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
Under NRMLA's ethical guidelines, which advertising practice for reverse mortgages is specifically prohibited?
Answer: Using celebrity endorsements without disclosing they are paid spokespeople
NRMLA ethics and FTC rules require that paid endorsements be clearly disclosed; implying a celebrity personally uses or independently endorses the product without disclosure is deceptive.
A HECM borrower wants to add a new co-borrower after loan origination. What is the correct response?
Answer: Explain that co-borrowers cannot be added after origination; a new loan would be required
HECM program rules do not permit adding co-borrowers to an existing loan; the original loan would need to be refinanced with both parties as borrowers.
Which federal agency oversees the HUD-approved housing counseling agencies that provide mandatory HECM counseling?
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.
Under the Gramm-Leach-Bliley Act (GLBA), HECM lenders are required to:
Answer: Provide borrowers a privacy notice explaining how their personal financial information is shared
GLBA requires financial institutions, including HECM lenders, to provide customers with a privacy notice describing their information-sharing practices and opt-out rights.
If a HECM servicer discovers the borrower has vacated the property for more than 12 consecutive months, what must the servicer do?
Answer: Call the loan due and payable and begin the foreclosure process if the borrower does not cure
Under HUD guidelines, a borrower's failure to occupy the property as their principal residence for more than 12 consecutive months triggers a due-and-payable condition.
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:
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.
Which HECM program safeguard specifically requires that the counseling session address alternatives to a reverse mortgage?
Answer: The HUD Counseling Protocol (24 CFR Part 214)
HUD's Housing Counseling Program regulations at 24 CFR Part 214 require that HECM counseling cover alternatives to reverse mortgages, such as refinancing, home equity loans, or public benefit programs.