Reverse Mortgage Loan Blog

Charleston SC — Forget the bar exam for lawyers or the SATs for high school seniors.

A mandatory nationwide licensing test for reverse-mortgage counselors is stumping veteran housing specialists, some of whom have been advising elderly homeowners in the Charleston area about this type of loan for years.

Several months after the federal government made the exam more difficult, no Lowcountry housing counselor has been able to pass the exam. As a result, area homeowners in search of the required counseling are being referred to agencies in Columbia or Greenville.

Debbie Kidd, head of the Homeowner Resource Center at Family Services Inc. in North Charleston, said she has failed the online test four times. “It’s humiliating for me,” Kidd said. “I’ve done this for 20 years. … Why can’t we pass this test?”

Robert Mitchell of the Trident United Way has taught classes about reverse mortgages to other counselors, yet he, too, did not make a passing score on this first attempt. Asked if he plans to retake the exam, Mitchell quipped: “If I don’t retire before that.”

Once an obscure financial product, reverse mortgages are being increasingly promoted to older homeowners as a way to help them pay their bills. When structured properly, they enable seniors who are at least 62 to tap into the equity they’ve built up in their residences without having to move out.

In recent years, housing advocates have raised concerns about abuses, so federal housing guidelines now require counseling for homeowners before they commit to a reverse mortgage.

Last year, the U.S. Department of Housing and Urban Development made the licensing exam for counselors tougher. A spokesman said the agency “acknowledges the test is intentionally difficult, but we believe it needs to be so because of the vulnerable population” who seek out reverse mortgages.

After receiving complaints from test takers, the department posted more study material online. But HUD also pointed out that 995 counselors nationwide have passed the test so far, leading it to believe “the level of difficulty is not so stringent as to limit the number of counselors available,” according to a statement.

In South Carolina, only two counselors — one each in Columbia and Greenville — have passed the test so far, according to HUD’s database. The number of people statewide who have taken the test is not available.

Locally, Kidd said Family Services has spent thousands of dollars sending some of its staff to training conferences and paying fees to retake the exam.

Kidd described what she sees as some of the more challenging aspects: the test doesn’t reveal the correct answers; some questions are written with double negative phrases; and she contends the test unfairly concentrates on less important details about trusts.

Next time, she’s thinking of taking the exam in Columbia. “Maybe it’s the test center,” Kidd said. “There’s no way I can continue to fail this test with the knowledge I have.”

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