In an in an effort to curb government spending and address the US deficit, $88 million in loan counseling funds was eliminated from the Department of Housing and Urban Development’s budget for the 2011 fiscal year. Earlier this month President Obama signed the legislation that helped avert a government shutdown but will also particularly affect seniors seeking counseling on an FHA-insured reverse mortgage loan. This is all in spite of the NCOA’s (National Council on Aging) opposition to the elimination. Their view is that counseling is a critical aspect of education for older homeowners and should not come out of the pockets of seniors who are already struggling financially. The NCOA has since urged Congress to restore the program for fiscal year 2012. Of the $88 million being cut for 2011, $8 million will be taken from reverse mortgage counseling funds beginning with the new fiscal year on Oct 1, 2011. While the funding for counseling will be eliminated, the counseling itself will still be required by law as part of the loan-qualification process. A previous maximum counseling fee limit of $125 was eliminated earlier this year, so consumers should stay vigilant and make sure that they do not get overcharged by agencies for the reverse mortgage counseling services they are required to take.
The response above is not intended to be anything other than the educated opinion of the author. It should not be relied upon as financial advice.