HUD Dishes More Details on Reverse Mortgage Counseling Rules

One week after publishing its final rule on housing counseling certifications, the Department of Housing and Urban Development (HUD) held a stakeholders call on Monday to discuss the finer points of its new requirements for agency-approved housing counselors, including what the final rule means for reverse mortgage counselors.

Under the final rule, housing counselors will be required to pass a standardized written exam and work for a HUD-approved counseling agency in order to gain certification to provide housing counseling services to consumers.

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.


Counselors seeking HUD certification will then have 36 months from the date after the exam becomes available to comply with this rule, according to various HUD counseling officials during Monday’s call.

This also applies to counselors who provide Home Equity Conversion Mortgage (HECM) counseling, who will be required to undergo specific testing criteria in efforts to gain HUD certification.

“HECM counselors do have to take this test,” said Sarah Gerecke, deputy assistant secretary for housing counseling at HUD. “When the 36 months become effective, HECM counselors will have to pass both the certified housing counseling exam and the HECM exam.”

The rulemaking process first saw a proposed rule published in 2013, followed by a comment period from industry stakeholders, which saw 215 comments submitted to HUD before the agency came through with the final rule last week, according to agency officials.

Commenters addressed the current HECM certification exam, recommending that the Housing Counselor Certification Examination mirror HUD’s HECM certification test.

Other commenters recommended that the new test not be modeled after the original HECM exam, as many counselors found it difficult to pass and certain inconsistencies of the HECM examination resulted in a decrease in the availability of reverse mortgage counseling.

HECM counselors, however, will be required to pass the new certification exam that applicable to all counselors seeking the HUD designation, HUD officials emphasized.

In response to comments about the administration of the HUD HECM exam, HUD said it has taken prior experience with the HECM Roster examination into consideration when developing the Housing Counselor Certification Examination.

There are also certain provisions of HUD’s final rule that take effect January 13, 2017. These include new definitions for certain programs, including homeownership and rental counseling, as well as requirements related to the distribution of materials during theses counseling program.

Also effective January 13 is a rule that prohibits entities from receiving HUD grants if any housing counseling agency (HCA) has been convicted for a violation under Federal law relating to an election for federal office, or if an HCA employs an individual who has been convicted of a Federal election law.

While details of when testing will begin and how many questions the exam will include were not disclosed, HUD said it plans to provide various training opportunities throughout January to prepare counseling stakeholders for the approaching effective date next month.

All counselors seeking HUD certification will be required to demonstrate competency in six topic areas, including financial management; property maintenance; homeownership and tenancy responsibilities; fair housing laws; housing affordability; and avoidance, and responses to, rental and mortgage delinquency as well as avoidance of eviction and mortgage default.

“As we continue to professionalize the field, we’re ensuring counselors get the training they need and the respect they deserve,” said Ed Golding, principal deputy assistant secretary for the Office of Housing at HUD, during Monday’s call. “Making sure everyone has a common base of knowledge to draw from will only improve outcomes and consistency.”

Written by Jason Oliva

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  • My comment has not changed from yesterday, which was:

    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

    • John,

      Right now we are dependent on the information RMD and other publications release. However, it is not clear how the information above leads to the conclusion that the new requirements sound “like counseling agencies and agents need to almost become financial advisors and more….”

      Jason states: “…counselors seeking HUD certification will be required to demonstrate competency in six topic areas, including financial management; property maintenance; homeownership and tenancy responsibilities; fair housing laws; housing affordability; and avoidance, and responses to, rental and mortgage delinquency as well as avoidance of eviction and mortgage default.” The last five topics are clearly related to housing and even the first if properly framed could easily be seen as related to managing finances in light of housing costs mainly covering budget matters.

      Like yours, my comment is third hand information and not to relied upon but if reasonably accurate, there is little reason to conclude that the topics covered include such things as Monte Carlo simulations, various portfolio accumulation and decumulation theories and practices and dollar cost averaging.

      It will be interesting to read what counselors’ views are on these issues.

      • The basic point of the new rules is that housing counselors have to have a basic level of competency in all the major services offered by housing counseling agencies. That includes budget counseling, pre-and post-purchase homeownership counseling, rental counseling, etc. They aren’t changing the basic nature of the profession, which is educational rather than advisory.

        Given that HUD is requiring all housing counselors who work on HUD-related programs to pass the certification exam, I’m guessing that it will be pretty basic. For HECM counselors, the main issue is that some of us are highly specialized and may have little experience in other areas of housing counseling. For example, I’ve been doing HECM counseling for 14 years, but I have no experience with foreclosure counseling outside of HECM default. So I and my some of my colleagues will have to bone up on the basics of the other areas in order to pass the exam. Given that we have 3 years to get this done, there shouldn’t be a major disruption in HECM counseling as a result of this rule.

        Other provisions of the rule may be troublesome for agencies that specialize in HECM counseling, and don’t do other types of housing counseling, but it’s likely that there will be workarounds for this.

      • The underlying concept here is that since HECM counselors are supposed to help clients review alternative options, they must possess broader knowledge about mortgages and housing topics generally in addition to their HECM knowledge. This is a sensible step up in the requirements for HECM counselors.

      • Peter,

        Yet Frank Kautz states it covers more than just HECM counselors and is generally aimed at them. It seems you are saying it is aimed at HECM counselors.

        Since you two seem to view this differently, perhaps you can clarify.

      • Hi all,

        This is not aimed at HECM Counselors, it is aimed at all counselors. HUD is trying to establish a quantifiable base line for all HUD counselors. Think of it as a Bar Exam. Every lawyer has to take the Bar Exam to show a base competency. If you want to practice in front of the Patent Bar, you have to take a separate exam in addition to the Bar Exam. That is what HECM counseling will now be like. All HUD counselors will have to show a base knowledge, but HECM counselors will have to have additional skills above and beyond the base counselor level.

        By and large, I would be that most HECM counselors will have no trouble passing a basic exam. It will also probably not change what they do in any meaningful way. However, it may very well help out with some individual counselors to know more about foreclosure prevention, budgeting, etc.

        Once again, try not to get to worried about this, it really is not that big a deal and should not impact the sales world in any way. (Unless the number of HECM counselors is reduced because people are not taking the exam.) However, I think it will benefit the people being counseled as the counselors will have more information at their finger tips.

        Frank J. Kautz, II
        Staff Attorney

        Community Service Network, Inc.
        52 Broadway
        Stoneham, MA 02180
        (781) 438-1977
        (781) 438-6037 fax
        [email protected]

      • I do appreciate your reply as well as understanding what you are saying. You and your family have a very safe Merry Christmas, Happy Holiday and a Happy New Year!

        Thanks again,


  • Hi all,

    As many will remember, I am a HECM counselor. As counselors, we all knew that this was coming. The point of this new exam is not pointed at HECM counselors, but rather a general knowledge test for all HUD housing counselors. For a long time, the only counselors that had any test at all were HECM counselors. HUD is trying to get some standardization of knowledge for all of its various counselors. As far as the HECM counseling program goes, nothing is changing. The only issue is that we, who are counselors, have to take an additional test.

    For those on the sales side, I would not worry about this at all. It is not directed at HECMs nor does it really have anything to do with them other than making sure that the HECM counselor is also certified as a standard HUD counselor.

    Now, as to whether or not this was really necessary, that I will leave up to the individuals to decide. Personally, I always thought that HECM counselors (and lawyers since I am one of those as well) should be exempted from this, but that was not to be.

    Frank J. Kautz, II
    Staff Attorney

    Community Service Network, Inc.
    52 Broadway
    Stoneham, MA 02180
    (781) 438-1977
    (781) 438-6037 fax
    [email protected]

    • Frank,

      Peter Bell seems to say all but the opposite. He only brings up HECM counselors in his response to Christena.

      I have asked Peter to clarify since he does not bother addressing anyone else. Perhaps you can do the same.

      • I suspect Peter was simply addressing the justification for HECM counselors being required to take the exam along with all the other housing counselors. He is correct that a broader knowledge base is a good thing for HECM counselors to have, even if all we do is HECM counseling. I agree with Frank that this will probably not be a major issue for HECM counselors or the HECM world in general.

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