CRMP Loan Disbursement Options and Payment Plans 3

Question 1

A HECM borrower has a $200,000 principal limit and mandatory obligations totaling $130,000. What is the maximum amount the borrower may draw in the first 12 months?

Accepted Answer

$140,000, because mandatory obligations plus 10% of the principal limit exceed 60%

Answer

$120,000, because the 60% limit applies

Answer

$130,000, because only the mandatory obligations amount is permitted

Answer

$200,000, because mandatory obligations override all limits

Question 2

Which disbursement strategy is generally considered most financially advantageous for a HECM borrower who wants to maximize available funds over the long term?

Accepted Answer

Open a line of credit and draw only as needed, allowing unused funds to grow

Answer

Draw the full lump sum immediately to invest the proceeds

Answer

Establish tenure payments beginning at loan closing

Answer

Select a short-term plan to maximize monthly payment amounts

Question 3

What happens to a HECM term payment plan when the borrower-selected term period expires?

Accepted Answer

Monthly disbursements cease, but the loan remains outstanding until a maturity event

Answer

The loan becomes immediately due and payable upon term expiration

Answer

Monthly payments automatically convert to a tenure plan to continue income

Answer

The borrower must refinance to access any remaining principal limit funds

Question 4

A HECM borrower on a tenure payment plan permanently moves into an assisted living facility and no longer uses the mortgaged home as their primary residence. What happens to their monthly payments?

Accepted Answer

Payments cease because primary residency is a condition of the tenure plan

Answer

Payments continue for an additional 12-month grace period

Answer

Payments continue until the end of the current calendar year

Answer

Payments reduce by 50% for up to 24 months to assist with transition costs

Question 5

A HECM borrower on a fixed-rate product wants to convert to a line of credit disbursement. What is the correct course of action?

Accepted Answer

This conversion is not possible; fixed-rate HECMs only permit lump sum disbursement

Answer

Request the conversion from the servicer at a standard fee of $20

Answer

Obtain new HUD counseling and sign a loan modification agreement

Answer

Contact HUD directly to request a product type waiver

Question 6

According to HUD regulations, how many times per year may a HECM borrower change their disbursement plan?

Accepted Answer

There is no regulatory limit; changes are available upon request to the servicer

Answer

Only once during the lifetime of the loan

Answer

Once per calendar year maximum

Answer

Twice per year, with a 6-month waiting period between changes

Question 7

Which HECM disbursement option would be MOST appropriate for a borrower who wants to pay off a specific debt over the next 5 years using reverse mortgage funds and then stop receiving payments?

Accepted Answer

Term plan, because it provides monthly payments for a defined number of years

Answer

Tenure plan, because it provides the most stable income stream

Answer

Line of credit, because draws can be taken at any time

Answer

Lump sum, because it delivers all funds at once for immediate debt payoff