CRMP Counseling and Disclosures 4 — Questions and Answers
Question 1: Which of the following is a required topic in every HUD-approved HECM counseling session?
- The borrower's credit score and debt-to-income ratio
- Financial implications of the loan, including costs and impact on estate (Correct answer)
- The lender's underwriting guidelines and approval criteria
- The borrower's investment portfolio and retirement account balances
Correct answer: Financial implications of the loan, including costs and impact on estate
HUD mandates that counselors cover the financial implications of the HECM, including fees, interest accrual, and the impact on the estate.
Question 2: A borrower's adult child accompanies her to the counseling session and insists on answering questions on her behalf. What should the counselor do?
- Allow the adult child to act as the borrower's agent for the session
- Redirect questions to the borrower directly and assess whether the borrower is participating freely (Correct answer)
- End the session and require the borrower to return alone
- Document that a third party was present and continue without intervention
Correct answer: Redirect questions to the borrower directly and assess whether the borrower is participating freely
Counselors must ensure the borrower is an active, voluntary participant and not unduly influenced; redirecting questions helps assess this.
Question 3: Under HUD Handbook 7610.1, the HECM counselor's fee may NOT exceed:
- $50 per session regardless of income
- $125 per session, waivable for borrowers who cannot afford it (Correct answer)
- $250 per session for in-person and $100 for telephone
- Any amount agreed upon between the counselor and the borrower
Correct answer: $125 per session, waivable for borrowers who cannot afford it
HUD caps the counseling fee at $125 and requires agencies to waive or reduce the fee for borrowers who cannot afford it.
Question 4: The HECM Counseling Protocol requires that counselors discuss the potential impact of the loan on the borrower's eligibility for which type of benefits?
- Social Security retirement income only
- Medicare Part A hospital insurance only
- Means-tested benefits such as Medicaid and Supplemental Security Income (SSI) (Correct answer)
- All federal pension and retirement benefits
Correct answer: Means-tested benefits such as Medicaid and Supplemental Security Income (SSI)
HECM loan proceeds can affect eligibility for means-tested programs like Medicaid and SSI if funds are not spent in the month received.
Question 5: After completing a HECM counseling session, what must the counselor send to the lender?
- A detailed summary of the borrower's financial situation
- The signed Certificate of HECM Counseling (HUD Form 92902) (Correct answer)
- A completed borrower credit report
- A lender referral form with the counselor's recommendation
Correct answer: The signed Certificate of HECM Counseling (HUD Form 92902)
The counselor issues HUD Form 92902, the Certificate of HECM Counseling, which is required before the lender can proceed with the loan.
Question 6: Which scenario would require a borrower to undergo a second HECM counseling session?
- The borrower selects a different lender after initial counseling
- The counseling certificate has expired and the loan has not yet closed (Correct answer)
- The borrower changes their disbursement plan from lump sum to line of credit
- The borrower's property appraisal comes in lower than expected
Correct answer: The counseling certificate has expired and the loan has not yet closed
If the 180-day counseling certificate expires before closing, the borrower must complete a new counseling session to obtain a fresh certificate.
Question 7: A HECM borrower moves out of the property for more than 12 consecutive months due to a medical condition. What is the disclosure requirement at loan origination regarding this scenario?
- No disclosure is required because medical absences are always exempt
- The lender must disclose that extended absence beyond 12 months triggers a due-and-payable event (Correct answer)
- The counselor must advise the borrower that medical absences of any length void the loan
- The lender must disclose a 6-month absence threshold that triggers default
Correct answer: The lender must disclose that extended absence beyond 12 months triggers a due-and-payable event
Borrowers must be told at counseling and closing that if the property is not their primary residence for more than 12 consecutive months, the loan becomes due and payable.
CRMP Counseling and Disclosures 4
Which of the following is a required topic in every HUD-approved HECM counseling session?