CRMP CRMP Loan Servicing and Post-Closing Requirements Questions and Answers 2 — Questions and Answers
Question 1: What document must a HECM servicer send annually to notify the borrower that the loan is still active?
- Annual Occupancy Certification (Correct answer)
- Loan Modification Agreement
- Annual Percentage Rate Disclosure
- Mortgage Statement of Account
Correct answer: Annual Occupancy Certification
Servicers must send an Annual Occupancy Certification to confirm the borrower still occupies the home as their primary residence.
Question 2: Under a HECM tenure payment plan, what happens to monthly payments if the borrower outlives the original loan term estimate?
- Payments stop automatically
- Payments continue for life as long as the borrower occupies the home (Correct answer)
- The servicer recalculates payments at a lower amount
- The borrower must reapply for additional funds
Correct answer: Payments continue for life as long as the borrower occupies the home
Tenure payments continue for the life of the loan as long as the borrower lives in and maintains the home as their primary residence.
Question 3: What is the primary purpose of a Life Expectancy Set-Aside (LESA) in HECM servicing?
- To fund life insurance premiums for the borrower
- To reserve funds to pay future property taxes and insurance (Correct answer)
- To cover closing costs over the loan's life
- To protect the lender against interest rate increases
Correct answer: To reserve funds to pay future property taxes and insurance
A LESA reserves a portion of the borrower's available equity to pay future property taxes and homeowner's insurance, preventing default.
Question 4: If a borrower wants to change their HECM payment plan from a line of credit to monthly tenure payments, what must they do?
- Refinance the existing HECM
- Submit a payment plan change request to the servicer (Correct answer)
- Obtain new FHA counseling
- Re-qualify based on current underwriting guidelines
Correct answer: Submit a payment plan change request to the servicer
Borrowers may request a payment plan change from their servicer without refinancing, subject to current availability of funds.
Question 5: What is the key difference between a full LESA and a partial LESA in HECM underwriting?
- A full LESA covers all property charges; a partial LESA covers only insurance
- A full LESA is funded entirely from loan proceeds; a partial LESA requires the borrower to contribute (Correct answer)
- A full LESA is mandatory; a partial LESA is optional
- A full LESA applies only to fixed-rate loans
Correct answer: A full LESA is funded entirely from loan proceeds; a partial LESA requires the borrower to contribute
A full LESA is funded entirely from loan proceeds when the borrower cannot demonstrate ability to pay charges; a partial LESA requires borrower contributions.
Question 6: Which entity is responsible for assigning a HECM to HUD when the loan balance reaches 98% of the Maximum Claim Amount?
- The borrower
- The original lender
- The loan servicer (Correct answer)
- The FHA counselor
Correct answer: The loan servicer
The loan servicer is responsible for assigning the HECM to HUD when the balance reaches 98% of the MCA to receive insurance claim payments.
CRMP CRMP Loan Servicing and Post-Closing Requirements Questions and Answers 2
What document must a HECM servicer send annually to notify the borrower that the loan is still active?