CRMP - Certified Reverse Mortgage Professional Financial Assessment and Underwriting Questions and Answers

Question 1

An underwriter is reviewing a HECM application where the borrower's residual income is $50 below the required threshold for their region.
The borrower has a satisfactory credit history but no significant liquid assets beyond the HECM proceeds.
Based on Financial Assessment guidelines, what is the underwriter's most likely course of action?

Accepted Answer

Require a fully-funded Life Expectancy Set-Aside (LESA) for property charges.

Answer

Approve the loan as is, since the shortfall is minimal and credit is satisfactory.

Answer

Deny the loan due to the failure to meet the residual income threshold.

Answer

Approve the loan with a partially-funded LESA.

Question 2

During the Financial Assessment, an underwriter notes a borrower had a 90-day delinquency on a medical bill two years ago but has a perfect payment history on all other obligations. The borrower provides a letter explaining the delinquency was due to a dispute with an insurance company that has since been resolved. Which of the following best describes how an underwriter may view this situation?

Accepted Answer

The borrower's explanation and otherwise clean credit history can be considered a satisfactory extenuating circumstance.

Answer

The single delinquency results in an automatic loan denial regardless of the reason.

Answer

A Life Expectancy Set-Aside (LESA) is now mandatory due to the major delinquency.

Answer

The underwriter can disregard the delinquency entirely as it is not housing-related.

Question 3

When calculating a HECM applicant's surplus or shortfall for the residual income analysis, which of the following debts or expenses must be included in their monthly obligations?

Accepted Answer

The estimated monthly property tax and homeowners insurance (PITI) charges.

Answer

A revolving credit card balance that the borrower intends to pay off with HECM proceeds.

Answer

A personal loan with only three monthly payments remaining.

Answer

A monthly gym membership fee paid via automatic debit.

Question 4

The HECM Financial Assessment evaluates two key principles regarding the borrower's ability to meet their financial obligations: willingness and capacity. A borrower's history of making timely mortgage and installment loan payments over the past seven years is a primary indicator of which principle?

Accepted Answer

Willingness

Answer

Collateral

Answer

Liquidity

Answer

Capacity

Question 5

An underwriter is assessing the income of a 68-year-old HECM applicant who has been a self-employed consultant for the past 15 years. To verify the stability and likely continuance of this income, which set of documents is most critical for the underwriter to review?

Accepted Answer

The two most recent years of signed federal income tax returns, including all schedules, and a year-to-date profit and loss statement.

Answer

A signed profit and loss statement for the current year-to-date and the previous full year.

Answer

The most recent three months of bank statements showing business deposits.

Answer

A letter from the applicant's largest client confirming their ongoing business relationship.

Question 6

A HECM applicant meets the credit history requirements but has insufficient monthly income to cover their ongoing property charges and meet residual income thresholds. Which of the following would be an acceptable method for the applicant to satisfy the Financial Assessment requirements without requiring a Life Expectancy Set-Aside (LESA)?

Accepted Answer

Documenting significant verifiable liquid assets, such as from a 401(k) or savings account, that can be used to offset the shortfall.

Answer

Pledging future HECM draws from their available line of credit.

Answer

Providing a gift letter from a family member promising to pay the charges annually.

Answer

Showing a history of large, irregular cash withdrawals from a brokerage account.