JOFOC_NCOA.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

(1) Identification of the agency and the contracting activity:

Office of Housing Counseling, HC Office of Chief Procurement Officer (HQ), NPH

(2) Nature and/or description of the action being approved:

Award of a new sole source purchase order to assist The Office of Housing Counseling, (OHC) with counseling senior homeowners interested in a Home Equity Conversion Mortgage (HECM) in making an informed decision of whether a HECM meets their needs. Senior homeowners will receive counseling, a Financial Interview Tool (FIT) analysis, Benefits Check-Up (BCU) tool review and will be provided a booklet “Use Your Home to Stay at Home”.

(3) A description of the supplies or services required to meet the agency’s needs (including the estimated value).

The Office of Housing Counseling, (OHC) is responsible for the administration and oversight of the Department of Housing and Urban Development’s (HUD) Housing Counseling Program. Section 255 of the National Housing Act (NHA) (12 U.S.C. 1715z-

20) authorized HUD to insure reverse mortgages, referred to as Home Equity Conversion Mortgages (HECMs), which can be used by senior homeowners, age 62 and older, to convert the equity in their homes to monthly streams of income or a line of credit to be accessed as needed. HECMs must be repaid when the borrower no longer occupies the home. A HECM is originated by a lending institution, such as a mortgage lender, bank, credit union, or savings and loan association, and the mortgage is insured by HUD.

HUD’s regulations implementing the HECM program are codified at 24 CFR Part 206.

To assist the senior homeowner in making an informed decision of whether a HECM meets their needs, the homeowner, consistent with section 255 of the NHA, is required to receive counseling by a HUD approved HECM counselor. Section 255(f) of the NHA requires the provision of consumer education and information to HECM mortgagors by entities other than the lender. Each mortgagee must make available to a homeowner, at the time of the loan application, a written list of the names and addresses of third-party information sources that are approved by HUD as responsible to provide the statutorily required counseling. The counseling must include information on options other than a HECM, the financial implications of entering into a HECM, the tax consequences of a HECM, and any other information that HUD or the prospective borrower may request.

Section 255 of the NHA was recently amended by the FHA Modernization Act, Title I of the Division B of the Housing and Economic Recovery Act of 2008 (HERA), which was enacted to modernize, streamline, and expand the scope of several Federal Housing Administration (FHA) programs. Section 2122 of the FHA Modernization Act amended section 255 of the NHA to provide that: (1) adequate counseling must be provided to HECM mortgagors; (2) such counseling shall be provided by counselors who meet qualification standards; and (3) adequate HECM counseling must be provided from an independent third party not associated with or compensated by a party involved in originating or servicing the mortgage, funding the loan underlying the mortgage, or the sale of annuities or other financial or insurance products.

To further modernize and enhance mandatory HECM counseling, All HUD approved counseling agencies and counselors who provide HECM counseling are required to provide each HECM counseling client a FIT analysis used to assess clients’ individual financial circumstances and assist counselors in providing budgeting guidance and assistance. In addition, HECM counselors also use BCU reviews for all clients who are 200% or below the federal poverty level. It is also available to any other client upon their request. BCU identifies other financial resources available to the client that they may be eligible for to address their needs established in the FIT analysis. These tools are required by HUD’s Counseling Handbook 7610.1 REV-5, appendix 4 HECM protocol, and page 150 of attachment B-12, and are proprietary tools of a national counseling intermediary, the National Council on Aging (NCOA).

In addition, HUD’s Counseling Handbook 7610.1 REV-5, chapter 4, paragraph 4-4 and appendix 4, page 85 require HECM counselors to provide the NCOA booklet “Use Your Home to Stay at Home”. This booklet is the proprietary property of NCOA. The current edition has not been updated to reflect current HECM program requirements since circa 2009. There have been a number of major changes to the HECM program that the booklet does not cover.

The estimated value of this procurement is $346,881.00. The estimated period of performance will be a base period of 12 months plus one 12 month option.

(4) An identification of the statutory authority permitting other than full and open competition.

FAR 6.302-1, 41 U.S.C. 3304(a)(1), Only one responsible source and no other supplies or services will satisfy agency requirements.

(5) A demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited.

The Office of Housing Counseling recommends a sole source award to National Council on Aging (NCOA). NCOA specializes in supporting the reverse mortgage industry and FHA’s HECM Loan program and counseling by providing key products and services.

This firm has HUD experience, the knowledge and technical qualifications, and the unique products and services to perform the tasks as described in the Performance Work Statement.

As this software is the only software designed for HUD approved counseling agencies, it is imperative that its continued use be supported in the form of contracted services to ensure that mandatory HECM counseling is not disrupted, potentially limiting HECM originations and making the likelihood that HECM borrowers are less capable of managing the risk involved with this type of reverse mortgage

The services are critical to the Department and the Home Equity Conversion Mortgages (HECM) counseling networks. The HECM program can be used by senior homeowners, age 62 and older, to convert the equity in their homes to monthly streams of income or a line of credit to be accessed as needed. A web-based program for financial assessment and a review of federal, state and local programs and benefits available to individual clients to assist counselors in providing counselling services that meet all HUD counseling requirements. The existing web-based program identified as the “Financial Interview Tool” (FIT) and “Benefits Check-Up” (BCU). In addition, counselors are required to provide clients with a booklet which is identified as “Use Your Home to Stay at Home.”

Counselors have designed their provision of counseling services around the unique format and information provided by the FIT and BCU online programs owned by NCOA.

Any change in vendor would have counseling content and cost implications for nearly a thousand counseling agencies nationwide. Moreover, reverse mortgage counseling training programs have been designed, in part, based on the unique format and information provided by NCOA. Any change in vendor would have training content, materials, and cost implications for reverse mortgage counseling training providers.

National Council on Aging, a non-profit housing counseling intermediary firm, is known for serving the needs of American seniors since 1950. NCOA conducts financial analyses and access to knowledge on existing financial resources for various counseling agencies that support the reverse mortgage industry. For instance, since just 2011, over 800 HUD-approved reverse mortgage counselors nationwide used NCOA’s Financial Interview Tool to help 82,262 older homeowners assess the suitability of a reverse mortgage for their situation. NCOA is the sole provider of the FITs analysis tool and Benefit Check-Up website.

(6) A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by Subpart 5.2 and, if not, which exception under 5.202 applies.

In accordance with FAR 5.2, the Justification for Other Than Full and Open Competition will be posted on FEDBizOpps and any responses to the notice will be considered by the agency.

(7) A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

The contracting officer will compare the contractor’s proposed price to the IGCE and to historical costs to determine if the contractor’s prices are fair and reasonable. The anticipated cost to the Government will be fair and reasonable.

(8) A description of the market research conducted (see Part 10) and the results or a statement of the reason market research was not conducted.

Market research analysis was conducted via web search and the results indicated that NCOA is the only vendor who can uniquely qualify to provide this critical tool/service without disruption. Furthermore, its unique provision of the FITS/BCU tool, which is proprietary to NCOA, also makes it the sole candidate for the pilot program provision of HECM services in Philadelphia.

(9) Any other facts supporting the use of other than full and open competition, such as:

In support of the President’s and HUD Secretary’s calls for action on stemming the tide of foreclosures, especially amongst senior households, the Regional Director of the HUD Philadelphia Homeownership Center (HOC) entered into a partnership with NCOA to deliver effective, modern, HECM counseling to senior borrowers in the Philadelphia metro area that suffers from one of the highest concentrations of foreclosure in the nation.

The project identifies HECM mortgagors currently at risk of or facing default and connects them with counselors specially trained in property charge loss mitigation (PCLM). The project also identifies and connects HECM servicing lenders with counselors as part of a joint effort to better communications between borrowers, lenders and the counseling industry overall.

Over the past years, HUD has not obtained these services directly and has relied on the implicit support of NCOA and its grant funding received through the annual Notice of Funding Availability (NOFA) process to support these integral services. However, due to changes in the NOFA award process and a reduction in annual appropriations from Congress, NCOA is no longer able to support these functions for the HECM counseling industry, despite their requirement in the HECM protocol for reverse mortgage counseling. Based on a legislative mandate to reform the HECM program, HUD instituted financial assessments as a mandatory underwriting requirement as well as modified the requirements regarding Non-Borrowing spouses. HECM counseling is the only mandatory counseling and is a critical consumer protection tool. In addition, HECM counseling reduces the risk to the Federal Housing Administration (FHA) Mutual Mortgage Insurance Fund.

Considering the high-levels of HECM foreclosures facing senior American borrowers and the precipitous drop in retirement wealth due to the long term effects of the recent financial crisis, any disruption in these services would be detrimental to thousands of senior Americans who need to be informed and understand how to responsibly manage their home’s equity. While the loan itself provides a source of funding to possibly pay for long and short terms needs, all too often, borrowers exhaust their loan proceeds leading to an inability to cover basic financial commitments like utilities, food and prescription medicines. Because HECM borrowers do not have a monthly payment to make each month, default of a reverse mortgage is not tied to missed monthly payments, but missed monthly or quarterly tax and insurance payments. Foreclosure in reverse mortgage lending is almost always a function of ill-prepared budgets and unrealistic expectations about the borrower’s resources and needs. It is through the FIT/BCU holistic financial assessment tool that HECM counselors are best equipped to help borrowers create a spending plan and evaluates if the borrowers can meet the demands of a reverse mortgage, or decide if an alternative plan(s) is a better option, possibly saving the borrower and his/her spouse and eligible relatives thousands of dollars in foreclosure and legal costs. The booklet provides the borrower with a critical information resource in preparation for a HECM counseling session. And, it’s a unique reference guide for the post counseling period.

The Department would have a significant interruption in a required HECM counseling system while a solicitation and award was conducted for a “replacement system”. An interruption of these services would cause significant disruption to the availability of HECM counseling, which is statutorily required for FHA HECM loans and a valuable consumer protection measure for seniors. This disruption could cause seniors to turn elsewhere for solutions for their housing and financial needs - potentially to predatory lenders - undermining HUD’s mission to protect consumers and provide safe and affordable loan options.

(10) A listing of the sources, if any, that expressed, in writing, an interest in the acquisition.

No sources have expressed interest, in writing, of this sole source acquisition.

(11) A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required.

The Office of Housing Counseling will research the web and review reverse mortgage counseling and lender trade industry publications their websites as well as BizHUB, for potential vendors who could offer HECM counseling services and web based tools that are similar to the characteristics of NCOA’s FIT and BCU tools which are a critical part of the HECM counseling requirements.