CRMP CRMP Loan Servicing and Post-Closing Requirements Questions and Answers 1 — Questions and Answers
Question 1: What happens to a HECM loan if the borrower permanently moves out of the property for more than 12 consecutive months?
- The loan becomes due and payable (Correct answer)
- The loan is automatically forgiven
- The interest stops accruing
- The borrower can transfer the loan to a new property
Correct answer: The loan becomes due and payable
A HECM loan becomes due and payable if the borrower permanently vacates the property for more than 12 consecutive months.
Question 2: Which of the following is a borrower's ongoing obligation under a HECM loan?
- Making monthly principal payments
- Paying property taxes and homeowner's insurance (Correct answer)
- Maintaining a minimum credit score of 620
- Notifying HUD of any income changes
Correct answer: Paying property taxes and homeowner's insurance
HECM borrowers must continue paying property taxes, homeowner's insurance, and maintain the property to avoid default.
Question 3: What is a HECM 'due and payable' event?
- When the loan balance exceeds the home value
- An event that triggers loan repayment, such as the borrower's death or sale of the home (Correct answer)
- When the borrower requests a lump sum disbursement
- A scheduled annual review of the loan balance
Correct answer: An event that triggers loan repayment, such as the borrower's death or sale of the home
A due and payable event triggers full repayment of a HECM, including the borrower's death, permanent move-out, or sale of the property.
Question 4: How long do eligible non-borrowing spouses have to remain in the home after the borrowing spouse's death under current HUD guidelines?
- 6 months
- 1 year
- For as long as they meet deferral period requirements (Correct answer)
- 5 years
Correct answer: For as long as they meet deferral period requirements
An eligible non-borrowing spouse may remain in the home indefinitely as long as they meet all HUD deferral period requirements.
Question 5: What is the maximum timeframe a borrower's estate has to repay or sell the home after a HECM becomes due and payable?
- 30 days
- 6 months, with possible extensions up to 12 months (Correct answer)
- 2 years
- No deadline exists
Correct answer: 6 months, with possible extensions up to 12 months
Heirs typically have 6 months to repay or sell, and may request up to two 90-day extensions for a maximum of 12 months.
Question 6: Which servicer action is required when a HECM borrower is delinquent on property charges?
- Immediate foreclosure filing
- Offering a repayment plan or LESA set-aside options (Correct answer)
- Automatic loan acceleration
- Reducing the borrower's available credit line
Correct answer: Offering a repayment plan or LESA set-aside options
Servicers must offer loss mitigation options, including repayment plans, before initiating foreclosure on property charge delinquencies.
CRMP CRMP Loan Servicing and Post-Closing Requirements Questions and Answers 1
What happens to a HECM loan if the borrower permanently moves out of the property for more than 12 consecutive months?