Certified Reverse Mortgage Professional (CRMP) Exam — Questions and Answers

Question 1: What minimum age must ALL borrowers on the title meet to qualify for a HECM?

62 years old (Correct answer)
65 years old
55 years old
60 years old

Correct answer: 62 years old

All borrowers listed on the HECM must be at least 62 years of age at the time of loan closing to qualify.

Question 2: What does the NRMLA Code of Ethics prohibit regarding advertising reverse mortgages?

Making misleading claims about government endorsement or affiliation (Correct answer)
Using the NRMLA logo in marketing materials
Advertising to borrowers over age 70
Mentioning the FHA insurance premium in ads

Correct answer: Making misleading claims about government endorsement or affiliation

The NRMLA Code of Ethics explicitly prohibits advertisements that imply a government endorsement or create misleading impressions about the nature of reverse mortgages.

Question 3: What is the primary purpose of the HECM Financial Assessment introduced by HUD in 2015?

To set the appropriate interest rate margin for the borrower's risk profile
To determine whether the borrower qualifies for a higher Principal Limit
To evaluate the borrower's willingness and capacity to meet ongoing loan obligations such as taxes and insurance (Correct answer)
To determine whether a borrower needs a HUD-approved counselor

Correct answer: To evaluate the borrower's willingness and capacity to meet ongoing loan obligations such as taxes and insurance

The Financial Assessment evaluates the borrower's credit history and residual income to determine their ability to pay taxes, insurance, and other property charges.

Question 4: Under HUD's financial assessment guidelines, which credit history factor is considered an 'extenuating circumstance' that may explain derogatory credit?

Job loss or medical emergency causing temporary hardship (Correct answer)
Chronic overspending on discretionary items
Choosing to prioritize other debts over housing obligations
Repeated late payments with no documented cause

Correct answer: Job loss or medical emergency causing temporary hardship

HUD recognizes job loss, medical emergencies, and similar events beyond the borrower's control as extenuating circumstances that may excuse derogatory credit history.

Question 5: What should be done if a borrower's capacity is in doubt?

Ignore and proceed
Postpone counseling
Ask a family member to sign
Refer for mental competency assessment (Correct answer)

Correct answer: Refer for mental competency assessment

If a CRMP has doubts about a borrower's mental capacity to understand the complex terms of a reverse mortgage, it is an ethical and responsible practice to refer them for a mental competency assessment. This ensures the borrower can make an informed decision and protects them from potentially entering into a contract they don't fully comprehend. Proceeding without addressing these doubts would be unethical.

Question 6: Under what circumstance may a HECM lender pay for a borrower's HUD-required counseling?

At any time, as long as the amount does not exceed the HUD maximum fee
Never — lender payment for counseling is always prohibited
Only for borrowers below 150% of the federal poverty line
Only after the borrower has received the counseling completion certificate (Correct answer)

Correct answer: Only after the borrower has received the counseling completion certificate

Lenders may pay for counseling only after the borrower receives the completion certificate, to prevent any appearance of influencing the counseling outcome.

Question 7: A CRMP ethically must disclose which of the following to a prospective reverse mortgage borrower?

All material facts that could affect the borrower's decision (Correct answer)
Competitor loan pricing only if asked
Proprietary lender guidelines
Only information required by state law

Correct answer: All material facts that could affect the borrower's decision

Ethical standards require CRMPs to disclose all material facts relevant to the borrower's informed decision-making.

Question 8: An originator discovers a borrower has an outstanding federal tax lien on the property. What is the MOST appropriate course of action?

Proceed with the loan and ignore the lien
Recommend the borrower hide the lien from HUD
Deny the loan without explanation
Advise the borrower the lien must be satisfied or subordinated at closing (Correct answer)

Correct answer: Advise the borrower the lien must be satisfied or subordinated at closing

Federal tax liens must be satisfied or properly subordinated before or at closing to ensure HECM eligibility and protect all parties.

Question 9: What residual income benchmark does HUD use as a reference when evaluating HECM applicants?

CFPB Ability-to-Repay standards
FHA Section 203(b) guidelines
Fannie Mae debt-to-income ratios
VA loan residual income tables by region and family size (Correct answer)

Correct answer: VA loan residual income tables by region and family size

HUD's HECM financial assessment references VA loan residual income tables, adjusted by region and family size, as a benchmark.

Question 10: What is the purpose of the expected average mortgage interest rate (AEI/Expected Rate) in HECM calculations?

It is used to calculate the principal limit at origination (Correct answer)
It determines the monthly service fee set-aside amount
It sets the interest rate charged to the borrower each month
It is used exclusively for adjustable-rate HECMs

Correct answer: It is used to calculate the principal limit at origination

The expected (average) interest rate is used in HUD's principal limit factor tables to determine how much a borrower can receive at origination.

Question 11: Which of the following would be considered a 'property charge' for HECM financial assessment purposes?

HOA fees for a condominium (Correct answer)
Borrower's car insurance premium
Credit card annual fees
Health insurance premiums

Correct answer: HOA fees for a condominium

HOA fees are property-related charges that must be sustained, along with property taxes and homeowner's insurance, and are included in property charge analysis.

Question 12: Which of the following best describes the purpose of the HECM Financial Interview Tool (FIT) used by counselors?

To determine the borrower's credit score for underwriting
To calculate the exact principal limit the borrower will receive
To verify the borrower's age and property ownership
To help counselors assess the borrower's financial situation and ability to meet ongoing loan obligations (Correct answer)

Correct answer: To help counselors assess the borrower's financial situation and ability to meet ongoing loan obligations

The FIT guides counselors in evaluating whether the borrower can sustain property charges and meet loan obligations after closing.

Question 13: A HECM originator must provide the borrower with the Total Annual Loan Cost (TALC) disclosure. What does TALC represent?

The total origination fee expressed as an annual percentage
An annualized cost projection that accounts for all loan costs over various time horizons (Correct answer)
The cumulative interest charged over the life of the loan
The lender's annual profit margin on the HECM product

Correct answer: An annualized cost projection that accounts for all loan costs over various time horizons

TALC is a required reverse mortgage disclosure showing the annualized total cost of the loan projected over multiple time periods, helping borrowers compare products.

Question 14: The NRMLA Code of Ethics applies to which of the following parties?

Only CRMP-certified professionals
All NRMLA member companies and their employees engaged in reverse mortgage activities (Correct answer)
Only originators, not processors or underwriters
Only company officers and senior management

Correct answer: All NRMLA member companies and their employees engaged in reverse mortgage activities

NRMLA's Code of Ethics covers all member firms and their staff involved in reverse mortgage transactions, not just designated professionals.

Question 15: What is the initial draw limit rule for a fixed-rate HECM?

Borrowers are limited to 60% of the Principal Limit or enough to pay mandatory obligations plus 10%, whichever is greater
Borrowers must draw the full Principal Limit at closing (Correct answer)
Borrowers may draw any amount up to the full Principal Limit at closing
There is no draw limit on fixed-rate HECMs

Correct answer: Borrowers must draw the full Principal Limit at closing

Fixed-rate HECM borrowers must take the full lump sum at closing, which equals the entire Principal Limit amount.

Question 16: In a HECM transaction, what does the term 'non-recourse' mean for the borrower or their heirs?

The lender cannot charge interest after the borrower's death
The loan has no origination fee if the borrower defaults
The lender cannot foreclose if the borrower misses property tax payments
The borrower will never owe more than the home's value at the time of repayment (Correct answer)

Correct answer: The borrower will never owe more than the home's value at the time of repayment

Non-recourse means the repayment amount is capped at the lesser of the loan balance or the home's appraised value; the estate is never liable for any shortfall.

Question 17: What document must a counselor provide to a client?

Property tax statement.
Credit score report.
Counseling certificate (Correct answer)
Loan agreement.

Correct answer: Counseling certificate

Upon successful completion of the reverse mortgage counseling session, the HUD-approved counselor must provide the client with a counseling certificate. This certificate serves as proof that the borrower has received the required education and understanding of the reverse mortgage product, and it is a mandatory document for the loan application process.

Question 18: Under NRMLA's Code of Ethics, what must an originator do if they identify a potential conflict of interest?

Proceed normally without disclosure
Disclose the conflict to the borrower and resolve or withdraw (Correct answer)
Obtain written approval from HUD
Report the conflict only to their employer

Correct answer: Disclose the conflict to the borrower and resolve or withdraw

NRMLA's ethical standards require members to disclose conflicts of interest to borrowers and either resolve the conflict or withdraw from the transaction.

Question 19: What is the current annual MIP rate charged on the outstanding HECM loan balance after closing?

0.50% (Correct answer)
1.25%
0.25%
2.00%

Correct answer: 0.50%

After closing, an annual MIP of 0.50% is charged on the outstanding loan balance throughout the life of the HECM.

Question 20: Under the HECM program, who is responsible for paying the counseling fee?

The lender must cover all counseling costs as part of loan origination
The borrower pays the fee, and it may be financed into the loan if the agency allows (Correct answer)
The borrower pays the fee, though it cannot be financed into the HECM loan
HUD subsidizes counseling and borrowers pay nothing

Correct answer: The borrower pays the fee, and it may be financed into the loan if the agency allows

Borrowers are responsible for counseling fees, and HUD allows agencies to permit fee financing into the loan proceeds for borrowers who cannot afford to pay upfront.

Question 21: How does a lender determine the required residual income threshold for a HECM applicant?

By using the borrower's pre-retirement budget as submitted
By applying the Freddie Mac residual income tables used for conventional loans
By referencing HUD's published table based on household size and geographic region (Correct answer)
By applying a fixed percentage of gross income regardless of geography

Correct answer: By referencing HUD's published table based on household size and geographic region

HUD publishes regional residual income tables organized by household size, and lenders must use the appropriate table for the borrower's location.

Question 22: Under the HECM program, what is the maximum claim amount (MCA) used to calculate the Principal Limit?

The outstanding mortgage balance plus closing costs
The greater of the appraised value or the FHA lending limit
The lesser of the appraised value or the FHA lending limit (Correct answer)
The appraised value of the home

Correct answer: The lesser of the appraised value or the FHA lending limit

The MCA is the lesser of the appraised value or the current FHA national lending limit, which caps the loan size.

Question 23: What happens when the last surviving borrower dies or moves out?

The loan becomes due and payable (Correct answer)
The government forgives the loan.
The loan continues as is.
The heirs can continue living there without conditions.

Correct answer: The loan becomes due and payable

A reverse mortgage becomes due and payable when the last surviving borrower dies, sells the home, or permanently moves out. At this point, the loan must be repaid, typically by selling the home, or by the heirs refinancing the loan or paying off the balance. This ensures the lender recovers the loan amount, while any remaining equity goes to the heirs.

Question 24: A borrower receives pension income from a plan that will terminate in 3 years. How should this income be treated in the financial assessment?

Counted at 50% of the full payment amount
Counted only for the remaining 3 years when projecting sustainability (Correct answer)
Counted at full value for the entire assessment
Excluded entirely from income calculations

Correct answer: Counted only for the remaining 3 years when projecting sustainability

Temporary income with a defined end date should be considered only for its remaining duration when assessing long-term ability to pay property charges.

Question 25: Under HECM financial assessment, which of the following best describes 'compensating factors' a lender may consider?

Positive factors such as low loan-to-value, significant residual income, or strong payment history that offset a weakness (Correct answer)
A co-borrower's financial strength substituting for the primary borrower's deficiencies
Additional collateral pledged to secure the HECM
Discount points paid upfront to reduce ongoing financial risk

Correct answer: Positive factors such as low loan-to-value, significant residual income, or strong payment history that offset a weakness

Compensating factors are positive financial indicators that may allow approval despite a single weakness, such as higher residual income, low LTV, or minimal debt.

Question 26: Under the HECM financial assessment, which factor is NOT evaluated by the lender?

The borrower's credit score threshold of 700 or higher (Correct answer)
History of property charge payments such as taxes and insurance
Previous bankruptcy or foreclosure records
Residual income after accounting for monthly obligations

Correct answer: The borrower's credit score threshold of 700 or higher

HECM financial assessment does not use a minimum credit score cutoff; it evaluates credit history, property charge payment history, and residual income instead.

Question 27: Who oversees reverse mortgage counselor approval?

FBI.
HUD (Correct answer)
Federal Reserve.
Consumer credit bureaus.

Correct answer: HUD

The Department of Housing and Urban Development (HUD) is responsible for approving and overseeing reverse mortgage counselors. HUD sets the standards for counselor training, certification, and the content of the counseling sessions. This oversight ensures that counselors are qualified and provide consistent, high-quality, unbiased information to prospective borrowers.

Question 28: During counseling, a client discloses that a non-borrowing spouse will remain in the home. What is the counselor's MOST important obligation?

Recommend the spouse be added as a co-borrower if they are under age 62
Advise the client to remove the spouse from the title to simplify the loan
Inform the lender immediately about the non-borrowing spouse's presence
Explain the protections and limitations for non-borrowing spouses under current HECM rules (Correct answer)

Correct answer: Explain the protections and limitations for non-borrowing spouses under current HECM rules

Counselors must fully explain non-borrowing spouse deferral rights and the conditions under which they can remain in the home after the borrower's death or departure.

Question 29: Under HECM rules, which of the following would constitute a loan maturity event requiring repayment?

The borrower turns 80 years old
The home's value decreases by more than 25% from the appraised value at origination
The borrower's income drops below the federal poverty level
The borrower fails to maintain the property as their primary residence for more than 12 consecutive months (Correct answer)

Correct answer: The borrower fails to maintain the property as their primary residence for more than 12 consecutive months

A HECM becomes due and payable when the borrower no longer occupies the property as a primary residence for more than 12 consecutive months, among other maturity events.

Question 30: A HECM borrower has satisfactory credit but residual income that is $75 below the HUD threshold. What type of LESA is typically required?

A Partially-Funded LESA (Correct answer)
A Fully-Funded LESA
No LESA is required since credit is satisfactory
A voluntary borrower-funded reserve account

Correct answer: A Partially-Funded LESA

A Partially-Funded LESA is required when credit is satisfactory but residual income alone falls short of the HUD threshold.

Question 31: Under HUD guidelines, the Life Expectancy Set-Aside (LESA) is established to ensure borrowers can pay:

Property charges including taxes and insurance over the borrower's expected tenure (Correct answer)
Monthly mortgage insurance premiums only
Monthly servicing fees for the loan term
Closing costs and origination fees

Correct answer: Property charges including taxes and insurance over the borrower's expected tenure

A LESA reserves funds from the loan proceeds to cover property taxes, homeowner's insurance, and other property charges for the borrower's projected life expectancy.

Question 32: A borrower owns a home worth $900,000. What is the maximum property value used to calculate the HECM principal limit?

$900,000
$647,200
$726,200
$822,375 (Correct answer)

Correct answer: $822,375

HUD caps the property value used in HECM calculations at the national lending limit (FHA maximum claim amount), which is $822,375 for 2023.

Question 33: Which scenario would cause a borrower to FAIL the residency requirement for a HECM?

Renting a room in the home to a family member
Vacationing abroad for 2 months each year
Temporarily residing in a rehabilitation facility for 4 months
Spending 7 months per year at the mortgaged property (Correct answer)

Correct answer: Spending 7 months per year at the mortgaged property

Borrowers must occupy the property as their primary residence, meaning they must live there the majority of the year; spending only 7 months could jeopardize that status depending on circumstances.

Question 34: Which environmental hazard found during a HECM appraisal typically requires remediation before loan approval?

Defective lead-based paint with chipping or peeling (Correct answer)
Presence of any building materials predating 1978
Asbestos encapsulated in good condition
Lead-based paint on interior walls only

Correct answer: Defective lead-based paint with chipping or peeling

Defective lead-based paint that is chipping or peeling must be remediated before HECM loan approval due to the health hazard it poses.

Question 35: A HECM borrower has an existing forward mortgage of $80,000. How must this be handled at closing?

It must be paid off with HECM proceeds at or before closing (Correct answer)
It can remain in place as a subordinate lien
It converts automatically into a second mortgage
The servicer negotiates a payoff schedule post-closing

Correct answer: It must be paid off with HECM proceeds at or before closing

HECM loans must be in first-lien position, so any existing mortgage must be paid off at closing using loan proceeds.

Question 36: After completing a HECM counseling session, what must the counselor send to the lender?

The signed Certificate of HECM Counseling (HUD Form 92902) (Correct answer)
A completed borrower credit report
A lender referral form with the counselor's recommendation
A detailed summary of the borrower's financial situation

Correct answer: The signed Certificate of HECM Counseling (HUD Form 92902)

The counselor issues HUD Form 92902, the Certificate of HECM Counseling, which is required before the lender can proceed with the loan.

Question 37: In HECM financial assessment, what does the term 'compensating factors' refer to?

HUD allowances for borrowers with military service
Discounts applied to the interest rate for strong borrowers
Positive financial attributes that may offset unsatisfactory credit or income findings (Correct answer)
Extra fees charged to compensate for higher-risk borrowers

Correct answer: Positive financial attributes that may offset unsatisfactory credit or income findings

Compensating factors are positive financial indicators that a lender may use to justify approval despite one unsatisfactory finding.

Question 38: What happens to unused funds in a Fully-Funded LESA when the borrower dies or the loan becomes due and payable?

They reduce the outstanding loan balance or are returned to the estate (Correct answer)
They revert to HUD's insurance fund
They are added to the loan balance owed
They are forfeited to the lender

Correct answer: They reduce the outstanding loan balance or are returned to the estate

Unused LESA funds reduce the outstanding loan balance or are returned to the borrower's estate at loan payoff.

Question 39: A CRMP recommends a HECM to a borrower solely because it generates the highest commission. This violates which ethical principle?

Confidentiality
Suitability and client-first duty (Correct answer)
Transparency
Competence

Correct answer: Suitability and client-first duty

Suitability requires that product recommendations serve the borrower's needs, not the originator's financial interest.

Question 40: What is the purpose of the HECM counseling certificate (HUD Form 92902)?

It documents that the borrower received independent HECM counseling from a HUD-approved agency (Correct answer)
It certifies that the lender reviewed the borrower's financial documents
It authorizes the lender to access the borrower's Social Security records
It confirms the borrower's property passed the FHA appraisal

Correct answer: It documents that the borrower received independent HECM counseling from a HUD-approved agency

Form 92902 is the official HUD certificate confirming a prospective borrower completed the required independent counseling session.

Question 41: What is required before a borrower can obtain a reverse mortgage?

Completion of counseling with a HUD-approved counselor (Correct answer)
Proof of recent employment.
An appraisal only.
A credit score of over 700.

Correct answer: Completion of counseling with a HUD-approved counselor

Before a borrower can obtain a reverse mortgage, federal regulations mandate the completion of a counseling session with a HUD-approved counselor. This crucial step ensures that prospective borrowers fully understand the product's features, risks, costs, and alternatives. It serves as a vital consumer protection measure, empowering borrowers to make informed decisions.

Question 42: A surviving Non-Borrowing Spouse wants to remain in the home after the HECM borrower's death. Must she repay the loan at that time?

Yes, but only 50% of the balance must be repaid if she can demonstrate financial hardship
No, but she must convert the HECM to a traditional mortgage within 6 months
Yes, the full loan balance must be repaid within 30 days of the borrower's death
No, an eligible NBS may defer repayment and remain in the home without making payments during the deferral period (Correct answer)

Correct answer: No, an eligible NBS may defer repayment and remain in the home without making payments during the deferral period

An eligible NBS under HUD's Deferral Policy may stay in the home and defer repayment of the HECM balance throughout the deferral period without making loan payments.

Question 43: When a counselor explains the HECM line of credit growth feature, they should clarify that the unused portion grows at:

The federal funds rate as set by the Federal Reserve each quarter
A fixed HUD-set rate of 2% per year regardless of market conditions
The same rate as the S&P 500 index, providing market-linked growth
A rate equal to the current interest rate plus the mortgage insurance premium rate, not based on investment returns (Correct answer)

Correct answer: A rate equal to the current interest rate plus the mortgage insurance premium rate, not based on investment returns

The HECM line of credit grows at the same rate as the loan's accruing interest plus MIP, which is not an investment return but rather reflects increasing loan availability.

Question 44: A HECM originator is approached by an adult child who asks to receive the borrower's loan details without a signed authorization. The originator should:

Decline and explain that borrower information is protected under privacy laws without proper authorization (Correct answer)
Share the information since the child will likely inherit the home
Share only the loan balance but no other details
Refer the child to the servicer who can decide independently

Correct answer: Decline and explain that borrower information is protected under privacy laws without proper authorization

Privacy laws including GLBA prohibit sharing a borrower's nonpublic personal information with third parties, including family members, without the borrower's explicit authorization.

Question 45: What must occur before a condominium unit can serve as collateral for a HECM loan?

The condo project must be on the FHA-approved condominium list (Correct answer)
The condo association must approve the loan
The borrower must own at least 51% of the condo complex
The condo must have been built after 1990

Correct answer: The condo project must be on the FHA-approved condominium list

The condominium project must be on HUD's FHA-approved condominium list, or undergo spot approval, before a HECM can be issued on any unit.

Question 46: What action must be taken if a HECM appraisal reveals required property repairs?

Repairs must be completed before closing, or funds may be set aside for completion after closing (Correct answer)
The loan must be denied
The appraised value is automatically reduced by repair costs
The borrower receives no funds until repairs are complete

Correct answer: Repairs must be completed before closing, or funds may be set aside for completion after closing

Required repairs may be completed before closing or a repair set-aside can be established to ensure completion within a specified timeframe after closing.

Question 47: Which statement best reflects the ethical duty of competence for a CRMP?

Complete the CRMP exam once and rely on that knowledge indefinitely
Continuously update knowledge through education as products, regulations, and markets evolve (Correct answer)
Limit practice to loan types covered during initial certification only
Delegate complex questions to underwriters without disclosing limitations to borrowers

Correct answer: Continuously update knowledge through education as products, regulations, and markets evolve

Ongoing education is essential because reverse mortgage regulations, products, and best practices change over time.

Question 48: What is the primary role of the FHA roster appraisal in the HECM origination process?

To determine the Maximum Claim Amount, which caps the insurable loan value (Correct answer)
To establish the loan interest rate
To verify the borrower's income
To certify the title is clear of liens

Correct answer: To determine the Maximum Claim Amount, which caps the insurable loan value

The FHA appraisal establishes the property value that determines the Maximum Claim Amount, which is the cap on the FHA-insured loan value.

Question 49: During a HECM financial assessment, the lender discovers the borrower has an outstanding federal tax lien. What is required?

The lien can be ignored if it is under $5,000
A LESA must be established equal to the lien amount
The lien must be paid in full before or at closing, or a repayment plan must be in place (Correct answer)
The loan is automatically denied

Correct answer: The lien must be paid in full before or at closing, or a repayment plan must be in place

Federal tax liens must be satisfied at or before closing, or the borrower must have an approved IRS repayment agreement in place.

Question 50: Under the HECM tenure payment option, how long do monthly payments continue?

Until the line of credit is exhausted
Until the borrower reaches age 85
For a fixed term selected at closing
For the life of the loan as long as the home is the primary residence (Correct answer)

Correct answer: For the life of the loan as long as the home is the primary residence

Tenure payments continue indefinitely as long as the borrower occupies the home as a primary residence, regardless of loan balance.

Question 51: Under the HECM Initial Disbursement Limit rules, what percentage of the Principal Limit may a borrower access at closing if they have no mandatory obligations?

75% of the Principal Limit during the first 12 months
50% of the Principal Limit during the first 12 months
60% of the Principal Limit during the first 12 months (Correct answer)
100% of the Principal Limit

Correct answer: 60% of the Principal Limit during the first 12 months

Borrowers with no or low mandatory obligations are limited to 60% of the Principal Limit during the first 12 months to reduce early loan balance growth.

Question 52: The Home Ownership and Equity Protection Act (HOEPA) primarily protects reverse mortgage borrowers from:

Inadequate counseling sessions
Property tax delinquency
Insufficient home equity
Predatory high-cost loan terms (Correct answer)

Correct answer: Predatory high-cost loan terms

HOEPA establishes protections against predatory lending by imposing restrictions on high-cost loans, including certain reverse mortgage products.

Question 53: A potential HECM borrower is currently in bankruptcy proceedings. How should the counselor handle this situation?

Refuse counseling entirely until bankruptcy is discharged
Complete counseling but note that bankruptcy may affect loan eligibility and advise the borrower to consult an attorney (Correct answer)
Issue the certificate immediately and direct the lender to proceed
Refer the borrower only to a bankruptcy attorney and close the session

Correct answer: Complete counseling but note that bankruptcy may affect loan eligibility and advise the borrower to consult an attorney

Counselors should complete the session, document the bankruptcy status, and advise the borrower to seek legal counsel, as active bankruptcy can affect HECM eligibility.

Question 54: A client who is deaf requests in-person counseling with a sign language interpreter they will provide. The agency should:

Accommodate the request, ensuring the interpreter does not have a conflict of interest (Correct answer)
Decline and refer the client to telephone counseling as the only accessible option
Provide written materials only, as interpreters create liability issues
Require the client to use the agency's own certified interpreter only

Correct answer: Accommodate the request, ensuring the interpreter does not have a conflict of interest

Agencies must make reasonable accommodations for clients with disabilities, and a client-provided interpreter is acceptable provided there is no conflict of interest.

Question 55: A prospective borrower completes their mandatory HECM counseling on March 15th. They wait to consider their options and do not sign a formal loan application with a lender until September 20th of the same year. What is the status of their counseling certificate on the date of application?

It is valid, provided the FHA case number is ordered within 10 days of its expiration.
It has expired, and the borrower must complete a new counseling session. (Correct answer)
It can be extended by the original counseling agency for an additional 90 days.
It is valid, as the certificate is good for one year from the date of the session.

Correct answer: It has expired, and the borrower must complete a new counseling session.

According to HUD guidelines, a HECM counseling certificate is valid for 180 days from the date the counseling session is completed. In this scenario, more than 180 days (approximately 189 days) have passed between March 15th and September 20th. Therefore, the certificate has expired, and the borrower must undergo counseling again before a loan application can be processed.

Question 56: A HECM borrower has a $200,000 principal limit and mandatory obligations totaling $130,000. What is the maximum amount the borrower may draw in the first 12 months?

$120,000, because the 60% limit applies
$140,000, because mandatory obligations plus 10% of the principal limit exceed 60% (Correct answer)
$130,000, because only the mandatory obligations amount is permitted
$200,000, because mandatory obligations override all limits

Correct answer: $140,000, because mandatory obligations plus 10% of the principal limit exceed 60%

The borrower may draw $140,000 ($130,000 in mandatory obligations plus $20,000, which is 10% of $200,000), since this exceeds the standard 60% cap of $120,000.

Question 57: A borrower has a manufactured home built in 1974. Which statement best describes HECM eligibility for this property?

It qualifies if it has been permanently affixed to the land for 10+ years
It is ineligible because manufactured homes must have been built on or after June 15, 1976 (Correct answer)
It qualifies as long as it meets current safety standards
It is ineligible because all manufactured homes are excluded from HECM

Correct answer: It is ineligible because manufactured homes must have been built on or after June 15, 1976

HUD requires manufactured homes to have been built on or after June 15, 1976 (meeting HUD standards), so a 1974 home does not qualify.

Question 58: What ethical principle is violated when a CRMP omits mention of rising loan balances and potential equity erosion when presenting a reverse mortgage?

Principle of professional brevity
Principle of regulatory compliance only
Principle of efficiency
Principle of full disclosure and transparency (Correct answer)

Correct answer: Principle of full disclosure and transparency

Failing to disclose material risks like compounding interest and equity erosion violates the duty of full and fair disclosure.

Question 59: A HECM borrower currently on a line of credit wishes to switch to a tenure payment plan. What is the correct procedure?

Apply for an entirely new HECM loan
Obtain a new property appraisal to confirm continued eligibility
Request a payment plan change through their loan servicer (Correct answer)
Obtain new HUD-approved counseling before the change is permitted

Correct answer: Request a payment plan change through their loan servicer

Borrowers with adjustable-rate HECMs can request a payment plan change from their servicer at any time; this is a built-in flexibility feature of HECM products.

Question 60: A HECM servicer must notify a borrower of a potential default condition within how many days of determining a due-and-payable event?

60 days
30 days (Correct answer)
45 days
15 days

Correct answer: 30 days

HUD requires servicers to notify borrowers of a due-and-payable condition within 30 days of the triggering event.

Question 61: What is the minimum age requirement to qualify for a reverse mortgage?

60
55
65
62 (Correct answer)

Correct answer: 62

To qualify for a Home Equity Conversion Mortgage (HECM), the most widely available type of reverse mortgage, all borrowers listed on the property's title must be at least 62 years old. This age requirement is a fundamental eligibility criterion established by the Federal Housing Administration (FHA) to ensure the product serves its intended demographic of senior homeowners.

Question 62: Under FHA guidelines, a HECM borrower must complete counseling BEFORE which of the following steps?

Loan signing at closing
Lender application submission (Correct answer)
Case number assignment
Property appraisal

Correct answer: Lender application submission

HUD requires the borrower to complete counseling before submitting a formal loan application so counseling is independent and uninfluenced by the process.

Question 63: What type of property is eligible for a HECM loan?

Cooperative (co-op) apartment in all states
Investment duplex where the owner rents both units
Vacation cabin used seasonally
FHA-approved condominium unit (Correct answer)

Correct answer: FHA-approved condominium unit

FHA-approved condominiums are eligible for HECMs, provided the condo project meets HUD approval requirements.

Question 64: A 'modified term' payment plan combines which two disbursement components?

Lump sum and tenure payments
Line of credit and tenure payments
Lump sum and a line of credit
Line of credit and term payments (Correct answer)

Correct answer: Line of credit and term payments

A modified term plan combines a line of credit set-aside with monthly term payments for a borrower-specified period, providing both a reserve and fixed-period monthly income.

Question 65: Which of the following is a permissible reason for a borrower to conduct HECM counseling by telephone rather than in person?

The borrower lives in a rural area without reasonable access to a local counselor (Correct answer)
The loan officer schedules telephone counseling by default for all clients
The borrower wants to avoid the counseling fee
The lender prefers faster closing timelines

Correct answer: The borrower lives in a rural area without reasonable access to a local counselor

Telephone counseling is permitted when in-person counseling is not reasonably available, such as in rural or underserved areas.

Question 66: Which income source requires verification through a current award letter AND evidence of recent receipt such as a bank statement?

Social Security or SSI income (Correct answer)
Dividend income from investments
Rental income
Pension income from a private employer

Correct answer: Social Security or SSI income

Social Security income must be verified with a current award letter and evidence of actual receipt, typically a bank statement showing the deposit.

Question 67: A HECM borrower on a fixed-rate product wants to convert to a line of credit disbursement. What is the correct course of action?

This conversion is not possible; fixed-rate HECMs only permit lump sum disbursement (Correct answer)
Request the conversion from the servicer at a standard fee of $20
Obtain new HUD counseling and sign a loan modification agreement
Contact HUD directly to request a product type waiver

Correct answer: This conversion is not possible; fixed-rate HECMs only permit lump sum disbursement

Fixed-rate HECMs are limited exclusively to the single lump sum disbursement; to access a line of credit, the borrower would need to refinance into a new adjustable-rate HECM product.

Question 68: A HECM borrower with a $400,000 home has a Principal Limit of $240,000. Their existing mortgage balance is $180,000. How much additional cash can they access at closing under the initial disbursement limit rules?

$24,000 (Correct answer)
$42,000
$0 — they must pay off the mortgage first from other funds
$60,000

Correct answer: $24,000

Mandatory obligations ($180,000) exceed 60% ($144,000) of the $240,000 PL, so borrowers may draw mandatory obligations plus 10% of PL ($24,000) in year one.

Question 69: A HECM borrower's home sells for less than the outstanding loan balance. What protects the borrower's heirs from owing the deficiency?

The lender's private mortgage insurance policy
The borrower's estate assets must cover the shortfall
A mandatory deficiency waiver signed at closing
FHA's mutual mortgage insurance fund, making HECMs non-recourse loans (Correct answer)

Correct answer: FHA's mutual mortgage insurance fund, making HECMs non-recourse loans

HECMs are non-recourse loans insured by FHA, so heirs never owe more than the home's appraised value or sale price.

Question 70: Which of the following documents is uniquely required for a HECM-to-HECM refinance application to ensure the transaction provides a tangible benefit to the borrower?

The Notice of Right to Receive a Copy of the Appraisal
The HUD/VA Addendum to the URLA (Form 92900-A)
The HECM Counseling Certificate
The Home Equity Conversion Mortgage Anti-Churning Disclosure (Correct answer)

Correct answer: The Home Equity Conversion Mortgage Anti-Churning Disclosure

The Home Equity Conversion Mortgage Anti-Churning Disclosure (Form HUD-92901) is specifically required for HECM-to-HECM refinance transactions. Its purpose is to protect borrowers from predatory lending practices by ensuring that the refinance provides a legitimate financial benefit and is not just generating fees for the lender.

Question 71: What happens to a HECM term payment plan when the borrower-selected term period expires?

Monthly payments automatically convert to a tenure plan to continue income
Monthly disbursements cease, but the loan remains outstanding until a maturity event (Correct answer)
The borrower must refinance to access any remaining principal limit funds
The loan becomes immediately due and payable upon term expiration

Correct answer: Monthly disbursements cease, but the loan remains outstanding until a maturity event

When a term payment plan expires, the scheduled monthly disbursements stop, but the loan itself remains in place; it becomes due only when a qualifying maturity event (death, sale, non-occupancy) occurs.

Question 72: A borrower age 74 wants a HECM but has a recent 60-day mortgage delinquency from 18 months ago that was caused by a hospitalization. Under FA guidelines, how should the lender likely treat this?

Automatically deny the loan
Consider it as extenuating circumstances and potentially approve without a LESA (Correct answer)
Require a full Fully-Funded LESA regardless
Refer the file to HUD for special approval

Correct answer: Consider it as extenuating circumstances and potentially approve without a LESA

Documented extenuating circumstances such as hospitalization can offset isolated derogatory credit events under HUD FA guidelines.

Question 73: Under the Equal Credit Opportunity Act (ECOA), a lender may NOT deny a HECM application based on which factor?

The applicant's race or national origin (Correct answer)
The applicant's age being under 62
The property failing to meet FHA guidelines
Insufficient home equity

Correct answer: The applicant's race or national origin

ECOA prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, or age (when the applicant is old enough to contract).

Question 74: What is the primary purpose of HUD-approved HECM counseling in the client assessment process?

To qualify borrowers financially and approve them for a specific loan amount
To ensure borrowers understand loan terms, alternatives, and their obligations before proceeding (Correct answer)
To allow the lender to verify the borrower's income and asset information
To complete the property appraisal and title search requirements

Correct answer: To ensure borrowers understand loan terms, alternatives, and their obligations before proceeding

HUD-approved counseling provides independent education so borrowers fully understand the HECM product, their obligations, and alternatives before making a decision.

Question 75: When evaluating rental income from a multi-unit property for a HECM financial assessment, how much of the gross rental income is typically counted?

50% of gross rental income
90% of gross rental income
75% of gross rental income (Correct answer)
100% of gross rental income

Correct answer: 75% of gross rental income

HUD typically allows 75% of gross rental income to account for vacancies and maintenance expenses when calculating effective income.

Question 76: What is the minimum age of a manufactured home to be eligible for a HECM loan?

Must be built after January 1, 1990
Age is not a determining factor for manufactured homes
Must be built on or after June 15, 1976 (Correct answer)
Must be built after January 1, 2000

Correct answer: Must be built on or after June 15, 1976

Manufactured homes must be built on or after June 15, 1976, when the HUD Code for manufactured housing standards took effect.

Question 77: Which property types are eligible for a HECM loan?

Single-family homes, HUD-approved condos, and manufactured homes meeting FHA standards (Correct answer)
Only properties with no existing mortgage
Only single-family detached homes
Any residential property regardless of condition

Correct answer: Single-family homes, HUD-approved condos, and manufactured homes meeting FHA standards

Eligible HECM properties include single-family homes, FHA-approved condominiums, and manufactured homes that meet specific HUD requirements.

Question 78: What ethical responsibility does a CRMP have when identifying potential elder abuse?

Ignore and continue processing the application
Report to the appropriate agency (Correct answer)
Inform a family member only
Delay until final documents are signed

Correct answer: Report to the appropriate agency

A Certified Reverse Mortgage Professional (CRMP) has a strong ethical and often legal obligation to protect vulnerable seniors. If a CRMP suspects elder abuse, whether financial, physical, or emotional, they must report it to the appropriate protective services agency. This action prioritizes the borrower's safety and well-being above all else, aligning with professional ethics.

Question 79: During the Financial Assessment for a HECM loan, what is the consequence if a borrower is found to have delinquent federal debt?

A Life Expectancy Set-Aside (LESA) will be established to pay the debt.
The loan amount will be reduced by the amount of the federal debt.
The borrower must pay a higher mortgage insurance premium.
The borrower is automatically disqualified from obtaining a HECM. (Correct answer)

Correct answer: The borrower is automatically disqualified from obtaining a HECM.

A key eligibility requirement for a HECM is that the borrower must not be delinquent on any federal debt. This includes things like unpaid federal income taxes or defaulted federal student loans. Delinquency on federal debt will render the applicant ineligible for the FHA-insured loan program.

Question 80: What is the ongoing Mortgage Insurance Premium (MIP) rate charged annually on the outstanding HECM loan balance?

0.5% per year (Correct answer)
1.25% per year
2.0% per year
0.85% per year

Correct answer: 0.5% per year

The ongoing annual MIP for HECM loans is 0.5% of the outstanding loan balance, charged monthly.

Question 81: Which federal agency oversees reverse mortgage advertising compliance?

HUD
CFPB (Correct answer)
FTC
FHA

Correct answer: CFPB

The Consumer Financial Protection Bureau (CFPB) is the primary federal agency responsible for consumer protection in the financial sector, including reverse mortgages. The CFPB oversees advertising compliance to ensure that marketing materials are not deceptive or misleading. Their role is to protect consumers from unfair, deceptive, or abusive practices in financial products and services.

Question 82: A CRMP learns that a colleague is falsifying borrower income information on HECM applications. Under NRMLA ethics, what should the CRMP do?

Ignore it since income is not verified on HECMs
Continue working at the same firm without involvement
Report the conduct to NRMLA and/or the appropriate regulatory authority (Correct answer)
Confront the colleague privately and take no further action

Correct answer: Report the conduct to NRMLA and/or the appropriate regulatory authority

CRMPs have an ethical obligation to report fraud and misconduct to NRMLA and regulatory authorities to protect consumers.

Question 83: Which of the following parties is explicitly prohibited from selecting or referring the borrower to a specific HECM counseling agency?

An Area Agency on Aging
The lender or mortgage broker originating the loan (Correct answer)
A HUD-approved housing counseling intermediary
A nonprofit organization not affiliated with the lender

Correct answer: The lender or mortgage broker originating the loan

HUD rules bar lenders and brokers from steering borrowers to a particular counselor to preserve counseling independence.

Question 84: A non-borrowing spouse who is under age 62 at loan origination is eligible for which HECM protection?

Independent HECM loan in their own name
Automatic transfer of the HECM to their name upon spouse's death
Deferral period allowing continued occupancy after the borrowing spouse's death (Correct answer)
Full loan proceeds equal to the borrowing spouse

Correct answer: Deferral period allowing continued occupancy after the borrowing spouse's death

HUD's Mortgagee Optional Election (MOE) allows a non-borrowing spouse to remain in the home after the borrowing spouse's death or move to a care facility, through a deferral period.

Question 85: Which of the following is a key non-recourse feature of the FHA-insured HECM program?

The amount owed on the loan can never exceed the value of the home when the loan is repaid. (Correct answer)
The borrower's heirs are not required to pay property taxes after the borrower passes away.
The lender can seize other assets from the borrower's estate if the home's value is insufficient to cover the loan balance.
The borrower is not responsible for homeowner's insurance premiums during the life of the loan.

Correct answer: The amount owed on the loan can never exceed the value of the home when the loan is repaid.

The HECM is a non-recourse loan. This means that when the loan becomes due and payable, the borrower or their estate will never owe more than the value of the home at the time of sale. The FHA insurance covers any shortfall if the loan balance exceeds the home's value.

Question 86: A HECM borrower on a tenure payment plan permanently moves into an assisted living facility and no longer uses the mortgaged home as their primary residence. What happens to their monthly payments?

Payments continue for an additional 12-month grace period
Payments continue until the end of the current calendar year
Payments reduce by 50% for up to 24 months to assist with transition costs
Payments cease because primary residency is a condition of the tenure plan (Correct answer)

Correct answer: Payments cease because primary residency is a condition of the tenure plan

Tenure payments are conditioned on the borrower's primary residency; once the borrower permanently vacates the home, tenure payments stop and the loan becomes due and payable.

Question 87: How should a CRMP respond when a borrower asks them to recommend an elder law attorney?

Recommend the attorney who offers the best referral arrangement
Tell the borrower attorneys are unnecessary for reverse mortgages
Provide a list of qualified attorneys without steering toward one who pays referral fees (Correct answer)
Refuse all attorney referrals to avoid liability

Correct answer: Provide a list of qualified attorneys without steering toward one who pays referral fees

CRMPs may provide referrals but must avoid steering based on personal financial benefit to preserve impartiality.

Question 88: What is the maximum origination fee a lender may charge on a HECM with a home value of $200,000?

$4,000
$2,000
$6,000
$2,500 (Correct answer)

Correct answer: $2,500

For homes valued at $125,000 or less the cap is $2,500; for homes above $125,000 the fee is 2% of the first $200,000, which equals $4,000, but the minimum floor is $2,500—so the answer for a $200,000 home is $4,000.

Question 89: A borrower has unpaid homeowners association (HOA) dues creating a lien on the property. How does this affect the HECM assessment?

The property is permanently disqualified due to the HOA lien
The borrower must agree to a Life Expectancy Set-Aside for future HOA dues
The HOA lien must be resolved before closing since HECM must be in first-lien position (Correct answer)
HOA liens are automatically junior to HECM and do not affect eligibility

Correct answer: The HOA lien must be resolved before closing since HECM must be in first-lien position

HOA liens can take priority over mortgages in some states, so they must be resolved before or at closing to protect the HECM's first-lien position.

Question 90: Which disbursement strategy is generally considered most financially advantageous for a HECM borrower who wants to maximize available funds over the long term?

Establish tenure payments beginning at loan closing
Select a short-term plan to maximize monthly payment amounts
Open a line of credit and draw only as needed, allowing unused funds to grow (Correct answer)
Draw the full lump sum immediately to invest the proceeds

Correct answer: Open a line of credit and draw only as needed, allowing unused funds to grow

A line of credit strategy is often considered most advantageous because the unused portion grows over time at the loan rate plus MIP, increasing available funds and providing flexibility for future needs.

Question 91: When a borrower asks a CRMP to rush the process so counseling happens on the same day as the application signing, the CRMP must explain that:

HUD requires a minimum 7-business-day waiting period between counseling and application signing (Correct answer)
The counselor can issue an expedited certificate for an additional fee
Same-day completion is allowed if the borrower waives the waiting period in writing
The lender can override the waiting period for financial hardship cases

Correct answer: HUD requires a minimum 7-business-day waiting period between counseling and application signing

HUD's mandatory waiting period of 7 business days between counseling and application signing cannot be waived by the borrower or lender.

Question 92: What is a Life Expectancy Set-Aside (LESA)?

An escrow-like fund to cover property charges (Correct answer)
A savings account for travel.
A retirement account.
A life insurance policy.

Correct answer: An escrow-like fund to cover property charges

A Life Expectancy Set-Aside (LESA) is a specific fund established from the reverse mortgage loan proceeds. Its primary purpose is to ensure that future property taxes and homeowner's insurance premiums are paid, especially for borrowers who may have difficulty meeting these obligations. It functions similarly to an escrow account, safeguarding the property and the lender's investment.

Question 93: A borrower applies for a HECM and the Financial Assessment reveals they have a history of paying their previous mortgage and installment loans on time, but have been more than 90 days late on two credit card payments in the last 24 months. How would an underwriter most likely proceed?

Approve the loan with no additional requirements.
Require a fully funded Life Expectancy Set-Aside (LESA) due to the credit risk. (Correct answer)
Disregard the credit card payments as they are unsecured debt.
Automatically deny the loan due to major derogatory credit.

Correct answer: Require a fully funded Life Expectancy Set-Aside (LESA) due to the credit risk.

The Financial Assessment evaluates the borrower's overall willingness and ability to meet financial obligations. While there is no minimum FICO score, major derogatory credit (such as payments 90+ days late) is a significant concern. An underwriter would likely view this as an increased risk of default on future property charges and, as a mitigating factor, require a fully funded Life Expectancy Set-Aside (LESA) to ensure taxes and insurance are paid.

Question 94: Which entity is primarily responsible for enforcing compliance with the Truth in Lending Act (TILA) for HECM lenders?

HUD Office of Inspector General
Consumer Financial Protection Bureau (CFPB) (Correct answer)
Federal Reserve Board
Office of the Comptroller of the Currency only

Correct answer: Consumer Financial Protection Bureau (CFPB)

The CFPB has primary authority to supervise and enforce TILA compliance for mortgage lenders, including those offering HECMs.

Question 95: Which statement about condominiums and HECM eligibility is correct?

Only condominiums with fewer than 10 units qualify for HECM
Condominiums are permanently excluded from HECM eligibility
Only FHA-approved condominium projects are eligible for HECM, or units in projects that receive spot approval (Correct answer)
Any condominium is eligible without additional review

Correct answer: Only FHA-approved condominium projects are eligible for HECM, or units in projects that receive spot approval

HECM eligibility for condos requires the project to be on HUD's approved condominium list or to receive single-unit (spot) approval under FHA guidelines.

Question 96: Which federal agency oversees the HUD-approved housing counseling agencies that provide mandatory HECM counseling?

HUD's Office of Housing Counseling (Correct answer)
FHA's Office of Single Family Programs
CFPB
FTC

Correct answer: HUD's Office of Housing Counseling

HUD's Office of Housing Counseling administers the approval and oversight of agencies that provide mandatory pre-loan counseling for HECM borrowers.

Question 97: A HECM borrower receives counseling and then decides to add a spouse to the title before closing. Does this require a new counseling session?

Yes, always, because any title change requires new counseling
No, because the original certificate covers all future title holders
No, but the spouse must be present at closing to sign non-borrower disclosures
It depends on whether the spouse will be a co-borrower or only a non-borrowing spouse added for estate purposes (Correct answer)

Correct answer: It depends on whether the spouse will be a co-borrower or only a non-borrowing spouse added for estate purposes

If the spouse becomes a co-borrower, they must complete counseling; if added only to title as a non-borrowing spouse, additional counseling is not necessarily required but the lender must verify eligibility.

Question 98: A CRMP is aware that their company is using an appraisal management company with a financial relationship to the lender. What should they do?

Accept the arrangement as standard lender practice
Order a second appraisal without disclosing the concern
Report only if the appraisal value seems inflated
Disclose the relationship to the borrower and ensure appraisal independence requirements are met (Correct answer)

Correct answer: Disclose the relationship to the borrower and ensure appraisal independence requirements are met

Lender-appraiser financial relationships must comply with independence requirements and be disclosed to protect borrower interests.

Question 99: Each time a HECM borrower makes a draw from their line of credit, what is the direct financial effect on the loan?

The draw is recorded as a credit with no immediate balance impact
The outstanding loan balance decreases by the draw amount
The principal limit increases to offset the draw
The outstanding loan balance increases by the draw amount (Correct answer)

Correct answer: The outstanding loan balance increases by the draw amount

Each line of credit draw increases the outstanding loan balance, which then accrues interest and MIP until the loan becomes due and payable.

Question 100: Which flood zone designation generally makes a property ineligible for a HECM unless flood insurance is obtained?

Zone C
Zone A or V (Correct answer)
Zone X
Zone B

Correct answer: Zone A or V

Properties in FEMA Special Flood Hazard Areas (Zone A or V) require mandatory flood insurance as a condition of HECM eligibility.

Certified Reverse Mortgage Professional (CRMP) Exam

The CRMP certification validates a professional's expertise and commitment to ethical practices in the reverse mortgage industry.

100

Questions

120 min

Time Limit

75%

To Pass

Checking for saved progress...

Exam Rules

You can skip questions and return to them later
Flag questions for review before submitting
No feedback shown until you submit the entire exam
Unanswered questions count as wrong — answer everything
10 pretest questions are mixed in and don't affect your score
Timer auto-submits when time runs out
Your progress is auto-saved every 30 seconds