Certified Reverse Mortgage Professional (CRMP) Exam — Questions and Answers

Question 1: Which property type is generally NOT eligible for a HECM?

Cooperative (co-op) housing unit (Correct answer)
Single-family home
HUD-approved manufactured home on a permanent foundation
FHA-approved condominium unit

Correct answer: Cooperative (co-op) housing unit

Co-op units are not eligible for HECM because the borrower holds shares rather than real property, which does not meet FHA collateral requirements.

Question 2: Under the HECM for Purchase program, what is the primary source of funds the borrower must bring to closing?

Gift funds from family members only
A bridge loan secured against the new property
Personal funds from savings, retirement accounts, or sale of existing home (Correct answer)
A conventional mortgage combined with HECM proceeds

Correct answer: Personal funds from savings, retirement accounts, or sale of existing home

HECM for Purchase requires borrowers to contribute personal funds (down payment) from eligible sources such as savings, retirement accounts, or proceeds from the sale of a prior home.

Question 3: Which regulation requires a clear explanation of costs in reverse mortgages?

Regulation Z
Regulation B
Regulation C
Regulation X (Correct answer)

Correct answer: Regulation X

Regulation X implements the Real Estate Settlement Procedures Act (RESPA), which requires lenders to provide borrowers with timely and comprehensive disclosures about the costs associated with real estate transactions, including reverse mortgages. This regulation ensures transparency regarding settlement costs, escrow accounts, and other charges, helping borrowers understand the full financial implications of their loan.

Question 4: Which federal law primarily governs reverse mortgage disclosures?

Real Estate Settlement Procedures Act
Home Mortgage Disclosure Act
Truth in Lending Act (Correct answer)
Fair Credit Reporting Act

Correct answer: Truth in Lending Act

The Truth in Lending Act (TILA), implemented by Regulation Z, is a federal law designed to protect consumers in credit transactions by requiring clear disclosure of key loan terms and costs. For reverse mortgages, TILA mandates that lenders provide detailed information about the Annual Percentage Rate (APR), finance charges, and other essential terms, enabling borrowers to make informed decisions.

Question 5: Under the HECM program, what is the maximum loan-to-value ratio typically available to a 62-year-old borrower compared to an 80-year-old borrower?

PLF is determined solely by the property value, not age
The 80-year-old receives a higher PLF than the 62-year-old (Correct answer)
The 62-year-old receives a higher PLF than the 80-year-old
They receive the same PLF regardless of age

Correct answer: The 80-year-old receives a higher PLF than the 62-year-old

Older borrowers receive higher Principal Limit Factors (PLFs) because they have a shorter expected loan term, reducing lender risk.

Question 6: What type of insurance protects against property damage and is required as a condition of maintaining a HECM loan?

Hazard/homeowner's insurance (Correct answer)
Flood insurance only
Mortgage insurance premium (MIP)
Title insurance

Correct answer: Hazard/homeowner's insurance

Borrowers must maintain hazard or homeowner's insurance throughout the HECM loan term as a condition of loan compliance.

Question 7: During the Financial Assessment for a HECM loan, what is the primary purpose of evaluating the borrower's credit history?

To calculate the total loan proceeds the borrower is eligible for.
To assess the borrower's willingness and ability to meet future property charge obligations. (Correct answer)
To ensure the borrower meets a minimum required credit score.
To determine the interest rate the borrower will receive.

Correct answer: To assess the borrower's willingness and ability to meet future property charge obligations.

The Financial Assessment's review of credit history is not to qualify based on a score, but to evaluate the borrower's past performance in meeting their financial obligations. This helps the lender determine the borrower's likelihood of paying future mandatory obligations, such as property taxes and homeowner's insurance.

Question 8: What does 'informed consent' require of a CRMP before a borrower signs reverse mortgage documents?

The borrower's attorney must approve all documents
The borrower must complete a written test on reverse mortgages
The borrower must understand the loan terms, risks, and alternatives in a language they comprehend (Correct answer)
The borrower must sign a waiver acknowledging receipt of any document

Correct answer: The borrower must understand the loan terms, risks, and alternatives in a language they comprehend

Informed consent requires that borrowers genuinely understand what they are agreeing to, including risks and alternatives.

Question 9: If a borrower wants to change their HECM payment plan from a line of credit to monthly tenure payments, what must they do?

Re-qualify based on current underwriting guidelines
Submit a payment plan change request to the servicer (Correct answer)
Obtain new FHA counseling
Refinance the existing HECM

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 10: A borrower owns a home worth $900,000. What is the maximum property value used to calculate the HECM principal limit?

$822,375 (Correct answer)
$647,200
$726,200
$900,000

Correct answer: $822,375

HUD caps the property value used in HECM calculations at the national lending limit (FHA maximum claim amount), which is $822,375 for 2023.

Question 11: Which practice is considered unethical in CRMP conduct?

Providing HUD-approved counseling
Steering client to unsuitable products (Correct answer)
Offering multiple product options
Disclosing all costs upfront

Correct answer: Steering client to unsuitable products

Steering a client towards a product that does not meet their financial needs or is not in their best interest is a clear violation of ethical conduct for a CRMP. This practice prioritizes the lender's or loan officer's gain over the client's well-being. Ethical CRMPs are expected to offer suitable options and provide transparent information, allowing the borrower to make an informed choice.

Question 12: Under the Financial Assessment (FA) requirements, what is a lender primarily evaluating?

The borrower's credit score on a 300–850 scale
The borrower's debt-to-income ratio compared to conforming loan standards
The borrower's willingness and capacity to pay property charges such as taxes, insurance, and HOA fees (Correct answer)
Whether the borrower has sufficient retirement savings to last 20 years

Correct answer: The borrower's willingness and capacity to pay property charges such as taxes, insurance, and HOA fees

Financial Assessment evaluates a borrower's ability and willingness to meet ongoing property charge obligations to protect both the borrower and the FHA insurance fund.

Question 13: When a counselor explains the HECM line of credit growth feature, they should clarify that the unused portion grows at:

The same rate as the S&P 500 index, providing market-linked growth
The federal funds rate as set by the Federal Reserve each quarter
A fixed HUD-set rate of 2% per year regardless of market conditions
A rate equal to the current interest rate plus the mortgage insurance premium rate, not based on investment returns (Correct answer)

Correct answer: A rate equal to the current interest rate plus the mortgage insurance premium rate, not based on investment returns

The HECM line of credit grows at the same rate as the loan's accruing interest plus MIP, which is not an investment return but rather reflects increasing loan availability.

Question 14: Which of the following credit events during the financial assessment would typically require a satisfactory explanation letter but would NOT automatically disqualify a borrower?

Delinquent FHA-insured mortgage in the past 12 months
Unpaid federal tax lien
Active Chapter 7 bankruptcy
Medical-related derogatory credit (Correct answer)

Correct answer: Medical-related derogatory credit

HUD guidelines allow medical derogatory credit to be disregarded or explained away as an extenuating circumstance.

Question 15: What happens when the last surviving borrower dies or moves out?

The heirs can continue living there without conditions.
The loan becomes due and payable (Correct answer)
The government forgives the loan.
The loan continues as is.

Correct answer: The loan becomes due and payable

A reverse mortgage becomes due and payable when the last surviving borrower dies, sells the home, or permanently moves out. At this point, the loan must be repaid, typically by selling the home, or by the heirs refinancing the loan or paying off the balance. This ensures the lender recovers the loan amount, while any remaining equity goes to the heirs.

Question 16: Which property condition would automatically disqualify a home from HECM eligibility?

Structural deficiencies that pose a safety hazard and cannot be repaired (Correct answer)
Absence of a swimming pool
Outdated kitchen appliances
An older roof with minor wear

Correct answer: Structural deficiencies that pose a safety hazard and cannot be repaired

Structural deficiencies that pose safety or habitability hazards and cannot be repaired will disqualify a property from HECM eligibility.

Question 17: Which of the following property types is generally INELIGIBLE for an FHA-insured HECM?

A unit in an FHA-approved condominium project.
A manufactured home that meets FHA requirements.
A four-unit property where the borrower occupies one unit as their primary residence.
A cooperative unit (co-op). (Correct answer)

Correct answer: A cooperative unit (co-op).

FHA guidelines specify which property types are eligible for a HECM. Eligible properties include single-family homes, 2-4 unit properties with the borrower occupying one unit, and condominiums and manufactured homes that meet specific FHA/HUD approval standards. Cooperative units, where the resident owns shares in a corporation rather than the real property itself, are not eligible for FHA-insured HECMs.

Question 18: A borrower receives Social Security income of $1,800/month and part-time wages of $600/month. The part-time income has been received for only 14 months. How should the lender treat the part-time wages?

Include the full $600 since any income counts
Average the wages over 14 months and include that figure
Include only 50% of the wages
Exclude the wages because 24 months of history is required (Correct answer)

Correct answer: Exclude the wages because 24 months of history is required

Employment income typically requires a two-year history to be counted; 14 months does not meet that threshold.

Question 19: What is the role of the loan originator in reverse mortgages?

To purchase the home from the borrower.
To appraise the property.
To ensure repayment from the borrower.
To facilitate and manage the reverse mortgage loan application (Correct answer)

Correct answer: To facilitate and manage the reverse mortgage loan application

The loan originator plays a crucial role in facilitating and managing the reverse mortgage loan application process. They guide the borrower through each step, from initial education and gathering necessary documentation to submitting the application and coordinating the closing. Their expertise ensures compliance with regulations and a smooth experience for the borrower.

Question 20: What information must the counselor confirm the client understands before issuing the HECM counseling certificate?

The client comprehends how the loan works, its costs, alternatives, and their rights and obligations (Correct answer)
The client has selected a specific HECM disbursement method
The lender has verified the property meets FHA appraisal standards
The client's credit score meets minimum FHA requirements

Correct answer: The client comprehends how the loan works, its costs, alternatives, and their rights and obligations

Before issuing the certificate, the counselor must confirm the client has an adequate understanding of HECM mechanics, costs, implications, and available alternatives.

Question 21: A loan originator is working with a married couple. The husband is 70 years old, but his wife is 59. They want to proceed with a HECM. The wife will be classified as a Non-Borrowing Spouse (NBS). To ensure the wife can remain in the home after her husband passes away under the deferral period, what specific action must occur at origination?

A life insurance policy must be purchased in the husband's name for the benefit of the lender.
The wife must be specifically identified as an 'Eligible Non-Borrowing Spouse' in the loan documents. (Correct answer)
The loan amount must be reduced by a factor based on the wife's age.
The wife must sign the note and mortgage along with her husband.

Correct answer: The wife must be specifically identified as an 'Eligible Non-Borrowing Spouse' in the loan documents.

For a Non-Borrowing Spouse to be protected by the deferral period (allowing them to remain in the home after the borrower's death), they must be identified as an 'Eligible Non-Borrowing Spouse' in the HECM loan documents at the time of origination and closing. This status is contingent on meeting specific criteria, such as being legally married at closing and occupying the home as a principal residence.

Question 22: Which statement best reflects the ethical duty of competence for a CRMP?

Complete the CRMP exam once and rely on that knowledge indefinitely
Delegate complex questions to underwriters without disclosing limitations to borrowers
Continuously update knowledge through education as products, regulations, and markets evolve (Correct answer)
Limit practice to loan types covered during initial certification only

Correct answer: Continuously update knowledge through education as products, regulations, and markets evolve

Ongoing education is essential because reverse mortgage regulations, products, and best practices change over time.

Question 23: Which of the following property types is generally INELIGIBLE for an FHA-insured HECM?

A unit in a condominium project that is not on the FHA-approved list. (Correct answer)
A manufactured home that meets FHA guidelines.
A four-unit dwelling where the borrower occupies one of the units as their primary residence.
A single-family home that is the borrower's primary residence.

Correct answer: A unit in a condominium project that is not on the FHA-approved list.

For a condominium to be eligible for a HECM, the entire condominium project must be approved by the FHA, or the specific unit must qualify for Single-Unit Approval. A unit in a non-approved project is generally ineligible. Single-family homes, 1-4 unit properties with one unit owner-occupied, and FHA-compliant manufactured homes are all potentially eligible property types.

Question 24: What happens to the HECM line of credit growth feature during the loan servicing period?

The unused portion grows at the same rate as the loan interest rate plus MIP (Correct answer)
It is converted to a fixed rate after 5 years
It decreases as the loan balance grows
It remains fixed at the original available amount

Correct answer: The unused portion grows at the same rate as the loan interest rate plus MIP

The unused HECM line of credit grows at the same rate as the loan's interest rate plus the 0.5% annual MIP, increasing available funds over time.

Question 25: During a HECM counseling session, a client asks about the TALC (Total Annual Loan Cost) rate. The counselor should explain that the TALC rate:

Measures the borrower's equity growth rate over the life of the loan
Replaces the APR calculation for reverse mortgage disclosure purposes and shows total cost as a percentage over the expected loan term (Correct answer)
Is a fixed rate set by HUD that applies to all HECM loans equally
Represents only the interest cost of the loan, excluding mortgage insurance premiums

Correct answer: Replaces the APR calculation for reverse mortgage disclosure purposes and shows total cost as a percentage over the expected loan term

The TALC rate is a standardized disclosure metric for reverse mortgages that expresses total loan costs—including interest, MIP, and fees—as a single annualized percentage.

Question 26: Under the mandatory obligations exception to the 60% initial disbursement limit, a borrower may draw additional funds primarily to:

Pay off existing mortgage liens and satisfy other required closing costs (Correct answer)
Fund a simultaneous home purchase under HECM for Purchase
Pay for home repairs identified during the appraisal
Pre-pay future property taxes and homeowners insurance

Correct answer: Pay off existing mortgage liens and satisfy other required closing costs

Mandatory obligations include existing mortgage liens, closing costs, and other required payoffs; borrowers may draw whatever is needed to satisfy these plus up to 10% of the principal limit.

Question 27: Which federal agency oversees reverse mortgage advertising compliance?

FHA
FTC
CFPB (Correct answer)
HUD

Correct answer: CFPB

The Consumer Financial Protection Bureau (CFPB) is the primary federal agency responsible for consumer protection in the financial sector, including reverse mortgages. The CFPB oversees advertising compliance to ensure that marketing materials are not deceptive or misleading. Their role is to protect consumers from unfair, deceptive, or abusive practices in financial products and services.

Question 28: A counselor discovers during a HECM session that the borrower has an existing tax lien on the property. What is the most appropriate counseling action?

Discuss how the lien may affect loan proceeds and eligibility, and advise the borrower to address it (Correct answer)
Refuse to complete the session until the lien is resolved
Inform the borrower that they are ineligible and end the session
Notify the lender immediately without informing the borrower

Correct answer: Discuss how the lien may affect loan proceeds and eligibility, and advise the borrower to address it

Counselors should educate borrowers on how outstanding liens can reduce net proceeds and affect closing, and encourage the borrower to resolve the issue.

Question 29: Under HECM rules, which of the following would constitute a loan maturity event requiring repayment?

The home's value decreases by more than 25% from the appraised value at origination
The borrower turns 80 years old
The borrower fails to maintain the property as their primary residence for more than 12 consecutive months (Correct answer)
The borrower's income drops below the federal poverty level

Correct answer: The borrower fails to maintain the property as their primary residence for more than 12 consecutive months

A HECM becomes due and payable when the borrower no longer occupies the property as a primary residence for more than 12 consecutive months, among other maturity events.

Question 30: What is a Life Expectancy Set-Aside (LESA)?

A savings account for travel.
A retirement account.
An escrow-like fund to cover property charges (Correct answer)
A life insurance policy.

Correct answer: An escrow-like fund to cover property charges

A Life Expectancy Set-Aside (LESA) is a specific fund established from the reverse mortgage loan proceeds. Its primary purpose is to ensure that future property taxes and homeowner's insurance premiums are paid, especially for borrowers who may have difficulty meeting these obligations. It functions similarly to an escrow account, safeguarding the property and the lender's investment.

Question 31: A borrower is 68 years old and owns a home with a remaining mortgage balance. How does this affect HECM eligibility?

Existing mortgage balances automatically disqualify any HECM applicant
The borrower is ineligible because the home must be owned free and clear
The borrower may be eligible; the reverse mortgage proceeds must first pay off the existing mortgage (Correct answer)
The borrower must wait until age 70 to apply if a mortgage balance remains

Correct answer: The borrower may be eligible; the reverse mortgage proceeds must first pay off the existing mortgage

Existing mortgages do not disqualify a borrower; HECM proceeds are used to satisfy outstanding liens at closing.

Question 32: A homeowner's property is appraised at $900,000. The 2024 HECM loan limit (maximum claim amount) is $1,149,825. Which figure does the lender use to calculate the Principal Limit?

The average of the two figures ($1,024,912)
$1,149,825, because it is always the loan limit that applies
$900,000, because it is the lesser of the appraised value or the loan limit (Correct answer)
Whichever value is higher, to maximize borrower benefits

Correct answer: $900,000, because it is the lesser of the appraised value or the loan limit

The Principal Limit is based on the lesser of the appraised value or the HECM maximum claim amount.

Question 33: A client who is deaf requests in-person counseling with a sign language interpreter they will provide. The agency should:

Provide written materials only, as interpreters create liability issues
Decline and refer the client to telephone counseling as the only accessible option
Require the client to use the agency's own certified interpreter only
Accommodate the request, ensuring the interpreter does not have a conflict of interest (Correct answer)

Correct answer: Accommodate the request, ensuring the interpreter does not have a conflict of interest

Agencies must make reasonable accommodations for clients with disabilities, and a client-provided interpreter is acceptable provided there is no conflict of interest.

Question 34: What is the maximum number of units allowed in a property that is eligible for a HECM?

1 unit only
Up to 2 units
Up to 4 units regardless of occupancy
Up to 4 units, with borrower occupying one unit (Correct answer)

Correct answer: Up to 4 units, with borrower occupying one unit

HECM allows up to 4-unit properties as long as the borrower occupies one of the units as their principal residence.

Question 35: A loan originator receives an application from a prospective borrower who lives in a neighborhood primarily occupied by a racial minority group. The originator knows from experience that appraisals in this area often come in lower than expected. How should the originator ethically proceed in accordance with fair lending laws?

Evaluate the application based on the borrower's individual financial merits and the property's specific characteristics, without regard to neighborhood demographics. (Correct answer)
Inform the appraiser about the neighborhood's demographic composition to ensure they are aware of all factors.
Advise the applicant that their neighborhood makes the loan riskier and suggest they apply for a smaller loan amount.
Increase the origination fee to compensate for the perceived property risk.

Correct answer: Evaluate the application based on the borrower's individual financial merits and the property's specific characteristics, without regard to neighborhood demographics.

The Fair Housing Act and Equal Credit Opportunity Act prohibit discrimination in lending, including the practice of 'redlining' or 'reverse redlining', where lending decisions are negatively influenced by the racial or ethnic composition of a neighborhood. The only ethical and legal course of action is to process the application based on the applicant's creditworthiness and the specific property's appraised value, completely disregarding neighborhood demographics.

Question 36: What is a 'fully-funded LESA' and when is it required?

An escrow account required whenever the loan-to-value ratio exceeds 60%
A set-aside funded entirely by the lender to cover loan servicing fees
A set-aside that covers the full life expectancy of projected property charges, required when financial assessment reveals severe credit issues (Correct answer)
A reserve account the borrower deposits into monthly after closing

Correct answer: A set-aside that covers the full life expectancy of projected property charges, required when financial assessment reveals severe credit issues

A fully-funded LESA is required when Financial Assessment indicates a borrower has both insufficient residual income and unsatisfactory credit history, covering property charges for the borrower's entire projected lifespan.

Question 37: When conducting telephone counseling for a HECM applicant, the counselor should:

Waive the written summary requirement since documents cannot be exchanged remotely
Complete the session faster since telephone counseling has shorter time requirements
Require the borrower to have a lender representative on the call
Send required materials in advance and confirm the client received and reviewed them before the session (Correct answer)

Correct answer: Send required materials in advance and confirm the client received and reviewed them before the session

For telephone counseling, the counselor must ensure the client has received and had time to review required materials before the session begins.

Question 38: Which agency insures HECM reverse mortgages?

Freddie Mac
Federal Reserve
Consumer Financial Protection Bureau
Federal Housing Administration (FHA) (Correct answer)

Correct answer: Federal Housing Administration (FHA)

The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), insures the majority of reverse mortgages, specifically Home Equity Conversion Mortgages (HECMs). This FHA insurance protects both the lender and the borrower, guaranteeing that the borrower will receive their payments and that the lender will be repaid according to the loan terms.

Question 39: A 75-year-old individual is applying for a HECM on their primary residence. They also own a vacation cabin in another state. How is the vacation cabin treated during the eligibility assessment?

The equity in the vacation cabin can be used to increase the HECM loan amount.
The client must sell the vacation cabin to be eligible for a HECM.
The property taxes and insurance on the vacation cabin are included in the financial assessment to determine the ability to pay obligations. (Correct answer)
The vacation cabin is irrelevant to the HECM application.

Correct answer: The property taxes and insurance on the vacation cabin are included in the financial assessment to determine the ability to pay obligations.

During the financial assessment, the lender must evaluate the borrower's overall financial capacity to meet all their obligations. This includes the ongoing costs for other properties they own, such as property taxes and insurance on a second home, as these are part of the borrower's total monthly liabilities and affect their residual income.

Question 40: A HECM borrower passes away and leaves the home to an adult child who does not wish to sell. What is the maximum amount the heir must pay to keep the home?

95% of the current appraised value (Correct answer)
The original loan amount plus 10% penalty
The full appraised value of the property
The outstanding loan balance including accrued interest

Correct answer: 95% of the current appraised value

Non-borrowing heirs may satisfy a HECM by paying 95% of the current appraised value, even if the loan balance exceeds the home's worth.

Question 41: Which of the following best demonstrates a CRMP's commitment to the ethical principle of professional competency?

Maintaining a professional and accessible office space.
Attending an industry conference to learn about recent changes to FHA's Financial Assessment guidelines. (Correct answer)
Sponsoring a table at a local senior health fair.
Matching a competitor's interest rate to win a client's business.

Correct answer: Attending an industry conference to learn about recent changes to FHA's Financial Assessment guidelines.

The NRMLA Code of Ethics requires members to provide services in a competent manner, which includes acquiring and maintaining the necessary knowledge and skills. The reverse mortgage industry is subject to frequent and complex rule changes. Actively pursuing continuing education on critical topics like the Financial Assessment demonstrates a commitment to providing accurate and competent advice, which is the core of this ethical principle.

Question 42: During the Financial Assessment for a HECM loan, what is the consequence if a borrower is found to have delinquent federal debt?

A Life Expectancy Set-Aside (LESA) will be established to pay the debt.
The loan amount will be reduced by the amount of the federal debt.
The borrower must pay a higher mortgage insurance premium.
The borrower is automatically disqualified from obtaining a HECM. (Correct answer)

Correct answer: The borrower is automatically disqualified from obtaining a HECM.

A key eligibility requirement for a HECM is that the borrower must not be delinquent on any federal debt. This includes things like unpaid federal income taxes or defaulted federal student loans. Delinquency on federal debt will render the applicant ineligible for the FHA-insured loan program.

Question 43: Which of the following best describes the 'primary residence' requirement for HECM eligibility?

The borrower must have lived in the home for at least 10 consecutive years
The home must be in the same state where the borrower was born
The borrower must occupy the property as their principal residence for at least 6 months per year (Correct answer)
The borrower may occupy a secondary vacation property as the qualifying residence

Correct answer: The borrower must occupy the property as their principal residence for at least 6 months per year

HUD requires HECM borrowers to occupy the property as their principal residence, generally defined as living there more than half the year.

Question 44: During HECM counseling, the counselor is required to provide the borrower with a disclosure about the total annual loan cost (TALC). The TALC disclosure helps the borrower understand:

The exact interest rate locked in at closing
The maximum principal limit available
The projected annual average cost of the loan expressed as a rate (Correct answer)
The monthly servicing fee charged by the lender

Correct answer: The projected annual average cost of the loan expressed as a rate

The TALC expresses the overall projected cost of a reverse mortgage as an annualized rate, similar to an APR.

Question 45: Why is unbiased communication important in counseling?

To encourage clients to take loans.
To ensure informed decision-making (Correct answer)
To complete legal paperwork.
To fulfill lender requirements.

Correct answer: To ensure informed decision-making

Unbiased communication is critical in reverse mortgage counseling because it allows borrowers to receive objective information without pressure or persuasion. Counselors must present all facts, risks, benefits, and alternatives fairly, enabling seniors to make a truly informed decision that is in their best interest, rather than being swayed by a particular lender or product.

Question 46: What document must a HECM servicer send annually to notify the borrower that the loan is still active?

Annual Percentage Rate Disclosure
Loan Modification Agreement
Annual Occupancy Certification (Correct answer)
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 47: When must a CRMP act as a mandatory reporter?

If the family disagrees
If abuse is suspected (Correct answer)
Only if the client asks
Never mandatory

Correct answer: If abuse is suspected

CRMPs, like many professionals working with vulnerable populations, often have a legal and ethical obligation to act as mandatory reporters. This means they are required by law to report any suspected elder abuse, neglect, or exploitation to the appropriate authorities. This responsibility is paramount to protecting the safety and well-being of senior clients.

Question 48: A prospective HECM borrower is having trouble finding a HUD-approved counselor with immediate availability. To help the client, the loan originator offers to call a specific counseling agency where they have a good relationship and schedule the appointment on the borrower's behalf. This action is:

Permitted as good customer service to help an elderly client.
Prohibited, unless the loan originator discloses the action in the loan file.
Permitted only if the originator provides the client with a list of at least three other agencies.
Prohibited, as it could be construed as steering and interferes with the counselor's independence. (Correct answer)

Correct answer: Prohibited, as it could be construed as steering and interferes with the counselor's independence.

HUD and NRMLA guidelines strictly prohibit lenders or originators from steering clients to a specific counselor or scheduling appointments for them. This rule is crucial for maintaining the required independence of the counseling session, which is a key consumer protection. The borrower must initiate contact with the counselor of their choice without influence from the lender.

Question 49: What protection does the HECM non-recourse feature provide to the borrower's estate?

The estate is never responsible for any loan repayment
Heirs are given 10 years to repay the loan
The FHA pays off the full loan balance regardless of home value
The estate owes no more than the home's appraised value at time of sale (Correct answer)

Correct answer: The estate owes no more than the home's appraised value at time of sale

The non-recourse feature ensures the estate never owes more than the home's value at the time of repayment, with FHA insurance covering any shortfall.

Question 50: What is the primary purpose of reverse mortgage counseling?

To appraise the borrower's assets.
To complete the loan application.
To educate the borrower on the loan's implications (Correct answer)
To verify property value.

Correct answer: To educate the borrower on the loan's implications

The primary purpose of reverse mortgage counseling is to ensure that prospective borrowers fully understand the complexities, benefits, risks, and responsibilities associated with a reverse mortgage. Counselors provide unbiased information about loan terms, costs, alternatives, and ongoing obligations, empowering borrowers to make an informed decision that aligns with their financial goals.

Question 51: Which scenario would MOST likely require a counselor to pause a session and follow up at a later date?

The client requests that a family member join the session by phone
The client asks detailed questions about loan disbursement options
The client becomes emotionally distressed and is unable to focus on the information being presented (Correct answer)
The client needs an interpreter for part of the discussion

Correct answer: The client becomes emotionally distressed and is unable to focus on the information being presented

If a client is too distressed to absorb the required information, the counselor should reschedule to ensure meaningful understanding, which is the goal of counseling.

Question 52: What is the primary role of the FHA roster appraisal in the HECM origination process?

To establish the loan interest rate
To determine the Maximum Claim Amount, which caps the insurable loan value (Correct answer)
To verify the borrower's income
To certify the title is clear of liens

Correct answer: To determine the Maximum Claim Amount, which caps the insurable loan value

The FHA appraisal establishes the property value that determines the Maximum Claim Amount, which is the cap on the FHA-insured loan value.

Question 53: Which environmental hazard found during a HECM appraisal typically requires remediation before loan approval?

Lead-based paint on interior walls only
Defective lead-based paint with chipping or peeling (Correct answer)
Asbestos encapsulated in good condition
Presence of any building materials predating 1978

Correct answer: Defective lead-based paint with chipping or peeling

Defective lead-based paint that is chipping or peeling must be remediated before HECM loan approval due to the health hazard it poses.

Question 54: A couple, ages 72 and 68, own a four-unit property and live in one of the units as their primary residence. They are interested in a HECM. Which statement accurately describes the eligibility of their property?

The property is eligible only if all four units are occupied by family members.
The property is eligible because it is a 2-4 unit dwelling with one unit occupied by the borrower as their principal residence. (Correct answer)
The property is ineligible because HECMs are only for single-family homes.
The property is ineligible because it generates rental income.

Correct answer: The property is eligible because it is a 2-4 unit dwelling with one unit occupied by the borrower as their principal residence.

FHA guidelines permit HECMs on 1-4 unit properties, provided that one of the units is occupied by the borrower as their principal residence. The income from the other units does not disqualify the property.

Question 55: How long do eligible non-borrowing spouses have to remain in the home after the borrowing spouse's death under current HUD guidelines?

5 years
For as long as they meet deferral period requirements (Correct answer)
1 year
6 months

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 56: Under HUD guidelines, who is responsible for selecting the HECM appraiser?

The lender orders the appraisal through an approved FHA roster appraiser (Correct answer)
The HUD field office assigns the appraiser
The borrower selects their preferred appraiser
The real estate agent recommends the appraiser

Correct answer: The lender orders the appraisal through an approved FHA roster appraiser

The lender must order the appraisal from an appraiser on the FHA Appraiser Roster, in compliance with appraiser independence requirements.

Question 57: What is the key difference between a full LESA and a partial LESA in HECM underwriting?

A full LESA is mandatory; a partial LESA is optional
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 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 58: Which type of property is explicitly ineligible for a HECM loan regardless of condition or borrower qualifications?

A property in a flood zone with required flood insurance
A single-family home with a detached garage
A cooperative (co-op) unit (Correct answer)
A property with an assumable first mortgage

Correct answer: A cooperative (co-op) unit

Cooperative (co-op) units are explicitly ineligible for HECMs because borrowers own shares in a corporation rather than having direct property ownership.

Question 59: Which citizenship or residency status makes a borrower ineligible for a HECM under FHA guidelines?

Permanent resident alien with a valid green card
Naturalized US citizen who was born abroad
Undocumented non-citizen without lawful immigration status (Correct answer)
Non-permanent resident alien who is lawfully present in the US

Correct answer: Undocumented non-citizen without lawful immigration status

FHA requires HECM borrowers to be US citizens or lawfully present non-citizens; undocumented individuals do not meet this requirement.

Question 60: A 65-year-old borrower is interested in a HECM for Purchase to buy a new primary residence. They are selling their current home and will have significant cash proceeds. What is a key feature of the HECM for Purchase program they should understand?

The HECM for Purchase can only be used to buy a single-family residence and not a condominium.
The loan requires monthly principal and interest payments, but only after the first five years.
The program requires no down payment if the borrower has sufficient equity in their previous home.
The borrower must make a significant down payment using their own funds, with the HECM financing the remainder. (Correct answer)

Correct answer: The borrower must make a significant down payment using their own funds, with the HECM financing the remainder.

The HECM for Purchase program allows seniors to buy a new home and get a reverse mortgage in a single transaction. A key requirement is that the borrower must contribute a significant down payment from their own funds (often from the sale of a previous home). The HECM loan then finances the remaining portion of the purchase price.

Question 61: Which of the following topics is REQUIRED to be covered in every HUD-approved HECM counseling session?

The lender's specific loan fees and rate structure
The client's credit score and debt-to-income ratio
The client's estate planning goals and will provisions
Options other than a reverse mortgage, such as selling or refinancing (Correct answer)

Correct answer: Options other than a reverse mortgage, such as selling or refinancing

Counselors are required to discuss alternatives to a HECM, including selling, downsizing, home equity loans, and public benefit programs, so borrowers consider all options.

Question 62: What document must be given during reverse mortgage counseling?

Annual percentage yield
Credit Risk Score Report
Truth in Savings Notice
TALC Disclosure (Correct answer)

Correct answer: TALC Disclosure

During reverse mortgage counseling, the counselor must provide the borrower with the Total Annual Loan Cost (TALC) Disclosure. This document is crucial as it illustrates the projected total cost of the reverse mortgage over various time horizons, expressed as a single annual percentage rate. It helps borrowers understand the long-term financial implications of the loan.

Question 63: During HECM counseling, what must the counselor provide to each borrower?

Loan pricing from at least three lenders
A guarantee of loan approval
A certificate of counseling completion and information on alternatives (Correct answer)
A HUD-approved list of other reverse mortgage products only

Correct answer: A certificate of counseling completion and information on alternatives

Counselors must issue a counseling completion certificate and discuss alternatives such as other home equity options or downsizing.

Question 64: A lender refers a client to a specific counseling agency. Under HUD rules, this arrangement:

Requires HUD approval on a case-by-case basis
Is permitted if the lender discloses the referral relationship in writing
Is allowed only if the counseling agency is nonprofit
Is prohibited because counseling must be independent of the lender (Correct answer)

Correct answer: Is prohibited because counseling must be independent of the lender

HUD prohibits lenders from steering borrowers to specific counselors or agencies to preserve the independence of the counseling process.

Question 65: A borrower selects a HECM adjustable-rate line of credit and makes no draws for several years. What happens to the unused portion of the line of credit over time?

It grows at the same rate as the loan's interest rate plus the annual MIP rate (Correct answer)
It remains static until the borrower makes a draw
It decreases as accrued interest reduces available funds
It is forfeited if unused for more than 5 years

Correct answer: It grows at the same rate as the loan's interest rate plus the annual MIP rate

The unused portion of a HECM line of credit grows at the loan's interest rate plus the annual MIP rate, increasing the borrower's available funds over time.

Question 66: Which statement best describes the CRMP's duty when a client's cognitive ability appears diminished?

Require a physician's note before any further discussion
Proceed if the borrower can sign their name
Transfer the file to a non-licensed staff member
Pause the process and consult with appropriate parties such as a trusted family member or legal counsel (Correct answer)

Correct answer: Pause the process and consult with appropriate parties such as a trusted family member or legal counsel

A CRMP must protect vulnerable borrowers and should pause, involve trusted parties, and potentially suggest capacity evaluation before proceeding.

Question 67: What should be done if a borrower's capacity is in doubt?

Ignore and proceed
Postpone counseling
Ask a family member to sign
Refer for mental competency assessment (Correct answer)

Correct answer: Refer for mental competency assessment

If a CRMP has doubts about a borrower's mental capacity to understand the complex terms of a reverse mortgage, it is an ethical and responsible practice to refer them for a mental competency assessment. This ensures the borrower can make an informed decision and protects them from potentially entering into a contract they don't fully comprehend. Proceeding without addressing these doubts would be unethical.

Question 68: Which income sources are considered in a reverse mortgage assessment?

Pension and Social Security benefits (Correct answer)
Rental income.
Gift cards.
Lottery winnings.

Correct answer: Pension and Social Security benefits

In a reverse mortgage financial assessment, lenders evaluate a borrower's stable and reliable income sources to ensure they can meet ongoing property obligations. Pension and Social Security benefits are considered consistent and predictable income streams for seniors. These are key factors in determining financial capacity, unlike speculative or one-time income sources.

Question 69: If a HECM borrower has an outstanding federal tax lien on the property, what must typically happen before closing?

The lien is automatically subordinated to the HECM
The lien is ignored if the amount is under $10,000
The lien must be satisfied or a payment plan approved by the IRS must be in place (Correct answer)
The property must be re-titled to remove the lien

Correct answer: The lien must be satisfied or a payment plan approved by the IRS must be in place

Federal tax liens must be paid off or a subordination/payment agreement must be in place because the HECM must hold a first-lien position.

Question 70: A borrower tells their CRMP they do not want their non-borrowing spouse included in the counseling session. What should the CRMP advise?

Encourage the non-borrowing spouse to attend because their rights under the loan are significant (Correct answer)
Respect the borrower's preference and exclude the spouse
Require the spouse to attend or decline the application
Have the spouse sign a waiver instead of attending

Correct answer: Encourage the non-borrowing spouse to attend because their rights under the loan are significant

Non-borrowing spouses have important rights and protections under HECM rules, so their attendance at counseling is strongly encouraged.

Question 71: If a borrower's non-borrowing spouse is present during HECM counseling, what is the counselor's responsibility regarding that spouse?

Exclude the non-borrowing spouse from all counseling discussions
Include the non-borrowing spouse in counseling and explain their rights and risks (Correct answer)
Obtain separate written consent from the non-borrowing spouse before discussing anything
Advise the non-borrowing spouse to seek independent legal counsel and end the session

Correct answer: Include the non-borrowing spouse in counseling and explain their rights and risks

HUD encourages including non-borrowing spouses in counseling so they fully understand how the loan affects them, including deferral period rights.

Question 72: An elderly client is applying for a reverse mortgage. Their adult child, who holds power of attorney, is heavily involved and pressures the CRMP to expedite the process and disburse funds directly into a joint account they share with the parent. What ethical principle from the CRMP Code of Ethics is most at risk in this scenario?

Integrity, by avoiding conduct that could involve deceit or misrepresentation and ensuring the transaction is fair to the client. (Correct answer)
Competence, as the CRMP must be knowledgeable about loan processing timelines.
Confidentiality, by protecting the client's personal financial information.
Fairness, by ensuring all clients are treated equally without bias.

Correct answer: Integrity, by avoiding conduct that could involve deceit or misrepresentation and ensuring the transaction is fair to the client.

The core issue is ensuring the transaction is free from undue influence and serves the best interest of the borrower. The CRMP Code of Ethics emphasizes integrity, which includes an obligation to avoid misrepresentation, protect the client's interests, and ensure fairness. Rushing the process under pressure and disbursing funds without ensuring the elderly client fully understands and consents could facilitate elder financial abuse, which is a severe breach of integrity.

Question 73: What document must accompany a HECM appraisal when the property has been sold within the previous 12 months at a price significantly below appraised value?

A letter from the borrower explaining the price difference
An FHA Field Review appraisal or desk review (Correct answer)
Proof of property improvements made since the prior sale
A comparative market analysis from a local real estate agent

Correct answer: An FHA Field Review appraisal or desk review

HUD may require a field review or desk review appraisal when prior sale prices differ significantly from the current appraisal to validate the valuation.

Question 74: A HECM loan applicant is reviewing their initial disclosures. Which specific document is designed to show them the projected total cost of the loan as an annual rate over several different time horizons and at various home appreciation rates?

The Closing Disclosure (CD)
The Loan Estimate (LE)
The Amortization Schedule
The Total Annual Loan Cost (TALC) Disclosure (Correct answer)

Correct answer: The Total Annual Loan Cost (TALC) Disclosure

The Total Annual Loan Cost (TALC) Disclosure is a HECM-specific document required by Regulation Z. It is uniquely designed to illustrate the total cost of the loan, including all fees and interest, as an annual rate. It projects this cost over different time periods (e.g., 2 years, the borrower's life expectancy) and assumes different rates of property value appreciation (0%, 4%, 8%) to give the borrower a comprehensive long-term cost perspective.

Question 75: During client assessment, a CRMP discovers the borrower receives SSI benefits. What concern should the professional raise?

SSI income cannot be counted as stable income in the financial assessment
HECM proceeds are always counted as income by the SSI program
HECM disbursements could affect SSI means-tested benefit eligibility if funds are not spent within the same month (Correct answer)
SSI recipients are categorically excluded from HECM programs

Correct answer: HECM disbursements could affect SSI means-tested benefit eligibility if funds are not spent within the same month

SSI is means-tested, so unspent HECM funds held in a bank account beyond the month of receipt can be counted as a resource and may reduce or eliminate SSI benefits.

Question 76: A CRMP is approached by a real estate agent offering a commission split for every reverse mortgage borrower referred. This arrangement is:

Only prohibited if the borrower is under age 70
Standard practice in the mortgage industry
A potential RESPA violation and ethical breach if not properly structured (Correct answer)
Permissible if both parties disclose it verbally

Correct answer: A potential RESPA violation and ethical breach if not properly structured

RESPA prohibits kickbacks and unearned fee-splitting arrangements that are not for legitimate services rendered.

Question 77: Which of the following is a requirement for maintaining the Certified Reverse Mortgage Professional (CRMP) designation in good standing?

Attending the NRMLA annual conference every year.
Completing 8 hours of approved continuing education annually. (Correct answer)
Publishing an article on a reverse mortgage topic in an industry journal.
Closing a minimum of 10 reverse mortgage loans per year.

Correct answer: Completing 8 hours of approved continuing education annually.

To maintain the CRMP designation, professionals must adhere to ongoing educational standards due to the evolving nature of the industry. This includes submitting eight hours of approved continuing education credits each year. Additionally, they must retake an ethics course and submit to a new background check every three years. The other options are not mandatory requirements for recertification.

Question 78: What is the minimum age requirement to qualify for a reverse mortgage?

65
62 (Correct answer)
55
60

Correct answer: 62

To qualify for a Home Equity Conversion Mortgage (HECM), the most widely available type of reverse mortgage, all borrowers listed on the property's title must be at least 62 years old. This age requirement is a fundamental eligibility criterion established by the Federal Housing Administration (FHA) to ensure the product serves its intended demographic of senior homeowners.

Question 79: A 62-year-old applicant is the sole owner of a home but their 55-year-old spouse also lives there. What is the correct course of action?

The 55-year-old must be removed from the title before application
The 55-year-old may be listed as a Non-Borrowing Spouse (NBS) with protections under current HUD guidelines (Correct answer)
Both spouses must be at least 62, so the application is automatically denied
The couple must wait until the younger spouse turns 62 before applying

Correct answer: The 55-year-old may be listed as a Non-Borrowing Spouse (NBS) with protections under current HUD guidelines

HUD's Non-Borrowing Spouse (NBS) policy allows eligible NBS protections for spouses under 62, permitting them to remain in the home after the borrower's death.

Question 80: A Fully-Funded LESA differs from a Partially-Funded LESA in that the Fully-Funded LESA:

Is only available for borrowers under age 72
Is funded entirely by loan proceeds upfront to pay all future property charges (Correct answer)
Requires the borrower to contribute monthly deposits
Covers only insurance premiums, not taxes

Correct answer: Is funded entirely by loan proceeds upfront to pay all future property charges

A Fully-Funded LESA is established when both credit and residual income are unsatisfactory, funding all projected property charges from loan proceeds.

Question 81: What is the purpose of the expected average mortgage interest rate (AEI/Expected Rate) in HECM calculations?

It is used exclusively for adjustable-rate HECMs
It is used to calculate the principal limit at origination (Correct answer)
It determines the monthly service fee set-aside amount
It sets the interest rate charged to the borrower each month

Correct answer: It is used to calculate the principal limit at origination

The expected (average) interest rate is used in HUD's principal limit factor tables to determine how much a borrower can receive at origination.

Question 82: What ethical responsibility does a CRMP have when identifying potential elder abuse?

Report to the appropriate agency (Correct answer)
Inform a family member only
Delay until final documents are signed
Ignore and continue processing the application

Correct answer: Report to the appropriate agency

A Certified Reverse Mortgage Professional (CRMP) has a strong ethical and often legal obligation to protect vulnerable seniors. If a CRMP suspects elder abuse, whether financial, physical, or emotional, they must report it to the appropriate protective services agency. This action prioritizes the borrower's safety and well-being above all else, aligning with professional ethics.

Question 83: A prospective HECM borrower completed the mandatory counseling session with a HUD-approved counselor. Which of the following statements about this counseling is correct?

The counseling session is designed to provide impartial education about the loan's features, costs, and obligations. (Correct answer)
Counseling is optional if the borrower has a strong financial background and a high credit score.
The lender selects the counseling agency and schedules the appointment for the borrower.
The counselor is responsible for approving the HECM loan application.

Correct answer: The counseling session is designed to provide impartial education about the loan's features, costs, and obligations.

HUD requires all prospective HECM borrowers to complete a counseling session with an independent, HUD-approved counselor. The purpose of this mandatory session is to provide unbiased education, ensuring the borrower fully understands the loan's terms, financial implications, and their responsibilities, such as paying property taxes and insurance. The counselor does not approve or deny the loan, and the borrower must be the one to choose the agency and schedule the appointment to maintain impartiality.

Question 84: When assessing a married couple for a HECM, one spouse is 72 and the other is 59. How does this affect eligibility?

Only the 72-year-old can be on the loan; the 59-year-old is an eligible non-borrowing spouse (Correct answer)
The younger spouse's age is averaged with the older to determine the principal limit
Both must be at least 62 to qualify, so the couple is ineligible
The 59-year-old must be removed from the title before closing

Correct answer: Only the 72-year-old can be on the loan; the 59-year-old is an eligible non-borrowing spouse

The spouse under 62 cannot be a borrower but may qualify as an eligible non-borrowing spouse with specific protections if properly disclosed.

Question 85: Which financial obligation must a reverse mortgage borrower continue to meet?

Property taxes and homeowner's insurance (Correct answer)
Student loan repayments.
Utility bills.
Monthly mortgage payments.

Correct answer: Property taxes and homeowner's insurance

Unlike traditional mortgages, reverse mortgage borrowers do not make monthly principal and interest payments. However, they are still responsible for maintaining the property and paying ongoing property charges. This includes property taxes, homeowner's insurance, and any homeowner's association (HOA) fees, which are essential to prevent foreclosure and protect the lender's interest in the home.

Question 86: Which document formally initiates the HECM application process and must be signed by the borrower?

Initial Counseling Certificate
Notice of Right to Cancel
Uniform Residential Loan Application (1003) (Correct answer)
Loan Estimate

Correct answer: Uniform Residential Loan Application (1003)

The Uniform Residential Loan Application (Form 1003) is the standard document that formally initiates any mortgage application, including HECMs.

Question 87: At what point must a HECM borrower complete HUD-approved counseling?

Within 90 days after receiving the loan comparison worksheet
Before the loan application is submitted to the lender (Correct answer)
After the loan closes but within 30 days of disbursement
Only if the lender's Financial Assessment reveals credit problems

Correct answer: Before the loan application is submitted to the lender

HUD mandates that borrowers receive independent counseling from a HUD-approved agency before any loan application is submitted.

Question 88: Under NRMLA's Code of Ethics, how should a CRMP handle a situation where a competitor is making misleading claims about their own products?

Ignore it as industry competition is expected
Match the competitor's marketing to stay competitive
Directly confront the competitor's clients with the truth
Report the misconduct to NRMLA and appropriate regulatory bodies (Correct answer)

Correct answer: Report the misconduct to NRMLA and appropriate regulatory bodies

NRMLA members are expected to report unethical conduct that harms consumers or the industry's reputation.

Question 89: The HECM Financial Assessment evaluates two key principles regarding the borrower's ability to meet their financial obligations: willingness and capacity. A borrower's history of making timely mortgage and installment loan payments over the past seven years is a primary indicator of which principle?

Capacity
Collateral
Liquidity
Willingness (Correct answer)

Correct answer: Willingness

'Willingness' refers to the borrower's intent and commitment to paying obligations, which is demonstrated by their past payment behavior as reflected on a credit report. 'Capacity' refers to their financial ability to make payments, which is assessed through an analysis of their income and assets.

Question 90: Who oversees reverse mortgage counselor approval?

Consumer credit bureaus.
FBI.
HUD (Correct answer)
Federal Reserve.

Correct answer: HUD

The Department of Housing and Urban Development (HUD) is responsible for approving and overseeing reverse mortgage counselors. HUD sets the standards for counselor training, certification, and the content of the counseling sessions. This oversight ensures that counselors are qualified and provide consistent, high-quality, unbiased information to prospective borrowers.

Question 91: A married couple is applying for a HECM. The husband is 72 and will be the sole borrower. His wife is 60 and will be a Non-Borrowing Spouse (NBS). To ensure the loan is FHA-insurable and the NBS protections are in place, what is the counseling requirement for the wife?

She must attend the counseling session. (Correct answer)
She is strongly encouraged, but not required, to attend the counseling session.
She can sign a waiver to bypass the counseling requirement.
She only needs to attend if she is also a co-owner of the property.

Correct answer: She must attend the counseling session.

For a HECM to be FHA-insurable where a Non-Borrowing Spouse exists, HUD requires the NBS to receive counseling and sign the counseling certificate. This ensures the NBS fully understands their rights, the conditions of the deferral period that may allow them to remain in the home after the borrower's death, and their responsibilities under the loan terms.

Question 92: What must occur before a condominium unit can serve as collateral for a HECM loan?

The condo association must approve the loan
The condo must have been built after 1990
The condo project must be on the FHA-approved condominium list (Correct answer)
The borrower must own at least 51% of the condo complex

Correct answer: The condo project must be on the FHA-approved condominium list

The condominium project must be on HUD's FHA-approved condominium list, or undergo spot approval, before a HECM can be issued on any unit.

Question 93: Under HUD's initial disbursement limit rule, what is the maximum percentage of the available principal limit a borrower may typically draw during the first 12 months?

75%
100%
50%
60% (Correct answer)

Correct answer: 60%

HUD regulations limit borrowers to drawing no more than 60% of their available principal limit during the first 12 months, or mandatory obligations plus 10%, whichever is greater.

Question 94: During the Financial Assessment, an underwriter determines that a borrower may struggle to pay their future property taxes and homeowners insurance. To mitigate this risk, the underwriter requires a portion of the HECM proceeds to be set aside to cover these future charges. What is this set-aside called?

Tax and Insurance Impound Fund
Life Expectancy Set-Aside (LESA) (Correct answer)
Borrower's Future Obligation Fund
Property Charge Escrow Account

Correct answer: Life Expectancy Set-Aside (LESA)

A Life Expectancy Set-Aside (LESA) is a requirement established during the Financial Assessment where a portion of the loan proceeds is reserved to pay for future property charges, such as taxes and insurance. This is done to reduce the risk of default when a borrower may have limited income or a poor history of paying these charges on time.

Question 95: Which scenario would cause a borrower to FAIL the residency requirement for a HECM?

Spending 7 months per year at the mortgaged property (Correct answer)
Renting a room in the home to a family member
Temporarily residing in a rehabilitation facility for 4 months
Vacationing abroad for 2 months each year

Correct answer: Spending 7 months per year at the mortgaged property

Borrowers must occupy the property as their primary residence, meaning they must live there the majority of the year; spending only 7 months could jeopardize that status depending on circumstances.

Question 96: A Certified Reverse Mortgage Professional (CRMP) is approached by a client who is insistent on using the proceeds of their HECM loan to purchase a specific annuity product recommended by their financial advisor. The CRMP has concerns that this might not be in the client's best interest. According to the NRMLA Code of Ethics, what is the CRMP's primary responsibility?

To advise the consumer to seek independent legal, tax, or investment counsel regarding the annuity purchase. (Correct answer)
To refuse to originate the loan unless the client agrees not to purchase the annuity.
To report the financial advisor to the appropriate regulatory body for providing potentially unsuitable advice.
To process the loan as requested, as the client has already received outside financial advice.

Correct answer: To advise the consumer to seek independent legal, tax, or investment counsel regarding the annuity purchase.

The NRMLA Code of Ethics, specifically Rule 402, requires members to advise consumers to seek legal, tax, and investment counsel when it appears to be in their best interest. While a CRMP should not provide financial advice they aren't licensed to give, they have an ethical duty to recommend that the client get impartial, expert advice on significant financial decisions related to the loan proceeds. Prohibiting the transaction or simply processing it without comment would be a failure of this ethical duty.

Question 97: A counselor working with a client who has a mortgage balance approaching their home's value should emphasize which HECM limitation?

The principal limit may not be sufficient to pay off the existing mortgage, potentially making the client ineligible (Correct answer)
Existing mortgage balances are ignored in HECM principal limit calculations
The client must pay off the existing mortgage before applying for a HECM
HECM loans cannot be used to pay off existing mortgages under any circumstances

Correct answer: The principal limit may not be sufficient to pay off the existing mortgage, potentially making the client ineligible

If the HECM principal limit is less than the existing mortgage balance, the borrower cannot qualify unless they bring additional funds to closing to pay down the existing lien.

Question 98: An underwriter is assessing the income of a 68-year-old HECM applicant who has been a self-employed consultant for the past 15 years. To verify the stability and likely continuance of this income, which set of documents is most critical for the underwriter to review?

A signed profit and loss statement for the current year-to-date and the previous full year.
The two most recent years of signed federal income tax returns, including all schedules, and a year-to-date profit and loss statement. (Correct answer)
A letter from the applicant's largest client confirming their ongoing business relationship.
The most recent three months of bank statements showing business deposits.

Correct answer: The two most recent years of signed federal income tax returns, including all schedules, and a year-to-date profit and loss statement.

For self-employed borrowers, underwriters must establish a stable and effective income. The standard requirement is to analyze the two most recent years of complete personal and business (if applicable) tax returns to calculate an average income. A current year-to-date Profit & Loss (P&L) statement is also required to ensure income has remained stable or is increasing.

Question 99: Which property types are eligible for a HECM loan?

Only single-family detached homes
Single-family homes, HUD-approved condos, and manufactured homes meeting FHA standards (Correct answer)
Only properties with no existing mortgage
Any residential property regardless of condition

Correct answer: Single-family homes, HUD-approved condos, and manufactured homes meeting FHA standards

Eligible HECM properties include single-family homes, FHA-approved condominiums, and manufactured homes that meet specific HUD requirements.

Question 100: A CRMP realizes after closing that they made an error in the loan disclosure that disadvantaged the borrower. What should they do?

Disclose the error and work to correct it through appropriate channels (Correct answer)
Blame the title company to deflect responsibility
Do nothing since the loan has already closed
Only act if the borrower discovers the error independently

Correct answer: Disclose the error and work to correct it through appropriate channels

Ethical professionals proactively disclose and correct errors regardless of whether the borrower has noticed.

Certified Reverse Mortgage Professional (CRMP) Exam

The CRMP certification validates a professional's expertise and commitment to ethical practices in the reverse mortgage industry.

100

Questions

120 min

Time Limit

75%

To Pass

Checking for saved progress...

Exam Rules

You can skip questions and return to them later
Flag questions for review before submitting
No feedback shown until you submit the entire exam
Unanswered questions count as wrong — answer everything
10 pretest questions are mixed in and don't affect your score
Timer auto-submits when time runs out
Your progress is auto-saved every 30 seconds

These practice questions were written with AI tools. They are not real exam questions. Exam facts are checked against the official sources listed below. Not reviewed by a subject-matter expert. Editorial policy

Sources & references

Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy

nrmlaonline.org — Test delivery, fees, exam format, passing score, registration deadline, retake fee, score release, time limit, score validity · verified Oct 2026
pearsonvue.com — Test dates · verified Oct 2026