CRMP Regulatory Compliance & Ethical Practices 4

Question 1

Which Mortgagee Letter introduced the Financial Assessment requirement for HECM applications?

Accepted Answer

ML 2014-22

Answer

HUD Mortgagee Letter 2014-22, effective March 2, 2015, introduced the Financial Assessment requirement to evaluate a borrower's willingness and capacity to meet ongoing loan obligations.

Question 2

Under RESPA, which payment arrangement between a HECM lender and a housing counseling agency would be a violation?

Accepted Answer

Paying a fee to a counselor for each referred borrower

Answer

RESPA Section 8 prohibits kickbacks and unearned fees, including payments to counselors for referring borrowers to a specific lender.

Question 3

A HECM originator is also a licensed real estate agent. Which scenario represents an ethical conflict requiring disclosure?

Accepted Answer

The originator earns a commission by selling the borrower a home being financed with a HECM for Purchase

Answer

Earning both a sales commission and origination fee on the same transaction is a dual-role conflict that must be disclosed to the borrower under NRMLA ethics guidelines.

Question 4

Under HUD guidelines, the Life Expectancy Set-Aside (LESA) is established to ensure borrowers can pay:

Accepted Answer

Property charges including taxes and insurance over the borrower's expected tenure

Answer

A LESA reserves funds from the loan proceeds to cover property taxes, homeowner's insurance, and other property charges for the borrower's projected life expectancy.

Question 5

What is the purpose of the Right of Rescission under TILA for HECM transactions?

Accepted Answer

It gives borrowers three business days after closing to cancel the loan without penalty

Answer

Under TILA, borrowers have a three-business-day right of rescission after closing on a HECM, during which they can cancel without penalty.

(CRMP) Certified Reverse Mortgage Professional Practice Test

(CRMP) Certified Reverse Mortgage Professional Practice Test

CRMP Regulatory Compliance & Ethical Practices 4