CRMP Loan Disbursement Options and Payment Plans 2

Question 1

A HECM borrower currently on a line of credit wishes to switch to a tenure payment plan. What is the correct procedure?

Accepted Answer

Request a payment plan change through their loan servicer

Answer

Borrowers with adjustable-rate HECMs can request a payment plan change from their servicer at any time; this is a built-in flexibility feature of HECM products.

Question 2

Each time a HECM borrower makes a draw from their line of credit, what is the direct financial effect on the loan?

Accepted Answer

The outstanding loan balance increases by the draw amount

Answer

Each line of credit draw increases the outstanding loan balance, which then accrues interest and MIP until the loan becomes due and payable.

Question 3

How does the servicer calculate the monthly tenure payment amount for an eligible HECM borrower?

Accepted Answer

Using the remaining principal limit and current interest rate, assuming the youngest borrower lives to age 100

Answer

Tenure payments are calculated based on the remaining principal limit and current interest rate, assuming the youngest eligible borrower will live to age 100, ensuring payments can continue for that timeframe.

Question 4

What is the primary advantage of a tenure payment plan compared to a term payment plan for a borrower concerned about longevity risk?

Accepted Answer

Tenure payments continue for as long as the borrower lives in the home, regardless of how long that is

Answer

With a tenure plan, the borrower receives payments for as long as they live in the home as their primary residence, eliminating the risk of outliving the disbursement period.

Question 5

Under what specific condition may a HECM borrower draw more than 60% of their principal limit in the first 12 months?

Accepted Answer

If mandatory obligations plus 10% of the principal limit exceed the 60% threshold

Answer

If a borrower's mandatory obligations (existing liens, closing costs, required set-asides) plus 10% of the principal limit exceed 60%, they may draw the full amount needed to satisfy those obligations.

(CRMP) Certified Reverse Mortgage Professional Practice Test

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CRMP Loan Disbursement Options and Payment Plans 2