CRMP Counseling Protocols & Client Communication 3 — Questions and Answers
Question 1: A lender refers a client to a specific counseling agency. Under HUD rules, this arrangement:
- Is permitted if the lender discloses the referral relationship in writing
- Is prohibited because counseling must be independent of the lender (Correct answer)
- Is allowed only if the counseling agency is nonprofit
- Requires HUD approval on a case-by-case basis
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 2: Which of the following topics is REQUIRED to be covered in every HUD-approved HECM counseling session?
- The client's credit score and debt-to-income ratio
- Options other than a reverse mortgage, such as selling or refinancing (Correct answer)
- The lender's specific loan fees and rate structure
- The client's estate planning goals and will provisions
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 3: A client who completed HECM counseling six months ago now wants to proceed with a different lender. Must the client complete counseling again?
- No, the counseling certificate is valid indefinitely
- Yes, a new session is always required when changing lenders
- It depends on whether the counseling certificate has expired under the lender's guidelines, typically 180 days (Correct answer)
- Only if the loan amount has changed significantly
Correct answer: It depends on whether the counseling certificate has expired under the lender's guidelines, typically 180 days
Most lenders and HUD guidelines treat counseling certificates as valid for 180 days, so a certificate issued six months ago may be expiring or already expired.
Question 4: When conducting telephone counseling for a HECM applicant, the counselor should:
- Waive the written summary requirement since documents cannot be exchanged remotely
- Send required materials in advance and confirm the client received and reviewed them before the session (Correct answer)
- Complete the session faster since telephone counseling has shorter time requirements
- Require the borrower to have a lender representative on the call
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 5: A client tells the HECM counselor that they plan to use loan proceeds to help a grandchild pay for college. How should the counselor respond?
- Discourage the client from proceeding since gifting proceeds is prohibited
- Advise the client that reverse mortgage proceeds cannot be used for educational expenses
- Acknowledge the goal, explain how the loan works, and ensure the client understands long-term implications (Correct answer)
- Recommend a home equity line of credit instead since it is better suited for this purpose
Correct answer: Acknowledge the goal, explain how the loan works, and ensure the client understands long-term implications
Counselors should not judge borrowers' spending intentions but must ensure they understand how the loan affects their equity, estate, and financial future.
Question 6: Under the HECM program, who is responsible for paying the counseling fee?
- The lender must cover all counseling costs as part of loan origination
- The borrower pays the fee, though it cannot be financed into the HECM loan
- The borrower pays the fee, and it may be financed into the loan if the agency allows (Correct answer)
- HUD subsidizes counseling and borrowers pay nothing
Correct answer: The borrower pays the fee, and it may be financed into the loan if the agency allows
Borrowers are responsible for counseling fees, and HUD allows agencies to permit fee financing into the loan proceeds for borrowers who cannot afford to pay upfront.
Question 7: Which scenario would MOST likely require a counselor to pause a session and follow up at a later date?
- 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 requests that a family member join the session by phone
- 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.
CRMP Counseling Protocols & Client Communication 3
A lender refers a client to a specific counseling agency.
Under HUD rules, this arrangement: