TopMortgage Compliance Update (1)
           January 17, 2011
                                    HECMs: February 1, 2011 Date Approaches

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Counseling is a central feature of the Home Equity Conversion Mortgage (HECM) program. Without a counseling certificate from an FHA-approved provider, a lender may not originate a HECM. Counseling has always been part of the HECM program, going back to Handbook 4235.1 Rev-1, which outlines the basic program. Published in 1994, it has been continuously revised through Mortgagee Letters, HECM regulations, and, of course, amendments to the HECM statute. Handbook 7610.1 contains the HECM Counseling Protocol.


Recently, HUD issued Mortgagee Letter 2010-37, which seeks to clarify certain aspects of the required List of HECM Counseling Agencies (Counselors List), along with guidance about completing the FHA Connection case assignment screens for HECMs vis-�-vis the Counselors List, and the timing for completion of certain relevant screens.


The salient requirement: lenders are required to provide each client with a list of HECM counseling agencies and that list must include no fewer than nine HUD-approved counseling agencies, based on specific criteria.


Compliance Effective: February 1, 2011 


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January 19, 2011 - 9:00 AM to 11:30 AM

A free webinar is being offered by HUD, which will provide an overview and the latest updates to the HECM origination requirements.

Topics will include: HECM purchase transactions, refinances, and updates to the HECM process, HECM Standard and the new HECM Saver.



Mortgagees are required to provide each client with a list of HECM counseling agencies.

The Counselors List must include no fewer than nine (9) HUD-approved counseling agencies, based on specific criteria.

The Counselors List must include at least:
  • five agencies within the local area and/or state of the prospective borrower
  • one of the local agencies located within a reasonable driving distance for the purpose of face-to-face counseling, and
  • the following four national intermediaries:

National Foundation for Credit Counseling (NFCC)

Money Management International (MMI)

National Council on the Aging (NCOA)



[Note: Earlier this month, the National Reverse Mortgage Lenders Association (NRMLA) sought guidance from FHA on the required actions lenders must take if they are unable to provide a full list of counselors to a potential applicant, when the client lives in an area that does not have five HUD-approved counseling agencies, as required by the selection criteria.]


Within one (1) business day of requesting a FHA case number, a lender should complete the HECM Referral List Update in FHA Connection.
  • The screen must be completed prior to a HECM loan being endorsed for insurance.
  • This screen requires the lender to input the nine (9) agencies that the lender provided on the list given to the client.
In the FHA Connection, the mortgagee must check the "Not Referred" box only if a client has already been counseled by a HUD-approved HECM counselor.
  • The client must be able to confirm that s/he has received counseling by providing the lender a completed the Certificate of HECM Counseling (Form HUD 92902), which verifies where and when the client received HECM counseling, and that counseling was received from a HUD-approved HECM counselor.
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HUD-Approved Housing Counseling Agencies

Mortgagee Letter 2010-37

November 8, 2010

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