CRMP Regulatory Compliance & Ethical Practices 2 — Questions and Answers
Question 1: Under HUD's HECM program, what is the maximum allowable origination fee for a home valued at $200,000?
- $2,000
- $4,000
- $6,000 (Correct answer)
- $8,000
Correct answer: $6,000
The origination fee is capped at the greater of $2,500 or 2% of the first $200,000 of the home's value plus 1% of the amount over $200,000, with a maximum of $6,000.
Question 2: Which federal law requires lenders to provide a Good Faith Estimate of settlement costs to HECM borrowers within three business days of application?
- TILA
- RESPA (Correct answer)
- ECOA
- HMDA
Correct answer: RESPA
RESPA (Real Estate Settlement Procedures Act) requires lenders to provide a Good Faith Estimate within three business days of receiving a loan application.
Question 3: An originator discovers a borrower has an outstanding federal tax lien on the property. What is the MOST appropriate course of action?
- Proceed with the loan and ignore the lien
- Advise the borrower the lien must be satisfied or subordinated at closing (Correct answer)
- Recommend the borrower hide the lien from HUD
- Deny the loan without explanation
Correct answer: Advise the borrower the lien must be satisfied or subordinated at closing
Federal tax liens must be satisfied or properly subordinated before or at closing to ensure HECM eligibility and protect all parties.
Question 4: What does the NRMLA Code of Ethics prohibit regarding advertising reverse mortgages?
- Using the NRMLA logo in marketing materials
- Making misleading claims about government endorsement or affiliation (Correct answer)
- Advertising to borrowers over age 70
- Mentioning the FHA insurance premium in ads
Correct answer: Making misleading claims about government endorsement or affiliation
The NRMLA Code of Ethics explicitly prohibits advertisements that imply a government endorsement or create misleading impressions about the nature of reverse mortgages.
Question 5: Under the Equal Credit Opportunity Act (ECOA), a lender may NOT deny a HECM application based on which factor?
- The applicant's age being under 62
- The property failing to meet FHA guidelines
- The applicant's race or national origin (Correct answer)
- Insufficient home equity
Correct answer: The applicant's race or national origin
ECOA prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, or age (when the applicant is old enough to contract).
Question 6: A HECM servicer must notify a borrower of a potential default condition within how many days of determining a due-and-payable event?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
HUD requires servicers to notify borrowers of a due-and-payable condition within 30 days of the triggering event.
Question 7: Which entity is primarily responsible for enforcing compliance with the Truth in Lending Act (TILA) for HECM lenders?
- HUD Office of Inspector General
- Consumer Financial Protection Bureau (CFPB) (Correct answer)
- Federal Reserve Board
- Office of the Comptroller of the Currency only
Correct answer: Consumer Financial Protection Bureau (CFPB)
The CFPB has primary authority to supervise and enforce TILA compliance for mortgage lenders, including those offering HECMs.
CRMP Regulatory Compliance & Ethical Practices 2
Under HUD's HECM program, what is the maximum allowable origination fee for a home valued at $200,000?