Taxation & Estate Planning

The New York Times has a recent article on the new rules for reverse mortgage counselors. 

Under the new rules, counselors are required to pass an exam that was used in recent years by the AARP Foundation to qualify its reverse-mortgage counselors, and they must take part in training every two years. Counselors will also have to follow a set of protocols to help determine whether a reverse mortgage will help a borrower.

Counselors will focus more attention on assessing borrowers? household budgets and carefully addressing whether a reverse mortgage will help achieve their goals. Sometimes, Ms. Burns said, counselors will suggest social service options like Meals on Wheels to alleviate some of their financial difficulties.

Counselors will also be required to determine whether the consumer actually understands the information. If they cannot make that determination with confidence, they must withhold the counseling certificate, which is needed before a loan can be approved. The counselor can recommend that a borrower bring along a family member or financial counselor to a return visit.

The article points out that telephone interviews are still available, which could cause some problems with determining whether the person on the telephone is actually the person trying to obtain the reverse mortgage. 

Whether or not a reverse mortgage is right for a particular person depends a lot on their specific circumstances. I've had some clients who obtained one and then regretted it, and others who were glad they did.  Having more stringent standards for the counseling which is required before obtaining one will hopefully lead to more people making the right decision for their situation.