CRMP Financial Assessment and Underwriting 5

Question 1

In HECM financial assessment, what does the term 'compensating factors' refer to?

Accepted Answer

Positive financial attributes that may offset unsatisfactory credit or income findings

Answer

Compensating factors are positive financial indicators that a lender may use to justify approval despite one unsatisfactory finding.

Question 2

A borrower's credit report shows a $2,200 medical collection that is less than two years old. Under HECM financial assessment, the lender should:

Accepted Answer

Exclude it from the credit analysis since medical collections are not considered derogatory under HUD FA rules

Answer

HUD FA guidelines explicitly exclude medical collections from the definition of derogatory credit, so they do not count against the borrower.

Question 3

How does a lender determine the required residual income threshold for a HECM applicant?

Accepted Answer

By referencing HUD's published table based on household size and geographic region

Answer

HUD publishes regional residual income tables organized by household size, and lenders must use the appropriate table for the borrower's location.

Question 4

A borrower age 80 has no mortgage debt and receives $2,400/month in Social Security. Their only property charges are $1,800/year in taxes and $900/year in insurance. Under financial assessment, this borrower most likely:

Accepted Answer

Passes with satisfactory residual income and no LESA required

Answer

With $2,400 monthly income and only $225/month in property charges, residual income likely exceeds HUD thresholds and no LESA is triggered.

Question 5

When a HECM borrower has a prior HECM that was assigned to HUD due to a 98% loan balance, how does this affect the financial assessment for a new HECM?

Accepted Answer

It is treated as a derogatory event and must be evaluated in the credit analysis

Answer

A prior HECM assignment to HUD is a credit event that must be identified and evaluated as part of the financial assessment credit analysis.

(CRMP) Certified Reverse Mortgage Professional Practice Test

(CRMP) Certified Reverse Mortgage Professional Practice Test

CRMP Financial Assessment and Underwriting 5