CRMP Financial Assessment & Borrower Eligibility 3

Question 1

Which of the following income types is given the LEAST weight in a HECM financial assessment because it is not guaranteed to continue?

Accepted Answer

Part-time employment wages

Answer

Part-time employment wages are considered less stable and least likely to continue long-term compared to fixed retirement income sources like Social Security or pensions.

Question 2

During a HECM financial assessment, the lender discovers the borrower has an outstanding federal tax lien. What is required?

Accepted Answer

The lien must be paid in full before or at closing, or a repayment plan must be in place

Answer

Federal tax liens must be satisfied at or before closing, or the borrower must have an approved IRS repayment agreement in place.

Question 3

What residual income benchmark does HUD use as a reference when evaluating HECM applicants?

Accepted Answer

VA loan residual income tables by region and family size

Answer

HUD's HECM financial assessment references VA loan residual income tables, adjusted by region and family size, as a benchmark.

Question 4

A borrower owns a home in a flood zone. How does this affect HECM eligibility from a financial assessment standpoint?

Accepted Answer

Flood insurance premiums must be factored into the ongoing property charge obligations

Answer

Flood insurance is a mandatory property charge for homes in flood zones and must be included when calculating the borrower's ability to sustain property charges.

Question 5

Which of the following scenarios would result in a 'satisfactory' credit determination under HUD's financial assessment?

Accepted Answer

No late housing or installment payments in the past 12 months with no major derogatory history in 24 months

Answer

HUD's satisfactory credit standard generally requires no late housing payments in 12 months and no major derogatory events in 24 months.

(CRMP) Certified Reverse Mortgage Professional Practice Test

(CRMP) Certified Reverse Mortgage Professional Practice Test

CRMP Financial Assessment & Borrower Eligibility 3