CRMP Client Assessment and Eligibility 3

Question 1

A prospective HECM borrower owns a 6-unit mixed-use building and lives in one unit. Is this property eligible?

Accepted Answer

No, HECM is limited to properties with 1 to 4 residential units

Answer

HECM eligibility is restricted to 1- to 4-unit residential properties, so a 6-unit building does not qualify regardless of owner-occupancy.

Question 2

What is the primary purpose of HUD-approved HECM counseling in the client assessment process?

Accepted Answer

To ensure borrowers understand loan terms, alternatives, and their obligations before proceeding

Answer

HUD-approved counseling provides independent education so borrowers fully understand the HECM product, their obligations, and alternatives before making a decision.

Question 3

A borrower has unpaid homeowners association (HOA) dues creating a lien on the property. How does this affect the HECM assessment?

Accepted Answer

The HOA lien must be resolved before closing since HECM must be in first-lien position

Answer

HOA liens can take priority over mortgages in some states, so they must be resolved before or at closing to protect the HECM's first-lien position.

Question 4

Which condition would qualify a borrower's condominium unit for HECM financing?

Accepted Answer

The condominium project is on HUD's approved condominium list or receives HUD spot approval

Answer

Condominium units must be in a HUD-approved project or receive individual spot approval under HUD guidelines to be eligible for HECM.

Question 5

A financial assessment reveals a borrower has a pattern of late property tax payments. What tool can the lender use to mitigate this risk?

Accepted Answer

A Life Expectancy Set-Aside (LESA) to fund future property tax and insurance payments

Answer

A LESA (Life Expectancy Set-Aside) requires setting aside a portion of HECM proceeds to cover future property taxes and insurance, reducing default risk.

(CRMP) Certified Reverse Mortgage Professional Practice Test

(CRMP) Certified Reverse Mortgage Professional Practice Test

CRMP Client Assessment and Eligibility 3