Borrower Qualification Requirements Flashcards
7 cards from real CRMP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Borrower Qualification Requirements flashcards as text
A borrower has a delinquent federal debt, including unpaid federal income taxes. How does this affect HECM eligibility?
Answer: The borrower must resolve the federal debt or establish a repayment plan before closing
HUD requires borrowers to be free of delinquent federal debt or have an approved repayment plan in place before a HECM can close.
Under HECM rules, what happens if only one of two co-borrowers dies?
Answer: The surviving co-borrower may remain in the home and the loan continues
When one co-borrower dies, the surviving eligible co-borrower retains all HECM rights and the loan does not become due and payable.
Which scenario would trigger a 'partially-funded LESA' rather than a fully-funded LESA?
Answer: The borrower has adequate residual income but an unsatisfactory credit history related to property charges
A partially-funded LESA is used when one Financial Assessment factor is deficient (credit or income, not both), providing a partial set-aside rather than full life-expectancy coverage.
A manufactured home was built in 1975 and the borrower has owned it since 1980. Is it HECM-eligible?
Answer: No, HUD requires manufactured homes to have been built on or after June 15, 1976 to meet HUD standards
HUD's Manufactured Home Construction and Safety Standards (HUD Code) took effect June 15, 1976; homes built before this date do not qualify.
What is the purpose of the HECM counseling certificate (HUD Form 92902)?
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.
A borrower owns a single-family home that is currently listed for sale. Can they apply for a HECM?
Answer: No, a property listed for sale cannot serve as collateral for a HECM
A property actively listed for sale does not qualify as a primary residence for HECM purposes; the listing must be cancelled before or at closing.
How does the age of the youngest borrower (or eligible Non-Borrowing Spouse) affect HECM loan proceeds?
Answer: The younger the borrower, the lower the Principal Limit Factor, resulting in less available proceeds
Principal Limit Factors (PLFs) increase with age; a younger borrower or NBS means a lower PLF and fewer available proceeds because the loan may remain outstanding longer.