HUD Issues New Certification Standards for Reverse Mortgage Counselors

The Department of Housing and Urban Development (HUD) will soon require that housing counselors participating in HUD programs gain certification to offer counseling services to consumers, according to a final rule issued by the agency this week.

To become certified, counselors must pass a standardized written examination and work for a HUD-approved housing counseling agency (HCA). This applies to anyone who provides housing counseling services to consumers under HUD programs, including Home Equity Conversion Mortgage (HECM) counselors.

As part of the certification process, counselors must demonstrate competency in several areas of housing counseling, including financial management; property maintenance; responsibilities of homeownership and tenancy; fair housing laws and requirements; housing affordability; and avoidance of, and responses to, rental and mortgage delinquency and avoidance of eviction and mortgage default.


“In response to the recent housing crisis, Congress recognized the value of HUD-approved housing counseling services to help struggling families and directed the Department to develop a standard certification process to increase the competency of counselors in the full range of housing issues confronting consumers,” HUD stated in a press release issued Wednesday.

Though announced today, HUD’s final rule will become effective following the release of the certification examination. Until then, HUD is currently providing resources to individuals seeking HUD certification, including a practice test that will soon be available.

The actual certification test, which will be administered by HUD’s Office of Housing Counseling, is expected to be published in the spring of 2017.

Once the rule is fully implemented, housing counseling required by HUD or provided in connection with any HUD program will meet common standards and will be delivered by a HUD certified counselor working for a HUD-approved housing counseling agency.

HUD plans to manage an online database of HUD-approved housing counseling agencies and certified counselors for consumers and partners to rely upon.

“HUD certification will allow consumers to quickly find a trusted, impartial and knowledgeable advisor who is required to put the consumer’s best interests first,” HUD stated in Wednesday’s press release.

HUD will also continue to require the separate HECM Counselor Roster examination and certification pursuant to the statutory requirements of the National Housing Act.

While all HECM counselors will be required to meet the certification requirements of the final rule, complying with the new standards shouldn’t be much of a stretch.

“HECM counselors have been certifying knowledge through testing for years, and the concept won’t be new to them,” said Amy Ford, director of Home Equity Initiatives at the National Council on Aging, a division of the NCOA that provides counseling and support to older adults considering accessing their home equity. “Of course, it will be an added layer of required testing for topics broader than the HECM counseling knowledge base, so time for training and study will be important.”

The expense of complying with the new certification requirements will be borne largely by the individual housing counselors who will be required to take and pass the Housing Counseling Certification Examination, HUD notes in the final rule.

HUD anticipates the examination to cost $100 for online testing at the examinee’s location and $140 for an on-site proctoring center examination, and an estimated average cost of $120 per housing counselor to take the certification exam.

With an estimated 8,433 housing counselors that work for HCAs or currently provide housing counseling for or in connection with other HUD programs that will need to be certified, the initial nationwide cost of the examination and training would total approximately $3,936,340, according to HUD.

The final rule on counseling arrives following HUD’s proposed rule issued on September 13, 2013 that set out regulations describing how HUD would implement changes to Section 106 of the Housing and Urban Development Act of 1968, which since was amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act to improve the effectiveness of housing counseling.

This final rule revises HUD’s Housing Counseling Program regulations to adopt the new requirements established in the housing counseling statute, and amends HUD’s general and other program regulations to clarify the requirement that housing counseling under other HUD programs must be provided by HCAs.

View the HUD final rule published in the Federal Register here.

Written by Jason Oliva

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  • I have many questions as to what is going to be taking place with the issuance of the new certification standards?

    It is sounding to me like counseling agencies and agents need to almost become financial advisors and more, unless I am misunderstanding what I am reading and I have been known to do that before.

    If I am interpreting this right, this is contrary to all of my and many other’s beliefs that we were trained on and brought up on going back 20 years since I have been in the reverse mortgage space!

    I have always been under the impression we were not to advise borrowers what to do with their proceeds from their reverse mortgage, nor were the counseling agencies.

    Sure we advise our borrowers to a degree and explain the options of what they can do with the proceeds. We always make it a point to discover what their need is for wanting to take out a reverse mortgage and so should the counselor be doing the same thing!

    However, this is sounding like now, a HUD counselor needs to get into many facets of the borrowers private financial condition and advise them in many areas of what to do with their assets?

    Will this also lead to more steering of borrowers to preferred lenders by counselors?

    I always thought the HUD counselor should be very versed and knowledgeable in all facets of reverse mortgage products, how they work ETC! In short, I have always told a borrower, the HUD counseling is for “your” protection.

    I tell them, first off the counselor wants to make sure the LO and company you are working with is giving you the proper straight information and looking out for “your” (The borrower” best interest!

    Secondly, I have always told my borrowers the counselor is their to make sure you fully understand what a reverse mortgage is, period!

    What is happening, should not HUD be forcing more training on the part of counseling agencies and their agents about the reverse mortgage product itself and all the changes that have taken place? In addition, should not the training include how “Important” it is for counselors NOT to steer senior borrowers to any particular company? What are they trying to turn the counselor into?

    That is my opinion only, please, anyone that feels I am misinterpreting what is being said and what the certification process may be adding to what a counseling agencies responsibilities are going to be, I will take your constructive correction and advise with open arms!

    I will treat it as you are doing me and everyone else a favor and it would be well appreciated!!

    John A. Smaldone

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