Reverse Mortgage Counseling Exam Details Emerge

image As part of the Department of Housing and Urban Development’s changes to HECM counseling, all HECM counselors will need to pass an exam to demonstrate their knowledge of reverse mortgages.  In cooperation with HUD, AARP Foundation’s Reverse Mortgage Education Project (RMEP) will be administering the HUD HECM Counselor Exam. 

The HECM counseling exam has 100 multiple choice questions and covers four major content categories (see table below).  In order for counselors to be eligible to join the HUD HECM National Counselors Network, they must answer at least 80 of the 100 questions correctly.

CONTENT CATEGORY Percent of Test Number of Questions
I – Reverse Mortgage (RM) Basics 25% 25
II – RM Costs and Benefits 50% 50
III – Options and Alternatives 13% 13
IV – RM Counseling 12% 12
  100% 100

The exam website also includes study materials as well as sample questions which you can see here.  If you would like to see a copy of the most recent HECM counseling policies and procedures click here.

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Currently, the HUD HECM National Counseling Network includes over 500 counselors who have achieved the qualifying scores on previous HECM Counselor Exams.  To learn more about what to expect from HUD’s new counseling protocol, see here.

HECM Exam Website

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  • I got 75 of the 100 …just one more test… Do you have suggestions to improve my score to 80 or 90? I believe the mortgage letters are the cause, there are too many changes on the loan product

  • I got 75 of the 100 …just one more test… Do you have suggestions to improve my score to 80 or 90? I believe the mortgage letters are the cause, there are too many changes on the loan product

  • I got 75 of the 100 …just one more test… Do you have suggestions to improve my score to 80 or 90? I believe the mortgage letters are the cause, there are too many changes on the loan product

  • I got 75 of the 100 …just one more test… Do you have suggestions to improve my score to 80 or 90? I believe the mortgage letters are the cause, there are too many changes on the loan product

  • Only 80%? That means the other 20% could be different from what I’m telling my clients. Who do the homeowners go to when the Lender and Counselor aren’t saying the same thing?

  • And, as a counselor, when I know more than the lender, I find that a bit troubling as well. Happens fairly often. I think, as long as we are all doing the best we can to educate the client, and that we take the time to investigate and correct any discrepancies, we’ll be contributing to a good result for the borrower. For my part, I will say that, if any lender feels that I have given misinformation to their client, I welcome that feedback. It’s also good to remember that what we tell the client, and what the client reports to the other party that we said, isn’t always the same thing.

  • Raymond, this is not an easy test. I would submit that a lot of loan originators might have a tough time passing it. We are hoping to hold the counselor to a really high standard of competency. I wish there were a similar test for the lender side — or is there one I haven’t heard about?

  • The overall quality of counseling for clients that I work for has improved somewhat, but the bottom line remains that counseling is simply a tickmark on a client’s reverse mortgage report card whose numbers get superceded at least twice more during the process by updated RMAs that must be disclosed and it is those numbers that are both confusing to and remembered by the client.

  • I found out something regarding the HECM testing which I think is rather disturbing.

    As a reverse mortgage specialist, if I decide to retire or if I can no longer work as an RMS, a natural transistion would be to become a counselor.

    You cannot take the test unless you work for a non-profit organization. I could take that test and pass it right now; but I’m denied that right to a job because I don’t work for them. Never mind if someone would like to bring me in as an excellent HECM counselor. Never mind if I have 8 years experience in counseling and helping seniors in the reverse mortgage business.

    How many people are they locking out of jobs by discriminating against them. Everyone has the “right” to take that test if they want to!

  • I agree with Chris Schafale. I think we have done a great disservice to our industry when we hold the counselors to a higher standard than we do our “Reverse Mortgage Specialist.” Let’s have a required exam for reverse mortgage professionals. Such an exam will not be a problem for the real professionals.
    As an aside, I think the budgeting part of counseling should be voluntary.

  • Let’s not have a war of originators vs counselors. We all need to be on the same page with the best interest of the customer in mind.

    On the other hand I do agree with Jerry. Many of my customers do not wish to share their finances with a stranger over the phone and can not make it to a face to face. I believe counselors should counsel on the HECM product only.

  • This is the test for counselors. What about the test for HECM borrowers?

    I guess that based on the variety of comments, even with the best of intentions our government continues to shoot itself (and us) in the foot on a regular basis.

    Why wasn’t/isn’t there a test for those trying to obtain conventional mortgages? And where are their legions of counselors?

    A filter of that degree might have helped us avoid the sub-prime debacle and the coming option-arm problems.

  • The finince part of the counseling makes no sense. Exactly what relevance is there to it? I have had clients that range from deep financial trouble to very well off do a RM for various reasons. Is a counselor now supposed to decide who should or should not do a RM?

    The important part of counseling is the accurate explanation of the elements of the RM. My clients consistantly tell me that all counseling did was repeat exactly what I told them – which affirms the counselor and I are doing our jobs properly.

    I agree with the higher level of testing for BOTH Loan Officers and Counselors. I would love to see a whole new category of lisencing or registration for LO’s that want to originate RM’s. I don’t think by just having your FHA – you should be able to handle this specialized product and customer.

  • I don’t know that many counselors really qualified to address every aspect of a seniors life, needs, or current situations in an hour. I have been in this field for 25 years and am still leaning human nature. Many seniors will not tell you the desperateness of their current situation. They don’t reveal every aspect of their lives to their own family. At best most counselors can be a good listener, clarify some concerns as to the process or termanology and probe to make sure they have a grasp of the program. But to try on the phone to ascertain every aspect of the seniors current situation, explain this loan program in language they do not understand and then test them on 100 questions. You better have more time than an hour to spend with our clients.

    What happens if the senior does not pass the Test? (The one they just paid $125 for) You going to send them some hints, some sample questions? You going to make the house payment next month when they can’t? You going to fix the roof, the sink? You going to assist them in buying food, paying for their utilities? I didn’t think so.

    I am not sure that the ones making these rules have any idea of the financial pit many of our seniors are in. They usually don’t call because they want to take a trip or have a party. They are at the end of their wits – scared – frustrated and not sure how they will survive till next month. They want someone to help them. Many times it won’t be us – because they either owe too much, have liens, judgements, or they just waited too long to seek help before they lose their home to foreclosure.

    My concern is that we are going to terrorize our senior adults my making the TEST the only thing we look at. Some one might need to have a better understanding in the field of gerontology before we decide that the 100 question test is a one size fits all test.

  • Please create a test for the originators, I welcome the opportunity to display my test results to my clients. That of course doesn’t mean I understand human nature but not knowing the product does more harm to this business than about anything out there other than the negative press (from of course, the not knowing the product). Vicious cycle.

  • Ron, the test is not for seniors, it is for counselors who provide the training.

    As a counselor, I have had numerous experiences where seniors told me that I gave them information that they needed to know to make a final decision, and that information had not been provided by the lender. I’ve also spoken to counselors (who hadn’t passed the exam) who were surprised when something changed within their software. The best counselors and the best lenders stay on top of the changes as they occur, and none of them would shy away from taking an exam. Chris is absolutely correct, the counseling exam is no picnic. It will also serve to eliminate counseling by anyone who happens to work for a HUD-certified housing counseling agency, regardless of what they think they know about RM’s.

  • Just looked at the sample test along with the key and noticed that 2 of the answers are not totally accurate.
    Question #6 could be answered with either a; an 85 year old male or d; a couple with one being 85.

    The answer to question #12 is also subject to interpretation. If the estimated costs of repairs run more than 15% of the value (max claim) then the client is not eligible for a HECM RM making answer a correct. Answer b is not totally correct either in that only a portion of the mandated repairs need to be made prior to closing. For instance if the cost of a new roof is $10k, it could be done prior to closing and the balance of the repairs ($10,000) could be “set aside”.

    If an entity is going to design a test for counselors or for that matter loan officers, they should run it by people with years of field experience along with experts from those servicing these loans.

  • The budgeting aspect is required per HUD and mandated by federal law.

    Budget Analysis and HECM Counseling

    HECM counselors are required to review a client’s unique financial situation during a HECM counseling session. In order to conduct this review, a counselor must document a client’s budget based on financial information (e.g. income, assets, debts, monthly expenses) provided by the client. A budget analysis by the counselor is necessary in order to meet the statutory requirement, Section 255 of the National Housing Act, which mandates that counselors evaluate and discuss appropriate alternatives to a HECM.
    Source: HUD Mortgagee Letter 09-11

    As a HECM counselor who has provided counseling for over 3000 homeowners, I belive this is a vital part of the counseling process in order to discuss alternatives. Yes it takes time, Yes in some cases is not an issue to determine alternatives, and Yes from a few borrowers it is a hassle. But it is mandated by Federal Law! Section 255 of the National Housing Act

  • The budgeting aspect is required per HUD and mandated by federal law.

    “Budget Analysis and HECM Counseling

    HECM counselors are required to review a client’s unique financial situation during a HECM counseling session. In order to conduct this review, a counselor must document a client’s budget based on financial information (e.g. income, assets, debts, monthly expenses) provided by the client. A budget analysis by the counselor is necessary in order to meet the statutory requirement, Section 255 of the National Housing Act, which mandates that counselors evaluate and discuss appropriate alternatives to a HECM.”
    Source: HUD Mortgagee Letter 09-11

    As a HECM counselor who has provided counseling for over 3000 homeowners, I know this is a vital part of the counseling process in order to discuss alternatives. Yes it takes time, Yes in some cases is not an issue to determine alternatives, and Yes for a few borrowers it is a hassle. But it is mandated by Federal Law! Section 255 of the National Housing Act

  • The 12 sample questions should be easy for any well trained loan originator. I always pride myself on having a counselor tell my borrowers that they know the product pretty well. I also agree that the budgeting part is not as important. Many borrowers are somewhat surprised that this is even included. I have had a counselor tell one of my clients the “they did not need a reverse mortgage.” They did close, however. I have also had the same counselor tell a client that she should file for bankruptcy even though a reverse mortgage would solve her issues. He even recommended an attorney and gave her his card!

  • How many of our seniors would find themselves in a much more comfortable position if counseling were a condition of anyone over the age of 62 taking out any kind of loan. On the other hand, for every diligent counselor, there is at least one who only wants to get through their call list. Has it been determined whether a senior must pay their $125 fee twice if they fail their first testing and go back again to retake?

  • Regarding my comment on question # 6. Only a is the correct answer for the test. However, I have had a number of situations arise where one has had to quit claim their interest to make it work….sorry!

  • louise,
    Remember that the change is to weed out the counselors who have not proven that they are able to adequately provide HECM counseling. Right now, ANY hud-certified agency can provide the counseling, whether there is someone on staff who has been trained or not. We had the opportunity to provide the counseling before anyone was trained, but we referred them on to someone who we knew was better qualified to provide the counseling. Now that HUD allows payment to counselors, there are counselors who do not refer people on because they can collect the counseling fee. The new requirement that counselors must pass a test first is a GREAT requirement so we will hopefully hear few (preferably “no”) stories about counselors who do not know what they are talking about.

    Also, remember that not all agencies charge the counseling fee, regardless of whether or not a person comes in once or twice or more.

  • I have taken this exam and even with 7 years Reverse management and lending experience found it to be an exam that will really test one’s knowledge of the business. Had I not had street experience I might not have been able to hit the passing grade of 80. This is a good thing. Reverse Loan officers should have to pass it as well.

    However, it is my prediction that the counseling turn around times will grind to a standstill as a large percentage (over 50%) of the general counseling community will not be able to pass this test on their first try. I would go as far to say that many Reverse LOs would have a tough time passing it as well if they are not focused on this product exclusively.

    There is a turntime crisis looming on the horizon!

  • Thanks for this article and the interesting comments.

    – HUD deserves credit for working with counseling agencies to build up a base of several hundred exam qualified counselors while HUD worked on the “rule making” to make the exam mandatory. They provided training and has earmarked grant funds for HECM exam qualified counselors for several years now so that they will have a network capable of handling the capacity when the counselors not yet certified are no longer able to work until they take and pass the exam.

    – Making the exam pass a mandate is good for everyone. Seniors deserve to spend their time and/or money with a competent counselor. The fact that lenders are less likely to have ill informed counselors confuse their clients is icing on the cake.

    – I have a feeling (although I am not certain) that several lending industry types had a hand in the development of the exam itself. If they didn’t I think they should as an exam like this should be regularly reviewed and updated.

    – I don’t think you’ll see a turn time crisis when this rule is implemented. AARP keeps a list of network counselors at http://www.hecmresources.org and there’s an awful lot of them (we have over 140 exam qualified the last time I checked. It may present a challenge to individual agencies when they have staff turn over, but interruption of service at a particular agency while a new counselor learns the ropes sounds like a price worth paying.

    -Exam for originators: NRMLA recently announced the launch of a new designation for originators.
    http://www.nrmlaonline.org/RMS/PRESS.ASPX?article_id=710

    I know its not mandatory, but its certainly a good industry starting point. Hey, maybe HUD could encourage originators to get certified with a lower MIP for exam qualified originators? ……just kidding guys!

  • I am relatively new to a counseling agency that has experienced alot of staff turnover recently. I am receiving no help from our HUD rep – as a “counselor”, where do I go for training, help, etc.I am sorry to post this here, but I don’t know where else to go to ask. Thanks!

  • I would hope someone out there can advise or direct you for help. This industry prides itself on helping the elderly, and you are supposed to help the elderly, so they should help you or it’s all talk.

  • Erika,
    If you are not getting help from your local HUD rep, you might reach out to the HUD HOC (Home Ownership Center) for your area and see who covers the counselors – the local HUD reps report to the HOC centers. They should be able to offer some assistance.

    Also, find out where you would have to be trained for or to get the information on the new counseling exam.

    You might also do some exploring on the HUD website (www.HUD.gov) for training – they offer events in various parts of the country and/or webinars.

    Another option might be to contact other counselors (find the list of counselors on HUD’s website) and ask how they got their training and for some support.

    Good luck!

  • Admin has a good point, if you’re not getting any sort of help, start looking for other options – may be why they have a lot of turnover. If you want to continue doing reverse mortgage counseling then find another agency and while interviewing ask how much training/support they provide.

    Hope this helps.

  • For Erika: I can point you in the right direction.

    There’s online training through AARP Ed. Foundation and in person training through Neighborworks America.

    Check out http://www.hecmresources.org and http://www.hecmexam.org for more details. As you can tell from this article, you’re going to need to pass the exam soon anyway, so you might as well prepare for it.

    If you cannot find what you need, feel free to get in touch with me (track me down through our website) and I’ll see what I can do.

  • Erika,

    See http://www.nw.org for information on HECM classes offered by NeighborWorks. The hecmexam.org website has an exhaustive list of training materials, including the latest version of the HECM training manual that we use in the NW trainings (I am one of the instructors). If you have questions beyond that, you can contact me at christenas@rfsnc.org.

  • Thank you to the person who commented on the sample questions on the hecmexam.org website. I had overlooked that problem with #12; fixed now.

  • I got 75 of the 100 …just one more test… Do you have suggestions to improve my score to 80 or 90? I believe the mortgage letters are the cause, there are too many changes on the loan product

  • I got 75 of the 100 …just one more test… Do you have suggestions to improve my score to 80 or 90? I believe the mortgage letters are the cause, there are too many changes on the loan product

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