CRMP Client Assessment and Eligibility 2

Question 1

A borrower is 68 years old and owns a home with a $40,000 remaining mortgage balance valued at $280,000. What must occur before HECM proceeds can be accessed?

Accepted Answer

The existing mortgage must be paid off at or before closing

Answer

HECM requires a first-lien position, so any existing mortgage or lien must be paid off at or prior to closing, typically from HECM proceeds.

Question 2

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

Accepted Answer

Spending 7 months per year at the mortgaged property

Answer

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 3

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

Accepted Answer

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

Answer

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

Question 4

A client discloses they have a federal tax lien on their property. What is the likely impact on HECM eligibility?

Accepted Answer

The lien must be resolved or subordinated before the HECM can close

Answer

Federal tax liens affect title and must be resolved, paid off, or formally subordinated to allow the HECM to hold first-lien position.

Question 5

Under the HECM financial assessment, which factor is NOT evaluated by the lender?

Accepted Answer

The borrower's credit score threshold of 700 or higher

Answer

HECM financial assessment does not use a minimum credit score cutoff; it evaluates credit history, property charge payment history, and residual income instead.

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CRMP Client Assessment and Eligibility 2