CRMP Ethics and Counseling Requirements 3 — Questions and Answers
Question 1: What is the maximum counseling fee a HUD-approved agency may charge a HECM applicant who cannot afford to pay?
- $125
- $250
- $0 — the fee must be waived (Correct answer)
- $75
Correct answer: $0 — the fee must be waived
HUD requires that counseling agencies waive the fee for borrowers who cannot afford it; inability to pay cannot be a barrier to counseling.
Question 2: Under NRMLA's Code of Ethics, a CRMP is prohibited from doing which of the following?
- Explaining loan comparisons to a borrower
- Accepting referral fees from non-licensed third parties outside RESPA safe harbors (Correct answer)
- Recommending independent legal review
- Disclosing total loan costs in writing
Correct answer: Accepting referral fees from non-licensed third parties outside RESPA safe harbors
NRMLA's Code of Ethics prohibits kickbacks and referral arrangements that violate RESPA and ethical standards.
Question 3: A CRMP recommends a HECM to a borrower solely because it generates the highest commission. This violates which ethical principle?
- Transparency
- Competence
- Suitability and client-first duty (Correct answer)
- Confidentiality
Correct answer: Suitability and client-first duty
Suitability requires that product recommendations serve the borrower's needs, not the originator's financial interest.
Question 4: Which of the following is a permissible reason for a borrower to conduct HECM counseling by telephone rather than in person?
- The lender prefers faster closing timelines
- The borrower lives in a rural area without reasonable access to a local counselor (Correct answer)
- The loan officer schedules telephone counseling by default for all clients
- The borrower wants to avoid the counseling fee
Correct answer: The borrower lives in a rural area without reasonable access to a local counselor
Telephone counseling is permitted when in-person counseling is not reasonably available, such as in rural or underserved areas.
Question 5: How does NRMLA's Code of Ethics address confidentiality of borrower information?
- Borrower data may be shared freely within the lender's marketing department
- Member firms must protect non-public personal information and use it only for the intended transaction (Correct answer)
- Confidentiality ends once the loan closes
- Borrowers must waive confidentiality to receive a HECM
Correct answer: Member firms must protect non-public personal information and use it only for the intended transaction
NRMLA's ethical standards require members to safeguard borrower data in compliance with Gramm-Leach-Bliley and related privacy laws.
Question 6: A CRMP learns that a colleague is falsifying borrower income information on HECM applications. Under NRMLA ethics, what should the CRMP do?
- Ignore it since income is not verified on HECMs
- Report the conduct to NRMLA and/or the appropriate regulatory authority (Correct answer)
- Confront the colleague privately and take no further action
- Continue working at the same firm without involvement
Correct answer: Report the conduct to NRMLA and/or the appropriate regulatory authority
CRMPs have an ethical obligation to report fraud and misconduct to NRMLA and regulatory authorities to protect consumers.
Question 7: What must a HECM counselor discuss regarding property taxes and insurance during the counseling session?
- How to negotiate lower property tax rates
- The borrower's obligation to pay taxes and insurance and the consequences of default (Correct answer)
- How to transfer tax liability to the lender
- Investment strategies using saved property tax money
Correct answer: The borrower's obligation to pay taxes and insurance and the consequences of default
Counselors must explain that failure to pay property taxes and homeowners insurance can trigger loan default and foreclosure.
CRMP Ethics and Counseling Requirements 3
What is the maximum counseling fee a HUD-approved agency may charge a HECM applicant who cannot afford to pay?