How to Become a Reverse Mortgage Counselor

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How to Become a Reverse Mortgage Counselor

Those who qualify for reverse mortgages may get income in retirement. Homeowners must first undergo authorized counseling in order to apply for a home equity conversion mortgage (HECM). The requirements that must be fulfilled for a person or organization to provide HECM counseling are set out by the U.S. Department of Housing and Urban Development (HUD).

Key Takeaways

  • Home equity conversion mortgages (HECMs), which are guaranteed by the federal government, are required to undergo reverse mortgage counseling.
  • Before providing HECM counseling services, counselors must adhere to standards set by the U.S. Department of Housing and Urban Development (HUD).
  • Reverse mortgage advisors who have been approved must pass training, tests, and background checks.
  • Homeowners may only get HECM counseling from counselors who are listed on the HECM roster.

What Does a Reverse Mortgage Counselor Do?

With the use of a HECM, a homeowner may convert the equity in their property into a source of income. Companies that provide reverse mortgages give homeowners cash in the form of a flat amount, payments over time, a line of credit, or a mix of these two choices. As long as the homeowner uses the house as their main residence, this money does not need to be paid back. The reverse mortgage debt becomes due after the borrower sells the house, vacates the property, or passes away.

However, a homeowner must fulfill a few prerequisites before applying for a HECM. One is completing reverse mortgage counseling with a company or organization that has received HUD approval. The responsibility of the reverse mortgage counselor is to ensure that homeowners comprehend what a reverse mortgage entails, including:

A homeowner obtains a certificate after successfully completing the counseling, which is necessary to submit an application for a HECM. However, a reverse mortgage counselor has the right to refuse to provide the counseling certificate if they think the homeowner doesn’t comprehend the HECM’s requirements. The homeowner may need to seek out more treatment if the counselor refuses to provide the certificate.

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When feasible, HUD encourages counselors to meet with clients in person; phone counseling is only used when in-person sessions cannot be organized.

Reverse Mortgage Counselor Requirements

HECM counseling services can only be provided by counselors who have been added to the HUD list. Counselors need to satisfy the following criteria in order to be included on this roster:

  • be employed by a state housing finance agency, an associate of an authorized intermediary, or a housing counseling agency with HUD approval.
  • pass the HECM test, which may be given by HUD or a third party certified by HUD.
  • HECM education and training must be completed within the two-year window before being included to the HUD roster.
  • possess technology that enables HUD to monitor the outcomes of counseling provided to HECM borrowers
  • every two years, complete HECM continuous education and training.
  • Every three years, take the HECM test again.

Additionally, qualified counselors cannot be included on the HUD’s Limited Denial of Participation (LDP) List, the General Services Administration’s Excluded Parties List System (EPLS), or the Credit Alert Interactive Response System (CAIVRS).

A background check is required for HECM-approved counselors.

How to Become a Reverse Mortgage Counselor

Counselors must complete the HUD Certified Housing Counselor Application in order to be included on HUD’s roster. This form is accessible online, where it may also be downloaded, printed, and converted to PDF format. An HECM training certificate must be included with this form when submitting it to HUD.

The details you must enter on this form are as follows:

  • Name
  • Date of birth
  • Social Security number
  • Gender
  • Ethnicity
  • Address
  • Phone number
  • Email
  • Details about HECM training, such as the title of the course and its finish date
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Additionally, you must affirm and concur with a number of assertions made in the application about the veracity of your information.

These papers cannot be uploaded once the HECM counselor test has been passed. After passing the HECM test, HUD suggests waiting a week or more before submitting an application for a position on the HECM counselor roster. This gives adequate time for updated exam results.

You may take the HECM test online from anywhere. Each exam session will cost $100.

After reviewing the completed application and any supporting materials, HUD will decide whether to accept the application or not. Counselors get email confirmation of the status of their application. They will be informed why it was rejected if it has. Once a counselor has been given the go-ahead, their employment may be confirmed before they are added to the HECM counselor list.

To maintain your position as an active member of the roster, you must complete at least one HECM training course every two years and repeat the HECM test every three years. Removal from the HUD roster might occur if these standards are not met. You could also be fired if you don’t follow HUD guidelines and standards.

What is home equity conversion mortgage (HECM) counseling?

A home equity conversion mortgage requires counseling (HECM).This particular reverse mortgage is one that the federal government, more particularly the Federal Housing Administration, is supporting (FHA).To ensure that the borrower is aware of their financial obligations, the counselor will go through how a reverse mortgage works with them during HECM counseling.

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What is required to become an HECM counselor?

For employment as a HECM counselor, the U.S. Department of Housing and Urban Development (HUD) requires a background check, education, and training. Counselors must continue to complete standards in addition to initial ones in order to keep their HUD-approved status.

What does a reverse mortgage counselor do?

Discussing a homeowner’s financial status and assisting them in deciding if a reverse mortgage is acceptable are the responsibilities of a HECM counselor. The benefits of a reverse mortgage, potential costs, and the tax ramifications of doing this may all be explained by reverse mortgage counselors.

The Bottom Line

If you want to provide your skills to older homeowners who may be thinking about a reverse mortgage, you could be interested in becoming a reverse mortgage counselor. You must work for a state housing finance agency, an affiliate of a HUD-approved intermediary, or a housing counseling organization before you may become a reverse mortgage counselor. You must also fulfill all HUD criteria, including testing and educational qualifications. Along with other tools to help you through the process of becoming an authorized counselor, HUD offers sample questions to assist you in getting ready for the HECM test.

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