Reverse Mortgage Products & Loan Origination Flashcards

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

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.

A borrower selects a HECM with a fixed interest rate. Which disbursement option is available to them?

Answer: Single lump-sum disbursement only

Fixed-rate HECMs are only available with a single lump-sum disbursement at closing.

What happens to an unused HECM line of credit balance over time?

Answer: It grows at the same rate as the loan's interest rate plus MIP

The unused HECM line of credit grows at the current interest rate plus the 0.5% annual MIP rate.

Which proprietary reverse mortgage feature most commonly distinguishes it from a HECM?

Answer: It can exceed the FHA lending limit for high-value homes

Proprietary (jumbo) reverse mortgages are designed for homes exceeding the FHA lending limit, allowing larger loan amounts.

During HECM origination, when must the borrower complete HUD-approved counseling?

Answer: Before signing the loan application

HUD-approved counseling must occur before the borrower signs the loan application to ensure informed consent.

A HECM for Purchase allows a borrower to do what unique action compared to a standard HECM?

Answer: Purchase a new primary residence using reverse mortgage proceeds

HECM for Purchase enables seniors to buy a new primary home using reverse mortgage proceeds in a single transaction.

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

Answer: 0.50%

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