HECM Test (2023/ 2024 Update) Questions and Verified Answers

HECM Test (2023/ 2024 Update) Questions and Verified Answers Q: T/F The agency is not permitted to provide a copy of the counseling certificate to a borrower's lender. Answer: False. Q: What role does FHA (Federal Housing Administration) play in Home Equity Conversion Mortgages? A. FHA sells the HECM loans on the secondary market B. FHA provides a strict rule of guidelines that lenders must adhere to C. FHA insures HECM loans D. FHA first instituted but no longer plays any part in HECM loans Answer: C Q: How is a reverse mortgage payment plan decided? A. The lender must decide based on the borrower's eligibility B. The borrower chooses which payment plan works best for them C. There is no payment plan on a reverse mortgage D. A reverse mortgage counselor advises the lender on which plan to use Answer: B Q: All of the following are true EXCEPT: A. Reverse mortgages can be paid back in periodic increments B. A HECM is a "non-recourse" loan which means that repayment is not required until the last remaining borrower dies C. Receiving a HECM results in 2 mortgages on the title D. Only a free and clear title can receive a HECM Answer: D Q: Principal limit on a HECM loan is best described as: A. Maximum initial loan amount B.Maximum loan balance for the life of the loan C.Maximum home value insured by HUD D. Appraised value or nation HECM mortgage limit, whichever is less Answer: B Q: T/F If a public or private non-profit housing counseling agency is not available in a particular area, it is permissible for local HUD office staff to become trained in order to counsel prospective HECM borrowers. All HUD offices maintain a staff of trained counselors. Answer: False Q: T/F A borrower's first step in receiving a reverse mortgage is to receive counseling from a certified HECM counselor. Answer: True Q: T/F It is not permissible for a lender to discuss or disclose estimated loan figures with a borrower before that borrower receives counseling from a certified HECM counselor Answer: True (California being the only exception) Q: Mr. Shadrick has spoken with Bob Loanman about getting a reverse mortgage. Mr. Shadrick was expected to be at his daughter's wedding in Hawaii so he will be completing his reverse mortgage counseling on the telephone while on vacation. Before he goes on vacation he's going to go ahead and get his appraisal inspection done by a licensed appraiser. What is the best way to describe how the appraisal will be paid for? A. The lender cannot charge Mr. Shadrick for this appraisal B.The borrower must pay for the appraisal upfront directly to the appraiser C. The borrower has the option of paying for the appraisal as a part of the closing costs when the reverse mortgage is closed D. The lender is responsible for the appraisal fee in all transactions Answer: A Q: A HECM counselor must discuss all of the following with a potential borrower EXCEPT: A. Financial implications B. Necessary credit qualifications C. Alternatives to a HECM D. Consequences to receiving a HECM Answer: B Q: T/F Other parties involved in the reverse mortgage transaction including children, financial advisors, and loan officers are encouraged to participate in the HECM counseling session. Answer: False Q: A good source for both borrowers and agencies for additional information on available resources for elderly homeowners is known as A. The Area Agency on Aging B. AARP C. D. Consumer Credit Counseling Services (CCCS) Answer: A Q: Which of the following is prohibited until the borrower receives counseling? A. Appraisal Inspection B. Preliminary Title Search C. Pulling an AVM D. Taking a loan application Answer: A Q: All of the following are true regarding ordering appraisals EXCEPT: A. An FHA Case # is required before an appraisal can be ordered B. An appraiser cannot be chosen directly by a Loan Officer C. If a borrower had an appraisal done on their home before speaking to a lender, the lender may use that appraisal as part of the HECM transaction. (The appraisal must be ordered by the lender and completed by a HUD-approved appraiser. ) D. All of the above are true Answer: C Q: T/F The final decision regarding the classification of the property is made by the lender. Answer: False