CRMP HECM Program and Products 3

Question 1

A HECM borrower selects the adjustable-rate product with a monthly adjusting index. What index is most commonly used for HECM ARM products?

Accepted Answer

Constant Maturity Treasury (CMT) or SOFR

Answer

Prime Rate

Answer

Federal Funds Rate

Answer

LIBOR only

Question 2

Which of the following property types is NOT eligible for a HECM loan?

Accepted Answer

Cooperative (co-op) apartment

Answer

FHA-approved condominium unit

Answer

Single-family home

Answer

Two-unit property occupied by the borrower

Question 3

Under the HECM Initial Disbursement Limit rules, what percentage of the Principal Limit may a borrower access at closing if they have no mandatory obligations?

Accepted Answer

60% of the Principal Limit during the first 12 months

Answer

100% of the Principal Limit

Answer

75% of the Principal Limit during the first 12 months

Answer

50% of the Principal Limit during the first 12 months

Question 4

What is the ongoing Mortgage Insurance Premium (MIP) rate charged annually on the outstanding HECM loan balance?

Accepted Answer

0.5% per year

Answer

1.25% per year

Answer

0.85% per year

Answer

2.0% per year

Question 5

A non-borrowing spouse (NBS) was properly disclosed and listed at loan origination. The borrowing spouse dies. Under current HUD guidelines, what protection does the NBS have?

Accepted Answer

The NBS may remain in the home under Deferral of Due and Payable status

Answer

The loan becomes immediately due and payable

Answer

The NBS must refinance the HECM into their own name within 6 months

Answer

The NBS receives the remaining line of credit but must vacate within 12 months

Question 6

Which statement best describes the HECM fixed-rate product compared to the adjustable-rate HECM?

Accepted Answer

The fixed-rate HECM requires full disbursement of available funds at closing as a lump sum

Answer

The fixed-rate HECM offers all disbursement options including line of credit

Answer

The fixed-rate HECM charges a lower upfront MIP than the adjustable-rate HECM

Answer

The fixed-rate HECM allows ongoing draws up to 10 years after closing

Question 7

Under what circumstance may a HECM borrower borrow MORE than 60% of the Principal Limit in the first 12 months without triggering the higher upfront MIP?

Accepted Answer

When mandatory obligations (existing mortgage payoff, closing costs) exceed 60% of the Principal Limit

Answer

When the borrower is over age 75

Answer

When the property is in a federally declared disaster area

Answer

When the borrower has no other retirement income