CRMP Borrower Qualification Requirements 2

Question 1

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

Accepted Answer

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

Answer

The borrower is ineligible because the home must be owned free and clear

Answer

The borrower must wait until age 70 to apply if a mortgage balance remains

Answer

Existing mortgage balances automatically disqualify any HECM applicant

Question 2

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

Accepted Answer

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

Answer

The borrower must have lived in the home for at least 10 consecutive years

Answer

The home must be in the same state where the borrower was born

Answer

The borrower may occupy a secondary vacation property as the qualifying residence

Question 3

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?

Accepted Answer

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

Answer

Both spouses must be at least 62, so the application is automatically denied

Answer

The 55-year-old must be removed from the title before application

Answer

The couple must wait until the younger spouse turns 62 before applying

Question 4

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

Accepted Answer

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

Answer

The borrower's credit score on a 300–850 scale

Answer

Whether the borrower has sufficient retirement savings to last 20 years

Answer

The borrower's debt-to-income ratio compared to conforming loan standards

Question 5

Which property type is generally NOT eligible for a HECM?

Accepted Answer

Cooperative (co-op) housing unit

Answer

Single-family home

Answer

FHA-approved condominium unit

Answer

HUD-approved manufactured home on a permanent foundation

Question 6

A lender determines a HECM applicant has a history of late property tax payments. What is the likely outcome under Financial Assessment rules?

Accepted Answer

The lender may require a Life Expectancy Set-Aside (LESA) to cover future property charges

Answer

The application is immediately denied with no recourse

Answer

The borrower must pay a larger upfront MIP to compensate

Answer

The lender must reduce the Principal Limit Factor by 10%

Question 7

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

Accepted Answer

Before the loan application is submitted to the lender

Answer

After the loan closes but within 30 days of disbursement

Answer

Only if the lender's Financial Assessment reveals credit problems

Answer

Within 90 days after receiving the loan comparison worksheet