CRMP Financial Assessment & Borrower Eligibility

Question 1

What is the primary purpose of a financial assessment in a reverse mortgage application?

Accepted Answer

To determine borrower eligibility and financial stability

Answer

The primary purpose of a financial assessment in a reverse mortgage application is to determine the borrower's eligibility and financial stability. This assessment ensures that borrowers have the capacity to meet ongoing property charges, such as property taxes, homeowner's insurance, and HOA fees. This helps prevent foreclosure due to non-payment of these essential obligations.

Question 2

Which factor is NOT typically reviewed in a reverse mortgage financial assessment?

Accepted Answer

Debt obligations

Answer

While monthly income and credit history are crucial components of a reverse mortgage financial assessment, the review typically focuses on the borrower's ability to pay ongoing property charges and maintain sufficient residual income. A detailed review of *all* existing debt obligations, in the same manner as a traditional debt-to-income ratio analysis for a forward mortgage, is not the primary focus. The assessment prioritizes property charge payment history and residual income over a comprehensive debt-to-income calculation.

Question 3

What is the minimum age requirement to qualify for a reverse mortgage?

Accepted Answer

62

Answer

To qualify for a Home Equity Conversion Mortgage (HECM), the most widely available type of reverse mortgage, all borrowers listed on the property's title must be at least 62 years old. This age requirement is a fundamental eligibility criterion established by the Federal Housing Administration (FHA) to ensure the product serves its intended demographic of senior homeowners.

Question 4

What documentation is commonly required for financial assessment?

Accepted Answer

Tax returns and bank statements

Answer

Financial assessment for a reverse mortgage evaluates a borrower's ability to meet ongoing property charges. Tax returns provide verifiable income history, while bank statements show current assets and financial stability. These documents are crucial for lenders to determine if the borrower can maintain property taxes and homeowner's insurance, which are mandatory obligations.

Question 5

Which financial obligation must a reverse mortgage borrower continue to meet?

Accepted Answer

Property taxes and homeowner's insurance

Answer

Unlike traditional mortgages, reverse mortgage borrowers do not make monthly principal and interest payments. However, they are still responsible for maintaining the property and paying ongoing property charges. This includes property taxes, homeowner's insurance, and any homeowner's association (HOA) fees, which are essential to prevent foreclosure and protect the lender's interest in the home.

(CRMP) Certified Reverse Mortgage Professional Practice Test

(CRMP) Certified Reverse Mortgage Professional Practice Test

CRMP Financial Assessment & Borrower Eligibility