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

HECM ARM products are indexed to the Constant Maturity Treasury (CMT) or SOFR (which replaced LIBOR), with a margin added to determine the note rate.

Question 2

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

Accepted Answer

Cooperative (co-op) apartment

Answer

Cooperative apartments are not eligible for HECM financing because borrowers own shares in a corporation rather than holding real property title.

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

Borrowers with no or low mandatory obligations are limited to 60% of the Principal Limit during the first 12 months to reduce early loan balance growth.

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

The ongoing annual MIP for HECM loans is 0.5% of the outstanding loan balance, charged monthly.

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

A properly disclosed eligible non-borrowing spouse may remain in the home under Deferral of Due and Payable status as long as they continue to meet all HECM obligations.

(CRMP) Certified Reverse Mortgage Professional Practice Test

(CRMP) Certified Reverse Mortgage Professional Practice Test

CRMP HECM Program and Products 3