor.

The purpose of this counseling session is to ensure potential borrowers understand the HECM loan. The average time needed to complete the session is 40 to 60 minutes. Remember, these counselors are not affiliated with lenders; their job is to represent YOUR best interests. All borrowers (and any non-borrowing spouse) must complete a counseling session.

Lenders must provide a list of at least 10 to 12 agencies that provide HECM counseling sessions. The choice of which agency to use is made by you, not the lender.

As the borrower, you must pay the counseling fee, which averages $125. Agencies sometimes have federal grant money to cover the cost of sessions. Make sure to find out the cost before scheduling a session.

Because HECMs are different from traditional loans that require monthly loan payments, your counselor will explain HECM’s unique features. You also will learn about:

• Available interest rates
• End of loan options
• And more!

The counselor will ask you a series of questions and will also answer any questions you might have, to be sure that you understand the HECM loan. Upon completion, you will receive a Counseling Certificate verifying your participation.

HECM lenders cannot begin processing loan applications until they receive your signed, dated, original Counseling Certificate. Counseling Certificates are valid for six months. For counseling about using a HECM for purchasing a home, the certificate must show the address of the new home being purchased.

*Borrower is responsible for property taxes, homeowners insurance, and property maintenance. A HECM is home-secured debt payable upon default or a maturity event.