The U.S. Department of Housing and Urban Development (HUD)’s Office of Housing Counseling this week announced that it would be making over $51 million in funds available in a new notice of funding opportunity, with one of the specific reasons for new funding availability centering on the prevention of foreclosures related to Home Equity Conversion Mortgage (HECM) transactions. This is according to the notice made public by HUD on Tuesday.

The move has the potential to increase the number of default counselors who are active in the HECM space, according to industry professionals who spoke with RMD.

Reverse mortgage counseling provision

In the announcement of the new funding opportunity, HUD highlighted that these additional funds are designed to assist stakeholders with the allocation of new funding for historically Black colleges and universities and other minority-serving institutions or agencies partnering with them; as well as allowing for greater prioritization of emergency preparedness and disaster recovery counseling.

Additionally, HUD specifies that the new funding will “includ[e] incentives for Home Equity Conversion Mortgage foreclosure prevention counseling,” which is hoped to increase the availability of such counseling for seniors who need it especially after the economic shock of the COVID-19 coronavirus pandemic.

“Agencies which commit to provide foreclosure prevention counseling to seniors with Home Equity Conversion Mortgages will receive additional incentives as part of the funding process,” HUD described in the announcement.

With these funds being housed under the fiscal year 2021 Comprehensive Housing Counseling Grant Program, the specific document describes the new reverse mortgage-related provisions further.

“HUD may augment the award based on an Applicant’s commitment to providing HECM default counseling,” the document reads. “Applicants are asked to indicate how many of their counselors will provide default counseling for reverse mortgage borrowers from April 1, 2021 to September 30, 2022. The bonus will be capped at five such counselors per Agency, Branch, and Subgrantee. As a reminder, default counseling for reverse mortgages can be provided by non-HUD HECM Roster Counselors.”

By the end of the designated performance period, qualifying counselors will be expected to have “attended at least eight hours of training in reverse mortgages in the three years prior to

the end of the grant period; and provided services to a minimum of ten HECM default counseling clients during the grant period,” the document specified.

HUD also specifies that the award total may be augmented further “based on the number of HECM Roster Counselors that provide housing counseling services as of September 30, 2020,” potentially in an effort to bolster HECM counselors generally.

“HUD is proud to make this funding available to housing counseling agencies across the nation,” said HUD Deputy Secretary Adrianne Todman in the funding opportunity announcement. “As our country continues to address the economic and public health impacts of COVID-19, the funding HUD is making available today is critical to ensuring resources and HUD-certified housing counseling professionals are available to support renters and homeowners so they can remain in their homes.”

Reverse mortgage industry, counseling professionals’ response

In terms of the measures being taken by the Department to address this issue, the National Reverse Mortgage Lenders Association (NRMLA) is very pleased by this news according to Steve Irwin, the association’s president.

“NRMLA welcomes this tremendous news from HUD on their funding opportunities for Housing Counseling Agencies,” Irwin told RMD. “The required reverse mortgage counseling has been a cornerstone of this mission-critical program, and to see the Department include additional incentives to expand the availability of HECM delinquency and loss-mitigation counseling will certainly help with those situations where borrowers may encounter issues with their property charges. This commitment by the Department to continually improve the program’s performance, and to help senior borrowers to effectively age in place, is greatly appreciated.”

Counseling professionals are also very pleased by this news. Generally speaking, multi-faceted counseling organizations including Money Management International (MMI) will apply for the grants across a variety of its applicable counseling programs, according to Jackie Boies, senior director of housing and bankruptcy services at MMI.

“Money Management International is extremely pleased that HUD is making $51 million in grants available to support HUD-approved housing counseling agencies and intermediaries, of which MMI has been since 2006,” Boies tells RMD. “We hope to be awarded a grant which will help MMI support the financial wellness of Americans, through counseling to stabilize their housing. These funds will provide housing counseling to thousands of renters and homeowners, educating and assisting them in making informed decisions about their housing options.”

MMI is all too aware of the particular impact that the pandemic’s economic effects have had on people of color and low-income households, and these funds should play a notable role in serving to advance equity in such affected communities, Boies says.

“”It will also help in the recovery process for those impacted by disaster, and help seniors remain in their homes with provisions for reverse mortgage counseling,” she continues.

In terms of the specific reverse mortgage impact, MMI is very pleased at the particular call-out by HUD regarding HECM default counseling, especially considering that it is one of the few agencies that provides such a service when compared with the wider housing counseling landscape.

“While many agencies provide reverse mortgage counseling, MMI is one of the smaller number of agencies who also provide reverse mortgage default counseling,” Boies says. “It is exciting to see that HUD is incenting agencies to provide this much-needed assistance. Today’s HECM borrower is faced with many of the pandemic-driven concerns, such as loss of employment and unexpected medical expenses. With rising property values, these seniors may soon see increases in property taxes and insurance. Any of these might topple an already stretched budget so the need for default counseling may be greater than ever.”

Read more about this grant availability at Grants.gov.