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					Webinar Instructions
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    patience
    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):
       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
   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)
   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_9-15-
    05.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:
        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

   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
   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

5.       In which languages do you provide HECM
         counseling?
         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

8.       In general, about how much of your
         agency's HECM counseling is provided by
         telephone?
         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    Percent of   Number of
                      Exam       Questions
I. Reverse             25%          25
Mortgage (RM)
Basics
II. RM Cost and       50%           50
Benefits
III. Options and      13%           13
Alternatives
IV. RM Counseling     12%           12

TOTAL                 100%         100
HECM Exam Content Specifications

   I. Reverse Equity Mortgage Basics (25%)
       A. Basic Definitions
           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
   I. Reverse Equity Mortgage Basics (25%)
       A. Basic Definitions (continued)
           Cost Financing
           Title Retention
           Lender Default
           Basic Loan Economics: calculating loan amounts (age,
            home value, loan program), loan balances, residual
            equity
       Reverse Mortgage Programs
           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%)
       C. Eligibility
           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

   I. Reverse Equity Mortgage Basics (25%)
       D. Borrower Obligations/Conditions of Default
           Residency
           Ownership
           Property Condition
           Property Taxes and Homeowner’s Insurance
           Fraud or Misrepresentation
           Bankruptcy
       E. Loan Documents
       F. Loan Process
HECM Exam Content Specifications

   I. Reverse Equity Mortgage Basics (25%)
       G. Loan Servicing
           Timely payment standards and penalties
           Statements to borrowers
           Default and foreclosure procedures
           Refinancing
           Pay-off procedures
HECM Exam Content Specifications

   II. Reverse Mortgage Costs and Benefits
    (50%)
       A. Loan Advances
           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

   II. Reverse Mortgage Costs and Benefits
    (50%)
       A. Loan Advances (continued)
           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

   II. Reverse Mortgage Costs and Benefits
    (50%)
       B. Itemized Costs
           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

   II. Reverse Mortgage Costs and Benefits
    (50%)
       B. Itemized Costs (continued)
           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
   II. Reverse Mortgage Costs and Benefits
    (50%)
       C. Total Costs
           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%)
       D. Residual Equity
           Potential importance
           Calculation
           Creditline use
           Annuities
       E. Financial Implications
           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

   III. Options and Alternatives (13%)
       A. Selling and moving
           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

   III. Options and Alternatives (13%)
       E. Home Repair/Improvement Loans
           Locating programs
           Advantages & disadvantages
       F. Property Tax Deferral Loans
           Locating programs
           Advantages & disadvantages
       G. Annuities
           Definition
           Advantages & disadvantages
           Impact on public benefits
HECM Exam Content Specifications

   III. Options and Alternatives (13%)
       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
   IV. Reverse Mortgage Counseling (12%)
       A. Consumer education role
       B. Independence
           Referrals
           Lender materials
           Fee disclosure
       C. Confidentiality
       D. Counseling Stages
           Screening
           Intake: consumer data, detecting potential abuse (pre-
            counseling loan fee incurred, fees owed to third parties,
            purchases from third parties, undue influence by third parties)
HECM Exam Content Specifications

   IV. Reverse Mortgage Counseling (12%)
       D. Counseling Stages (continued)
           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

   IV. Reverse Mortgage Counseling (12%)
       E. Consumer Competency
           Conservators and guardians
           Durable power of attorney
       F. Consumer Education Resources
           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

   IV. Reverse Mortgage Counseling (12%)
       G. HUD policies for HECM counseling and
        housing counseling in general
       H. Program Information Sources
           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

   IV. Reverse Mortgage Counseling (12%)
       I. Counselor education and training resources
       J. Counselor ethics
Sample HECM Exam Questions
   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

   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
   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

   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

   To take the HECM Counselor Exam, you
    must:
       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

   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
   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
    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
   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
   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
   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
   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

   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.   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.
4.   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
   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
   The online basic HECM counselor training
    course is available at www.brainshark.com.
   Example of link to session:
       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

				
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