CRMP Financial Assessment & Borrower Eligibility 2

Question 1

Under HUD's financial assessment guidelines, which credit history factor is considered an 'extenuating circumstance' that may explain derogatory credit?

Accepted Answer

Job loss or medical emergency causing temporary hardship

Answer

HUD recognizes job loss, medical emergencies, and similar events beyond the borrower's control as extenuating circumstances that may excuse derogatory credit history.

Question 2

When calculating Residual Income for a HECM financial assessment, which of the following is EXCLUDED from monthly expenses?

Accepted Answer

Federal income taxes

Answer

Federal income taxes are not included in the residual income expense calculation; it uses housing expenses, installment debt, and revolving debt obligations.

Question 3

A borrower has a property tax default that was resolved 18 months ago. How should the counselor treat this during financial assessment?

Accepted Answer

Document it as a resolved derogatory credit event and evaluate the cause

Answer

Resolved tax defaults must be documented and analyzed for cause; they do not automatically require a LESA or disqualify the borrower.

Question 4

What is the primary purpose of a Life Expectancy Set-Aside (LESA) in the HECM program?

Accepted Answer

To ensure ongoing payment of property charges over the borrower's life expectancy

Answer

A LESA is established to ensure property charges (taxes and insurance) are paid throughout the borrower's expected loan period, reducing default risk.

Question 5

Under financial assessment, a borrower who demonstrates satisfactory credit but insufficient residual income would most likely receive which determination?

Accepted Answer

Mandatory partial LESA

Answer

Insufficient residual income with satisfactory credit typically results in a partial LESA rather than a full LESA, unless credit is also unsatisfactory.

(CRMP) Certified Reverse Mortgage Professional Practice Test

(CRMP) Certified Reverse Mortgage Professional Practice Test

CRMP Financial Assessment & Borrower Eligibility 2