Practice Test Geeks(CRMP) Certified Reverse Mortgage Professional Practice Test
← All CRMP Flashcard Decks

Regulatory Compliance & Ethical Practices 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 Regulatory Compliance & Ethical Practices flashcards as text

  1. Which Mortgagee Letter introduced the Financial Assessment requirement for HECM applications?

    Answer: ML 2014-22

    HUD Mortgagee Letter 2014-22, effective March 2, 2015, introduced the Financial Assessment requirement to evaluate a borrower's willingness and capacity to meet ongoing loan obligations.

  2. Under RESPA, which payment arrangement between a HECM lender and a housing counseling agency would be a violation?

    Answer: Paying a fee to a counselor for each referred borrower

    RESPA Section 8 prohibits kickbacks and unearned fees, including payments to counselors for referring borrowers to a specific lender.

  3. A HECM originator is also a licensed real estate agent. Which scenario represents an ethical conflict requiring disclosure?

    Answer: The originator earns a commission by selling the borrower a home being financed with a HECM for Purchase

    Earning both a sales commission and origination fee on the same transaction is a dual-role conflict that must be disclosed to the borrower under NRMLA ethics guidelines.

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

    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.

  5. What is the purpose of the Right of Rescission under TILA for HECM transactions?

    Answer: It gives borrowers three business days after closing to cancel the loan without penalty

    Under TILA, borrowers have a three-business-day right of rescission after closing on a HECM, during which they can cancel without penalty.

  6. Which of the following would constitute a RESPA Section 8 violation in a HECM transaction?

    Answer: Accepting a referral fee from a title company for directing business to them

    Accepting referral fees or kickbacks from settlement service providers such as title companies violates RESPA Section 8's prohibition on unearned fees.

  7. An applicant's credit report shows multiple recent late payments on property taxes. Under Financial Assessment rules, a lender should consider:

    Answer: Evaluating the circumstances and potentially requiring a fully-funded LESA

    Financial Assessment requires lenders to evaluate the borrower's credit history in context; a pattern of property tax delinquency may result in a mandatory fully-funded LESA.