CRMP Ethics and Counseling Requirements 5 — Questions and Answers
Question 1: An 80-year-old borrower with early-stage dementia wants to proceed with a HECM. The most appropriate ethical step is:
- Obtain only the standard application signature and proceed
- Pause and recommend the borrower obtain a legal guardian or power of attorney review before proceeding (Correct answer)
- Have the borrower's adult child sign on their behalf immediately
- Require a physician's letter then continue normally
Correct answer: Pause and recommend the borrower obtain a legal guardian or power of attorney review before proceeding
Cognitive impairment raises capacity concerns; a CRMP should recommend legal safeguards such as a guardian or attorney review before any loan is executed.
Question 2: What is the primary purpose of the HECM counseling certificate?
- To confirm the borrower meets FHA income requirements
- To document that the borrower received independent third-party counseling as required by HUD (Correct answer)
- To waive the borrower's right to rescission
- To serve as a property inspection report
Correct answer: To document that the borrower received independent third-party counseling as required by HUD
The counseling certificate is proof that the borrower received independent HUD-mandated counseling before proceeding with the HECM application.
Question 3: A CRMP's marketing materials imply that a HECM is 'government money' that does not have to be repaid. This is:
- Acceptable marketing language commonly used in the industry
- Deceptive and a violation of NRMLA ethical standards and FTC advertising rules (Correct answer)
- Permissible if a disclaimer is included in fine print
- Allowed for borrowers over age 80 only
Correct answer: Deceptive and a violation of NRMLA ethical standards and FTC advertising rules
Implying a HECM is a government grant or free money is deceptive advertising, violating both NRMLA ethics and FTC rules.
Question 4: Under HUD guidelines, which of the following individuals must complete HECM counseling?
- Only the oldest borrower on title
- All borrowers listed on the loan application, and non-borrowing spouses are strongly encouraged to attend (Correct answer)
- The borrower's designated heir only
- One family member per household, chosen by the lender
Correct answer: All borrowers listed on the loan application, and non-borrowing spouses are strongly encouraged to attend
All borrowers on the application must attend counseling, and HUD strongly encourages non-borrowing spouses to participate as well.
Question 5: A CRMP is approached by an assisted living facility that wants to receive a fee for referring residents to the CRMP's reverse mortgage practice. This arrangement is:
- Legal if the facility provides educational services about reverse mortgages
- Prohibited under RESPA if the fee is tied to actual loan referrals (Correct answer)
- Acceptable with a written referral agreement
- Legal as long as the resident consents
Correct answer: Prohibited under RESPA if the fee is tied to actual loan referrals
Paying referral fees to non-licensed parties in exchange for mortgage referrals violates RESPA Section 8 regardless of ancillary services provided.
Question 6: Which ethical principle requires a CRMP to disclose a personal financial interest in a transaction to the borrower?
- Competence
- Confidentiality
- Conflict of interest disclosure (Correct answer)
- Due diligence
Correct answer: Conflict of interest disclosure
Conflict of interest disclosure requires that any personal financial stake the CRMP has in the transaction be revealed to the borrower.
Question 7: A borrower withdraws from the HECM process after counseling but calls back six months later wishing to restart. Which statement about the counseling certificate is correct?
- The original certificate remains valid indefinitely
- HUD counseling certificates are typically valid for 180 days and a new one may be required if expired (Correct answer)
- A new certificate is never required for the same borrower
- The lender may grant a 12-month extension to any certificate
Correct answer: HUD counseling certificates are typically valid for 180 days and a new one may be required if expired
HUD counseling certificates are generally valid for 180 days; if that period has expired, the borrower must complete counseling again.
CRMP Ethics and Counseling Requirements 5
An 80-year-old borrower with early-stage dementia wants to proceed with a HECM.
The most appropriate ethical step is: