HUD Permits Borrower-Paid Counseling

Today, the U.S. Department of Housing and Urban Development published Mortgagee Letter 2008-12 to permit counseling agencies to charge seniors a fee for counseling services. HUD said the counseling fee should be reasonable and customary for the service provided and not exceed $125.

According to ML 2008-12, the counseling fee can be paid directly by the consumer (or related parties), by the lender, or paid out of the loan proceeds. Upon agreement of both the lender and the borrower, the closing agent can assume responsibility for remitting payment to the counseling agency that performed the service.

Payment under any of these methods must be reflected in the 800 series on the HUD-1 settlement statement in accordance with HUD’s Real Estate Settlement Procedure regulations at 24 CFR part 3500 (see 24 CFR 3500.8).

Lenders are reminded that they may not steer, direct, recommend, or otherwise encourage a client to seek the services of any one particular counseling agency.

To read a copy of the ML 2008-12, please click http://media.nrmlaonline.org/email/ML2008-12.pdf

article sourse www.reversemortgage.org (NRMLA)