CRMP Financial Assessment and Underwriting 4

Question 1

Under HUD Mortgagee Letter 2014-21, which TWO unsatisfactory factors must BOTH be present to require a Fully-Funded LESA?

Accepted Answer

Unsatisfactory credit history AND insufficient residual income

Answer

A Fully-Funded LESA is required only when BOTH the borrower's credit history AND residual income are found to be unsatisfactory.

Question 2

A borrower disputes a collection account on their credit report. During HECM financial assessment, the lender should:

Accepted Answer

Treat the disputed account according to HUD guidelines, which may still require evaluation

Answer

HUD requires lenders to evaluate disputed accounts and determine if they represent a pattern of credit disregard regardless of the dispute status.

Question 3

For a borrower who is self-employed, which income figure is used in the HECM financial assessment?

Accepted Answer

Net self-employment income from Schedule C averaged over two years

Answer

Net self-employment income from Schedule C is averaged over two years to determine a stable monthly income figure for FA purposes.

Question 4

A HECM borrower has satisfactory credit but residual income that is $75 below the HUD threshold. What type of LESA is typically required?

Accepted Answer

A Partially-Funded LESA

Answer

A Partially-Funded LESA is required when credit is satisfactory but residual income alone falls short of the HUD threshold.

Question 5

Which of the following is considered a 'satisfactory' credit history outcome in HECM financial assessment?

Accepted Answer

No late mortgage payments in the past 24 months and no more than two 30-day late installment payments in the past 12 months

Answer

HUD's satisfactory credit standard allows up to two 30-day late installment payments in 12 months if the mortgage history is clean for 24 months.

(CRMP) Certified Reverse Mortgage Professional Practice Test