For every story of someone that got hurt with a bad mortgage in the housing crisis it sure would be nice to hear a good story. We all know that regulation and re-regulation has been a boon for the people that grow trees and make paper. The big question is do people read and understand all of the disclosures that the regulators require with the purpose of protecting mortgage applicants. The answer is NO! There is no way to comprehend everything that is put in front of you when applying and ultimately closing on a mortgage. It is overwhelming. If you don’t sign the papers, you don’t get the loan. So the papers get signed and from there it is frankly pot luck.
The good story is HUD Counseling. For retirees and seniors interested in a Reverse Mortgage to pay off their current mortgages and supplement their retirement income they are required to participate in counseling. They are not even allowed to complete a loan application before they successfully complete the required counseling.
The counselors consist of independent advisors, many of whom represent non-profit organizations, approved by HUD. They provide the homeowners with an unbiased truly independent assessment of the loan program and their particular scenario. Whether a homeowner arrives at counseling fully prepared with a Reverse Quote Package or not, it doesn’t matter. The counselors will review the homeowner’s objectives, create a quote scenario, and explain the benefits and any associated risk factors.
The end result is that if the required disclosures do not register the counselors are there to be sure the homeowners’ are fully informed. I ask myself this question, instead of all of the increased regulation and piles of disclosure for all mortgages aimed at protecting people but often baffling, why not adopt the HUD Counseling mandate? The principles are sound and it goes a long way toward helping protect homeowners from their lenders and potentially poor decisions that could cost them dearly later.
George H. Omilan