CRMP HECM Program and Products 4

Question 1

A HECM borrower with a $400,000 home has a Principal Limit of $240,000. Their existing mortgage balance is $180,000. How much additional cash can they access at closing under the initial disbursement limit rules?

Accepted Answer

$24,000

Answer

Mandatory obligations ($180,000) exceed 60% ($144,000) of the $240,000 PL, so borrowers may draw mandatory obligations plus 10% of PL ($24,000) in year one.

Question 2

Which HUD form must be signed by a HECM counselor and borrower to certify that counseling was completed before loan application?

Accepted Answer

HUD-9902 (HECM Counseling Certificate)

Answer

The HUD-9902 is the HECM counseling certificate that must be issued by an independent HUD-approved counselor before the lender can take a loan application.

Question 3

What is the primary purpose of the HECM Financial Assessment introduced by HUD in 2015?

Accepted Answer

To evaluate the borrower's willingness and capacity to meet ongoing loan obligations such as taxes and insurance

Answer

The Financial Assessment evaluates the borrower's credit history and residual income to determine their ability to pay taxes, insurance, and other property charges.

Question 4

When a Life Expectancy Set-Aside (LESA) is required after Financial Assessment, how are property charge payments handled?

Accepted Answer

A portion of the Principal Limit is set aside and the servicer pays property charges on the borrower's behalf

Answer

A LESA reserves a calculated portion of the Principal Limit from which the servicer disburses property taxes and insurance premiums directly, removing the risk of borrower non-payment.

Question 5

Which statement about HECM loan limits is accurate as it relates to the Maximum Claim Amount (MCA)?

Accepted Answer

The MCA is the lesser of the appraised value or the FHA national lending limit

Answer

The Maximum Claim Amount is the lesser of the property's appraised value or the FHA HECM lending limit, capping the base for Principal Limit calculations.

(CRMP) Certified Reverse Mortgage Professional Practice Test

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CRMP HECM Program and Products 4