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Home Equity Conversion
Mortgage Counselor Exam
Preparation Webinar Trainings
Two Part Series, Part 2 of 2
May 2, 2008
HECM Exam Preparation



These webinar trainings are meant to prepare
housing counselors for the AARP Reverse Equity
Mortgage Exam.
However, these webinar trainings should not be
seen as all inclusive, and you may need to study
additionally on your own to prepare for the exam.
If you do not plan on taking the exam, these webinar
trainings will provide you will an introduction to
reverse equity mortgages, how they work, and how
they compare to other options for homeowners.
Supplemental Training Materials

Whether you plan to take the test or not, there are
several documents we recommend you download
and review, (all documents are available at
(www.hecmexam.org/guide_study_materials.cfm):





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AARP’s Consumer Guide to Reverse Mortgages “Home
Made Money” (46 pages)
HECM Training Manual (146 pages)
HUD Handbook 4235.1 REV-1
HECM Mortgagee Letters, Regulations, and Statue
Technical Topics
HECM Software
Agenda
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Welcome and Introductions
Items to Review from Last Webinar
QUESTIONS AND ANSWERS
Proprietary loan products
QUESTIONS AND ANSWERS
Key Decisions (selecting a counselor, interest rate, time,
lender)
QUESTIONS AND ANSWERS
Spending Your Home Equity (Leftover estimates,
Estimate shortcomings, Investing)
QUESTIONS AND ANSWERS
Agenda (continued)





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Refinancing (HECM to HECM)
QUESTIONS AND ANSWERS
BREAK 10 MINUTES
General Overview of Additional Topics
General HECM Exam Information and Content
QUESTIONS AND ANSWERS
HECM Exam Registration and Scheduling Information
QUESTIONS AND ANSWERS
Study Planning
QUESTIONS AND ANSWERS
Closing Remarks and Poll Questions
Adjourn
Items to Review from Last
Webinar
Basic Forms of Home Equity
Conversion

Two basic forms of home equity conversion:
loan plans and sales plans.


Loan plans (reverse mortgages) you borrow
against home equity
In sales plans, you sell your home and then rent
it back from the buyer (sale leaseback), or sell
the right to ownership to your home upon your
death (sale of a “remainder interest”).
HECM Counseling


HUD’s Procedures and Requirements for
HECM counseling are in Chapter 2 of the
HECM handbook (4235.1 REV).These are
subsequently clarified in detail in Mortgagee
Letter 2004-25, 2004-48, and 2006-25.
Counseling protocol is updated online can be
found at:
www.hecmresources.org/protocol_9-1505.pdf. However, this is not an official HUD
document and its use it NOT required by
HUD.
HECM Counseling

Counselors should always protect the
confidentiality of the client and client’s
advisors! Without client permission,
counselors should share personal information
about competent clients with no one,
including family members and lenders.
HECM Counseling

HECM legislation outlines the information that
MUST be provided to all prospective
borrowers. In HUD-92902 (Certificate of
Borrower Counseling). Amended in 2006, this
more recent version is available at
www.hud.gov/offices/adm/hudclips/index/cfm.
HECM Counseling

Counselors should avoid:



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Making any direct, specific recommendations or
referrals to any specific lenders or products;
Giving any “advice” that might be interpreted as
influencing the homeowner’s decisions;
Applying their own value system or preferences to
the homeowner’s situation or needs; and
Providing any opinion about the suitability of any
loan for the client.
HECM Counseling

Counselors should stress that:



The decision to apply for the loan is the client’s
decision;
The decision about the client’s eligibility for a
HECM is the lender’s and HUD’s; and
The issuance of a HECM counseling certificate
certifies that the client has received counseling.
HECM Counseling

Counseling protocol is divided into three main
parts:




Initial contact
Individualized information packet
Counseling session
Who receives HECM counseling?


All borrowers of their legal representatives MUST
receive counseling.
Non-borrower spouses.
HECM Counseling

Who receives HECM counseling? (continued)


Trust beneficiaries and persons with reversionary
or remainder interest.
NOTE: For borrowers lacking legal competency,
the counseling session must be conducted with a
person holding a durable power of attorney, or
with a court-appointed conservator or guardian.
QUESTIONS AND
ANSWERS
Proprietary Loan Products
Proprietary Loan Products



These are non-HECM reverse mortgage loan
products.
Commonly referred to as “proprietary”
mortgage products implying that the
characteristics of the products were
developed and are owned by a particular
lender.
These products continue to grow as
additional lending institutions have entered
the lending arena.
Proprietary Loan Products

Counselors are prohibited from steering
borrowers to particular products or lenders.
However, they should be familiar with the
various features of available products both
HECM and proprietary.
Proprietary Loan Products

In general counselors should counsel
borrowers to examine the following features
in relation to proprietary loan products:






The amount of money the borrower will receive
The closing costs associated with the product
How the borrower will be able to access the funds
Eligible properties
The structure of the interest rate of the loan
The index used by the lender to calculate the interest
charged on the loan and how much and how
frequently the interest rate can changes on an
adjustable rate mortgage
Proprietary Loan Products

In general counselors should counsel
borrowers to examine the following features
in relation to proprietary loan products
(continued):


Whether to proprietary product contains a
creditline growth rate
Whether the product allows the borrower to make
partial repayment
Types of Proprietary Loan Products

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Fannie Mae, Home Keeper reverse mortgage
Fannie Mae, Home Keeper for home
purchase mortgage
Financial Freedom, Cash Account Advantage
EverBank Reverse Mortgage, Reverse Select
Generation Mortgage, Generation Plus
Lender Lead Solutions, Simple60
Fannie Mae, Home Keeper Reverse
Mortgage




Developed in 1996
Product was developed to address needs of
those who could not be served by a HECM
Available in all states to homeowners 62
years old and older
Eligible property types:


Owner-occupied single-family homes
Condominium units meeting Fannie Mae’s
guidelines
Fannie Mae, Home Keeper Reverse
Mortgage

Eligible property types: (continued)



Planned unit developments
Qualified properties held in a trust and/or
leasehold
Ineligible properties:


Multi-unit properties, even if owner occupied
Cooperative units
Fannie Mae, Home Keeper Reverse
Mortgage

Loan:




Amount of funds determined by borrower’s age
and number of borrowers at time of application.
Unlike HECM principal limit is based on blending
of ages of borrowers.
The lower of the appraised value or Fannie Mae
lending limit of $417,000.
The current or expected interest rate is NOT part
of this calculation.
No mortgage insurance premium.
Fannie Mae, Home Keeper Reverse
Mortgage

Borrower may receive funds from this product
as:



Fixed monthly payments for as long as at least
one borrower occupies the home as principal
residency (tenure plan)
Creditline
Combination of monthly payments and creditline
Fannie Mae, Home Keeper Reverse
Mortgage


Borrowers are charged an origination fee that
may not exceed 2 percent of the APV of
home, a monthly servicing fee, and other
closing costs.
Interest rate for this product adjusts monthly
and is equal to a fixed spread above the
index rate. The rate may never rise above 12
percentage points above the initial rate.
Fannie Mae, Home Keeper, FOR
HOME PURCHASE


Enables seniors to obtain a Home Keeper
reverse mortgage in connection with the
purchase of a new home in a single
transaction.
Why use Home Keeper for purchase?


Reduces out of pocket expenses for consumer
Eliminates any new monthly mortgage payment
Fannie Mae, Home Keeper, FOR
HOME PURCHASE

Case Study:

76 year old woman sells her home for a $75,000
profit and wants to buy a new home costing
$115,000. To avoid a mortgage payment on the
new house, she would need to pay $115,000 in
cash. This means what? Could this woman
purchase the new home by combining her money
with a Home Keeper reverse mortgage?
Fannie Mae, Home Keeper, FOR
HOME PURCHASE



It means she needs to come up with $40,000 in
cash from her savings or some other source.
She could use her sales proceeds and combine
it with a Home Keeper reverse mortgage.
It would look like this:





Sales price of new home: $115,000
Profit from sale of old home: $75,000
Home Keeper loan: $40,000
Additional cash from borrower: 0
Monthly payments: 0
Financial Freedom, Cash Advantage
Plan




A division of IndyMac Bank
As of February 2008, second largest reverse
mortgage originator.
Designed to meet needs of borrowers whose
home values are in excess of 203(b) lending
limits.
Available in all states to homeowners 62
years old and older
Financial Freedom, Cash Advantage
Plan

Eligible property types:






Single-family detached homes
Condominiums (some restrictions apply)
Planned Unit Developments (PUDs) (some
restrictions apply)
1 to 4 rental unit (one must be owners occupied)
Co-ops (New York State only)
Ineligible properties:

Manufactured homes DO NOT qualify
Financial Freedom, Cash Advantage
Plan

Loan:




Amount of funds determined by borrower’s age at time
of application. Unlike HECM principal limit is based on
blending of ages of borrowers.
The appraised value of the home has not set limit. A
home must be valued at least $75,000 to qualify.
Interest rate is adjustable and based on 6 month
LIBOR. The rate is reset semiannually and has a
lifetime cap of 6% above the expected interest rate,
but no periodic cap.
No mortgage insurance premium.
Financial Freedom, Cash Advantage
Plan

Borrower may receive funds from this product
as:



Creditline
Initial lump sum with creditline
Cash out option – only a lump sum advance
Financial Freedom, Cash Advantage
Plan
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Borrowers are charged an origination fee that
may not exceed 2 percent or $2,500
whichever is greater.
Borrower pays third-party closing costs
Borrower must draw a minimum of $500 after
closing.
Borrower can make partial or full payments to
creditline.
QUESTIONS AND
ANSWERS
Key Decisions
Selecting a Counselor


To be eligible for a federally insured HECM,
the borrower must discuss the loan with a
counselor employed by a nonprofit or public
agency approved by HUD.
To find the HUD-approved counseling agency
nearest you call 1-800-569-4287,or search
online at
www.hud.gov/offices/hsg/sfh/hecm/hecmli
st.cfm/.
Selecting a Counselor



Borrowers may also request HUD-approved
HECM counseling through the AARP
Foundation’s Reverse Mortgage Education
Project.
These counselors are required to use loan
analysis and comparison software that meets
the model specifications.
Network counselors provide in-person
counseling in their local areas, and counseling
by telephone in other areas nationwide.
Selecting a Counselor


For current information on requesting HECM
counseling services from these counselors,
go to
www.hecmresources.org/network.cfm or
call 1-800-209-8085.
This counseling generally takes at least one
hour. When provided by telephone, it typically
requires two or more calls.
Selecting a Time


In the future, a borrower may be eligible for
larger cash advances because they will be
older and your home is likely to be worth
more. So timing is key.
Borrowers can use the calculator at
www.aarp.org/revmort to see how much
difference an older age or greater home
value could make.
Selecting an Interest Rate


HECM lenders must offer an interest rate that
is tied to the one-year U.S. T rate (Treasury
Security rate). Once a year, this rate can
increase or decrease by the same amount as
any increase or decrease in the T-rate.
But this “annually adjustable” rate cannot
change by more than 2 percentage points up
or down per year, nor by more than 5 total
points up or down over the life of the loan.
Selecting an Interest Rate


HECM lenders may also offer a lower
“monthly adjustable” rate that can increase or
decrease each month by the same amount
as any increase or decrease in the T-rate
each month.
But the only limit on this rate is a 10
percentage point cap over the life of the loan.
Monthly Versus Annual Interest Rate

The advantages of the monthly adjustable
rate are:




you get larger loan advances;
when rates fall, your rate will drop sooner than an
annually adjusting rate;
your rate will be lower than an annually adjusting rate
for as long as increases in the T-rate are less than 3.6
percentage points per year or 6.6 points over the life
of the loan; and
your rate can decrease by more than 2 points per
year, and by more than 5 points over the life of the
loan.
Case Study: Monthly Versus Annual
Interest Rate



How much greater would the loan advances be
when selecting a monthly versus an annually
adjusting interest rate?
A 75-year-old single borrower living in a
$250,000 home could get a creditline of about
$127,000 from an annually adjustable HECM
versus about $157,500 from a monthly
adjustable HECM.
What would be the benefits of the annual
interest rate?
Monthly Versus Annual Interest Rate


The main advantage of the annually
adjustable rate is that a lower interest rate will
be charged on your loan balance whenever
T-rate increases are greater than 3.6 points
per year or 6.6 points over the life of the loan.
Also, when rates increase, your rate will not
rise as soon as a monthly adjusting rate will.
Monthly Versus Annual Interest Rate


Most HECM borrowers select a monthly
adjustable rate.
Borrowers selecting an annual rate are
generally concerned that rising rates might
exceed the annual rate’s caps for extended
periods.
Selecting a Lender



The most complete lists of HECM lenders
can be found online at
www.hud.gov/ll/code/llplcrit.html/.
Enter your city or select your state, place a
checkmark in the “HECM” box, and click the
“SUBMIT” button.
Borrowers need to consider cost, origination
services, loan servicing, and a lender’s
professional commitment to meeting
consumer needs.
Cost



Generally the only HECM loan costs that lenders
control are the origination fee and the servicing
fee. So be sure to find out the dollar amount that
each lender you are considering would charge
you for these fees.
Although third-party closing costs are not likely
to vary much from lender to lender, you might
want to check these as well.
At present, HECM interest rates do not vary from
one lender to another. So check out the latest
information at www.aarp.org/revmort.
Origination Fees


The level of service a lender provides may be
more difficult to assess than cost is, but
service can be important. You will want your
loan officer to be knowledgeable,
experienced, and respectful.
You will also want a loan officer who respects
your knowledge and preferences and helps
you reach your own decisions.
Loan Servicing



At loan closing, most originating lenders transfer
their loans to another office or company specializing
in servicing the loan from that point forward.
Request a sample of the account statements the
servicer would send you. Make certain you fully
understand all the information on these statements.
In particular, if you are considering a HECM
creditline, find out how the servicer would keep you
informed about the growing amount of credit a
HECM provides
Professional Commitment



A commitment to meeting consumer needs can
be seen in a lender's professional relationships
and consumer information.
For example, members of the NRMLA (National
Reverse Mortgage Lenders Association) have
developed “best practices” for their industry. For
more information, go to
www.reversemortgage.org.
For the latest information on lenders who can
provide this type of consumer information, go to
www.aarp.org/revmort.
QUESTIONS AND
ANSWERS
Spending Your Home
Equity
Leftover Estimates



HECM counselors and lenders can estimate
how much equity would be left at various
future times based on assumptions about
future interest rates, borrower’s loan
advances, and about changes in home’s
value.
These estimates generally assume that your
home would be sold to repay the loan.
So they deduct the estimated cost of selling
your home from your remaining equity.
Leftover Estimates

Then it’s a simple calculation: If the estimated
net sale proceeds are greater than your
estimated debt, you (or your heirs) would get
the difference in a lump sum of cash. If at any
point your rising debt catches up to your
home’s value, then there would be no equity
left.
Estimate Shortcomings


Most reverse mortgage borrowers select a
creditline. The amount of leftover equity at
the end of a creditline loan depends primarily
on the size and timing of the cash advances
a borrower requests during the loan.
Computer software based on the model
specifications lets you enter the creditline
draws that you expect to make. This gives
you a more accurate estimate of the equity
that would remain if your loan were to end at
various points in the future.
Estimate Shortcomings

The actual estimate shortcoming figures will
depend on:



the actual creditline advances you select during
the loan;
the actual interest rates charged on the loan; and
the actual changes in your home’s value during
the loan.
Investing


Investing the money you get from a
reverse mortgage is a highly questionable
practice. It is extremely unlikely that you
could safely earn more from an investment
than the loan would cost.
Be wary of anyone who wants to sell you
something, and suggests a reverse
mortgage as a way to pay for it.
QUESTIONS AND
ANSWERS
Refinancing
(HECM to HECM)
Refinancing HECM-to-HECM

Three marketplace factors that may
determine if this is plausible:



Large increase in value of the subject property
Large increase in FHA’s loan limit for the county in
which the property is located
Substantial decrease in interest rate, relative to
the expected rate the was in effect when the
original HECM was obtained
Refinancing HECM-to-HECM

Refinance counseling is likely to be of two
main types:


Counseling on “lender-initiated” refi’s will occur
when a lender contacts a current borrower about
a potential refi
Counseling on “borrower-initiaited” refi’s will occur
when a borrower contacts a counselor seeking refi
information
Refinancing HECM-to-HECM


Closing costs -Many of the same closing
costs paid in obtaining existing HECM must
be paid again.
These include:



Origination fee
Third-Party closing costs
Mortgage Insurant Premium
Refinancing HECM-to-HECM

There are FHA regulations pertaining to the
existing mortgage that may cause the
refinance request to be ineligible. Such as:




Defaulted taxes
Defaulted hazard or flood insurance premiums
Defaulted on required repair conditions
HUD never issued mortgage
Mortgagee Letter 2004-18

Highlights:



Reduced Initial MIP
Anti-Churning Disclosure Requirement
Housing Counseling Requirements – Waiver
Requirements and 5X rule
Case Study: Initial Mortgage Insurance
Premium

Givens:






Maximum Claim Amount (existing loan): $275,000
Maximum Claim Amount (new loan): $362,790
Calculate: MIP for new loan
Step 1:Calculate difference between old and
new maximum claim amount.
Step 2: Multiple the difference x 0.02 to
calculate 2%
Answer? What is initial MIP for new HECM
QUESTIONS AND
ANSWERS
BREAK 10 MINUTES
General Overview of
Additional Topics
General Overview of Additional
Topics




Housing Alternatives
Bankruptcy and foreclosure
HECM Mortgagee Letters
HECM Loan Agreements
General HECM Exam
Information and Content
HECM Exam General Information


Plan to arrive at the testing site you selected
30 minutes before your exam appointment
to allow enough time for the check-in
process. You must bring two forms of
identification.
Both forms must include your signature, and
one of them must be a current or valid
government-issued photo ID (for example,
a driver's license, state-issued photo ID,
military ID card, passport).
HECM Exam General Information


If you are taking the exam at a Techskills site,
you must also bring the online verification
form that you print out after scheduling your
exam.
If you are taking the exam at Thomson
Prometric site, you must also bring both the
Authorization Letter you got when
you registered for the exam and the
confirmation number
given to you by Thomson Prometric.
HECM Exam General Information

The Testing Administrator will sign you in and
escort you to your testing station. You will
not be permitted to bring anything into the
testing area. But lockers will be available for
any personal items (for example, purses,
briefcases) you may want to store during the
exam.
HECM Exam General Information

You will be allowed TWO HOURS to
complete the exam (this includes the time it
will take you to answer the survey questions .
So do not waste time on the most difficult
questions. Leave them until you have
completed the rest of the questions. If at that
time you are still unsure of the answer, it is
better to guess than to leave the answer
blank.
Survey Questions


To help assess agency needs and evaluate
the exam, you will be asked to complete a
brief 9-question survey as part of the exam
process.
At the exam, the nine survey questions will
be the first ones you see. Answering them
will give you some practice with the
computer-based exam format before you
begin the 100-item exam.
Survey Questions
1.
For how many total years have you provided
HECM counseling?





Have not yet counseled my first client
Less than 1 year
1 to 3 years
3 to 6 years
More than 6 years
Survey Questions
2.
About how many HECM counseling
certificates have you personally issued
within the past 12 months?





Less than 50
51 to 150
151 to 250
251 to 500
More than 500
Survey Questions
3.
About how many total HECM counseling
certificates have you personally issued
since you began counseling?





Less than 150
151 to 250
251 to 500
501 to 1,000
More than 1,000
Survey Questions
4.
What kind of HECM counselor training have
you had? (Mark all that apply.)





No training
Trained by a lender
Trained by another counselor or someone at my
agency
Used AARP's "Training-in-a-Box" video training
Attended AARP's 2-day HECM counselor training
Survey Questions
In which languages do you provide HECM
counseling?
5.




English only
English and Spanish
English, Spanish, and at least one other
language
English and at least one other language that is
not Spanish
Survey Questions
6.
Which of the following best describes your
internet access at work?



Have fast, always available internet access (DSL,
cable, T-1)
Have dial-up internet access
Do not have internet access
Survey Questions
7.
Which reverse mortgage software do you
use most often?




HUD's HECM software
Do not use reverse mortgage software
Fannie Mae's "Reverse Mortgage Assistant“
Financial Freedom's "Reverse Mortgage
Analyzer"
Survey Questions
In general, about how much of your
agency's HECM counseling is provided by
telephone?
8.





less than 10%
10% to 39%
40% to 59%
60% to 89%
90% or more
Survey Questions
9.
What would you estimate is the total
amount of time that a complete HECM
counseling case requires on average
(including intake, scheduling, preparation,
counseling, paperwork, follow-up)?






less than 30 minutes
31 to 60 minutes
61 to 90 minutes
91 to 120 minutes
121 to 150 minutes
151 minutes or more
HECM Exam Content Categories
Content Category
I. Reverse
Mortgage (RM)
Basics
II. RM Cost and
Benefits
III. Options and
Alternatives
IV. RM Counseling
TOTAL
Percent of
Exam
25%
Number of
Questions
25
50%
50
13%
13
12%
12
100%
100
HECM Exam Content Specifications
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I. Reverse Equity Mortgage Basics (25%)
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A. Basic Definitions
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Reverse Mortgage
Home Equity Loan
“Forward” Mortgage
Debt, Equity, Appreciation
Nonrecourse Limit
Use of Loan Proceeds: consumer choice, foreclosure
prevention, home purchase, repayment requirements
First Mortgage Requirement
HECM Exam Content Specifications
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I. Reverse Equity Mortgage Basics (25%)
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A. Basic Definitions (continued)
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Cost Financing
Title Retention
Lender Default
Basic Loan Economics: calculating loan amounts (age,
home value, loan program), loan balances, residual
equity
Reverse Mortgage Programs
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HUD’s Home equity Conversions Mortgage (HECM)
Fannie Mae’s “Home Keeper” Loan
Financial Freedom’s “Cash Account” Loan
Roles of HUD, FHA, Fannie Mae
HECM Exam Content Specifications

I. Reverse Equity Mortgage Basics (25%)
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C. Eligibility
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Age
Number of Borrowers
Ownership: joint, living trust, life estate
Residency
Property Type
Countable Equity: equity limits, multi-unit properties
Pre-existing Debt or Delinquency
Property Standards
Required Repairs: standards, set-asides, riders
HECM Exam Content Specifications
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I. Reverse Equity Mortgage Basics (25%)
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D. Borrower Obligations/Conditions of Default
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Residency
Ownership
Property Condition
Property Taxes and Homeowner’s Insurance
Fraud or Misrepresentation
Bankruptcy
E. Loan Documents
F. Loan Process
HECM Exam Content Specifications
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I. Reverse Equity Mortgage Basics (25%)
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G. Loan Servicing
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Timely payment standards and penalties
Statements to borrowers
Default and foreclosure procedures
Refinancing
Pay-off procedures
HECM Exam Content Specifications
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II. Reverse Mortgage Costs and Benefits
(50%)
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A. Loan Advances
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Determining loan amounts: loan program, age, home
value, equity limits, loan costs, cost options (interest rate
adjustability, equity sharing)
Program definitions: maximum claim amount, adjust
property value, principle limit, net principal limit
Payment plans: payment plan options, payment plan
changes
Initial lump sums: definition, timing, advantages &
disadvantages
HECM Exam Content Specifications
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II. Reverse Mortgage Costs and Benefits
(50%)
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A. Loan Advances (continued)
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Creditlines: definition, advantages & disadvantages,
creditline growth (concept, rate growth versus
nongrowth, residual credit versus residual equity),
accessing creditlines
Tenure advances: definition, advantages &
disadvantages
Term advances: definition, advantages & disadvantages
Combination of loan advance types
HECM Exam Content Specifications
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II. Reverse Mortgage Costs and Benefits
(50%)
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B. Itemized Costs
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Application Fee
Origination Fee: purpose, limitations
Third-Party Closing Costs: appraisal, credit report, title
insurance, document preparation, recording fees,
endorsement, escrow/settlement fee, inspections, flood
zone certification, title search, mortgage/intangible tax
Servicing Fee: purpose, limitations, set asides, timing
Mortgage Insurance Premium (MIP): purpose, amounts
charged, reduced MIP for HECM refinances
HECM Exam Content Specifications
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II. Reverse Mortgage Costs and Benefits
(50%)
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B. Itemized Costs (continued)
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Interest: compounding of interest, interest rate basics
(indexes, margins, limitations), interest rate adjustability,
HECM interest rates (initial, expected, and compounding
rates), HECM interest rate options, including impact on
loan advances and loan balances
HECM Set-Asides
HECM Exam Content Specifications
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II. Reverse Mortgage Costs and Benefits
(50%)
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C. Total Costs
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Total Annual Loan Costs: definition, description,
calculation, Truth-in-Lending disclosure requirements,
including assumptions about appreciation, loan term,
and creditline usage, treatment of annuities purchased
with reverse mortgage proceeds
TALC patterns: basic pattern, major variables
(appreciations, tenure, payment plan), early magnitude,
changes over time, exceptions
Evaluating TALCS: projections in relation to loan term,
appreciation, payment plan
HECM Exam Content Specifications

II. Reverse Mortgage Costs and Benefits
(50%)
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D. Residual Equity
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Potential importance
Calculation
Creditline use
Annuities
E. Financial Implications
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Impact on estate and heirs
Impact on public benefits: Social Security and Medicare,
SSI (loan advances, annuity advances), Medicaid (loan
advances, annuity advances), other programs
Income tax: taxability, deductibility
HECM Exam Content Specifications
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III. Options and Alternatives (13%)
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A. Selling and moving
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Income and sale proceeds
Impact on public benefits
Housing options: types, definitions, advantages &
disadvantages, locating programs
B. Sales leaseback
C. Refinancing current debt
D. Home Equity Loans: advantages &
disadvantages
HECM Exam Content Specifications
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III. Options and Alternatives (13%)
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E. Home Repair/Improvement Loans
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F. Property Tax Deferral Loans
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Locating programs
Advantages & disadvantages
Locating programs
Advantages & disadvantages
G. Annuities
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Definition
Advantages & disadvantages
Impact on public benefits
HECM Exam Content Specifications
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III. Options and Alternatives (13%)
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H. Investing loan proceeds
I. Aging network programs and services
J. SSI: description, application
K. Medicaid: description, application
L. Legal Services
HECM Exam Content Specifications
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IV. Reverse Mortgage Counseling (12%)
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A. Consumer education role
B. Independence
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Referrals
Lender materials
Fee disclosure
C. Confidentiality
D. Counseling Stages
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Screening
Intake: consumer data, detecting potential abuse (precounseling loan fee incurred, fees owed to third parties,
purchases from third parties, undue influence by third parties)
HECM Exam Content Specifications
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IV. Reverse Mortgage Counseling (12%)
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D. Counseling Stages (continued)
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Consumer objectives
Consumer protection: “estate planning service firms”
Consumer resources and budgeting
Consumer Options
Consumer Advisories: sustainability, eligibility
Certificate: content, issuance
Record-keeping
Post-counseling contact
HECM Exam Content Specifications
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IV. Reverse Mortgage Counseling (12%)
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E. Consumer Competency
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Conservators and guardians
Durable power of attorney
F. Consumer Education Resources
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Web sites: www.aarp.org/revmort/, www.hud.gov,
www.fanniemae.com, www.reversemortgage.org,
www.aarp.org
Booklets: AARP’s Consumer Guide “Home Made
Money” and Money From Home
HECM Exam Content Specifications
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IV. Reverse Mortgage Counseling (12%)
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G. HUD policies for HECM counseling and
housing counseling in general
H. Program Information Sources
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Web sites:
www.hud.gov/offices.hsg/sfh/hecm/hecmhome.cfm,
www.hudclips.org, www.hecmresources.org,
www.efannie.com
HECM statue, regulations, handbook, mortgage letters
Cash account: fact sheet
HECM Exam Content Specifications
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IV. Reverse Mortgage Counseling (12%)
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I. Counselor education and training resources
J. Counselor ethics
Sample HECM Exam Questions
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You can find questions that are similar in
format to the 100 multiple-choice questions
in the exam at
http://www.hecmexam.org/guide_sample_qu
estions.cfm.
But these questions do not represent the
complete range or difficulty of the material
that may be covered by the exam. To see a
list of the content categories and specific
topics that may be covered in the exam
HECM Exam Score
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The qualifying score you need to achieve
on the exam to become eligible to join the
AARP Foundation's HECM Counseling
Network is 80 or more correct (out of 100
questions).
You will learn your score on the exam
immediately after you complete it.
HECM Exam Score
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If you achieve the qualifying score of 80 or
more, you will be given a printout including:
 a confirmation that you have achieved the
qualifying score and will be sent a
Certificate of Achievement from the AARP
Foundation commemorating this
accomplishment, and
 information on applying to become a
member of the AARP Foundation's HECM
Counseling Network.
HECM Exam Score
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If you do not achieve the qualifying score,
this does NOT mean that you have "failed"
the exam. The exam does not have a
"pass/fail" score. It only has a score that
qualifies counselors to be eligible to join
the AARP Foundation's HUD-sponsored
HECM counseling network. If you do not
achieve that score, you will still be able to
take the exam at a future time.
QUESTIONS AND
ANSWERS
HECM Exam
Registration and
Scheduling
HECM Exam Registration
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To take the HECM Counselor Exam, you
must:
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be an employee of a HUD-approved counseling
agency;
register and pay for the exam ($100 per exam);
and
schedule the date, time, and place of your exam.
HECM Exam Registration
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Exam registration and payment can only be
done online with a credit card. Secure online
exam fee payment is available through VeriSign,
and all major credit cards are accepted. After you
have registered and paid for the exam, you can then
take the next step: scheduling your exam.
To register for the HECM exam visit
http://www.hecmexam.org/exam_registration.cfm.
HECM Exam Scheduling
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You must set up an appointment in advance
to take the exam. When you register, you will
have two options for scheduling your exam
appointment:
 OPTION A - Techskills: Select from a list of
testing sites operated by Techskills in AZ, CA,
CO, FL, IL, IN, KS, MN, MO, NV, NC, OH, OK,
TN, TX, UT, and WI. If you select one of
these sites, you can schedule your exam
online, and you will receive a confirmation
by email. To see the Techskills sites, go to
www.techskills.com/locations/ and select your
state (or a nearby state).
HECM Exam Scheduling
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OPTION B - Prometric: If none of the
Techskills testing sites are conveniently
located, you can select from among many
more testing sites operated by Thomson
Prometric. If you select one of these sites,
you will print out an "Exam Authorization
Letter" when you register online. This letter
will give you the information and directions
you will need to call Thomson Prometric to
schedule your exam.
http://www.hecmexam.org/guide_basic_info.cf
m#register
No-Show, Cancellation,
Rescheduling, Retesting
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If for any reason you are not able to take the
exam at the time or place of your appointment,
please call the TechSkills testing site number on
your confirmation email or contact Thomson
Prometric at 1-800-715-8345 at least 48 hours
before the time of your appointment to cancel or
reschedule.
No-Show, Cancellation,
Rescheduling, Retesting
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If you call less than 48 hours before your exam
appointment, or fail to appear at the time and
place of your appointment, the AARP
Foundation will be charged by Prometric for the
full cost of your taking the exam. If this occurs,
you will not be permitted to take the exam at
a later time unless you or your agency pays
the AARP Foundation $100 for the cost of
your missed exam.
No-Show, Cancellation,
Rescheduling, Retesting
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To cancel your registration altogether, you must
make two phone calls. First, call the Techskills
testing site number on your confirmation email or
Thomson Prometric at 1-800-715-8345 to cancel
your appointment as required above. Then, no
matter where you were scheduled to take the
exam, call Edgia (the company administering the
exam) at 1-800-295-5783 to cancel your
registration. A fee credit will then be given to the
credit card on which the registration fee was
charged.
No-Show, Cancellation,
Rescheduling, Retesting
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If you do not achieve the qualifying score,
you can re-take the exam at any time and as
many times as you choose. The exam fee
cost for each re-take is be $100.
In the past, counselors received a refund of
the exam fee if they achieved the qualifying
score on the exam. This policy has been
discontinued. The exam fee is nonrefundable
except as noted above.
QUESTIONS AND
ANSWERS
Study Planning
Study Planning
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Study Materials: The study materials
mentioned above can be accessed at:
http://www.hecmexam.org/guide_study_mate
rials.cfm.
Study Plan Disclosure: The webinars have
been structured to cover the material as
recommended by AARP. This study plan is
meant to be a general guide, and studying
needs and intensity will vary based on HECM
experience.
Study Planning
Recommended Study Plan:
1.
Begin by reviewing AARP's web site and the web
pages they have on reverse mortgages. This will
provide you with a quick and general introduction
and overview. To view these web pages visit:
http://www.aarp.org/money/revmort/. Also
although it is somewhat out of date, it is
recommended that you also review AARP's
consumer guide, "Home Made Money," available at
http://www.hecmexam.org/guide_study_materials.c
fm.
Study Planning
2.
Counselors are also strongly encouraged to
review the AARP training manual for HECM
counselors. It is available at:
http://www.hecmexam.org/guide_study_materia
ls.cfm. It is somewhat out-of-date, however
IACED has newer manuals from
NeighborWorks America which where update
as of Feb. 2008. If you would like a copy of this
binder, please contact Lisa Travis at
ltravis@iaced.org.
Study Planning
3.
4.
All counselors who plan to take the test should
also be familiar with the HUD handbook 4235.1
REV-1. This handbook is also available at the
study materials web site.
Counselors should also review the HECM
Mortgagee letters, Regulations, and Statues
posted on the study materials web site. Many
changes have been made to the HECM
program since 1994 and this will provide some
of the updated information on the program.
Study Planning
5.
Technical topics are another areas that
counselors will need to be familiar with. These
are posted
at: http://www.hecmexam.org/guide_study_mat
erials.cfm. However, there are also sub-links
posted on the web-site which link to even more
detailed information on these topics.
Study Planning
6.
HUD also encourages counselors to be familiar
with the HUD HECM software. It shows how
loans are structured and helps with
understanding the program's technical
terminology. This software can be downloaded
at:
http://www.hud.gov/offices/hsg/sfh/hecm/hecmi
nst.cfm.
Basic HECM Counselor Training
Online
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An online audio-visual basic training course for
HECM counselors. The 19-session course is
based on the 2-day live basic training sessions
developed and provided by the AARP
Foundation’s Reverse Mortgage Education
Project for the HUD.
The online version includes downloadable
training materials and has a total run time of 3.2
hours, not including time for trainees to complete
homework assignments.
Basic HECM Counselor Training
Online
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The online basic HECM counselor training
course is available at www.brainshark.com.
Example of link to session:
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HECM Counselor Training 1 - Introduction &
Overview (6:55 minutes)
www.brainshark.com/aarp/HECM_1
QUESTIONS AND
ANSWERS
CLOSING REMARKS
AND POLL
QUESTIONS
For More Information

Please contact, Lisa Travis, Program
Manager with IACED
317-920-2300
ltravis@iaced.org