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HECM PRACTICE QUESTIONS AND ANSWERS
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HECM PRACTICE QUESTIONS AND ANSWERS
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HECM PRACTICE QUESTIONS ANDANSWERS
The6HECM6Saver6was6introduced6as6an6option6to6lower6the6upfront6cost6of6a6HECM6by6r
educing6the6upfront6mortgage6insurance6premium6to:6
a.60.
b.60.01%6of6the6Maximum6Claim6Amount.
c.61%6of6the6Maximum6Claim6Amount.
d.61.25%6of6the6Maximum6Claim6Amount.6-6ans--b
If6repairs6are6required6but6can6be6completed6after6closing,6the6lender6will6create6a6repair6
set-aside6in6the6amount6of:
a.615%6of6the6maximum6claim6amount.
b.6100%6of6the6actual6cost6of6repairs.
c.6100%6of6the6estimated6cost6of6repairs.
d.6150%6of6the6estimated6cost6of6repairs.6-6ans--d
TALC6rates6generally6are6greatest6when6borrowers6live:
a.6less6than6their6life6expectancies.
b.6to6their6full6life6expectances.
c.6longer6than6their6life6expectancies6-6ans--a
The6net6principal6limit6at6closing6is:
a.6a6percentage6of6the6maximum6claim6amount6before6any6funds6are6set-
aside6or6any6fees6are6paid.
b.6the6credit6remaining6after6all6set-asides6and6fees6have6been6deducted.
c.6the6lesser6of6the6home's6appraised6value6or6the6lending6limit.
d.6the6most6HUD6will6pay6on6an6insurance6claim.6-6ans--b
Mr.6Martin6is6836and6his6wife6is665.6If6Mrs.6Martin6is6removed6from6the6title6to6the6home,6t
he6HECM6principal6limit6would6be:
a.smaller.
b.6the6same.
c.6larger.6-6ans--c
T/
F6Most6lenders6require6that6borrowers6take6a6lump6sum6payment6if6they6choose6an6adjus
table6rate6and6only6allow6a6creditline6with6a6fixed6interest6rate6HECM.6-6ans--False
,T/
F6Given6the6same6principal6limit,6a6term6payment6plan6will6provide6a6larger6monthly6pay
ment6than6a6tenure6payment6plan.6-6ans--True
HECM6term6advances:
a.6are6generally6larger6than6tenure6advances.
b.6are6monthly6payments6for6a6fixed6number6of6months6chosen6by6the6lender.
c.6do6not6allow6unscheduled6lump6sum6draws.6-6ans--a
A6borrower6who6needs6a6monthly6payment6for6a6short6period6of6time6and6then6wants6to6h
ave6the6opportunity6to6borrow6more6in6the6future6may6want6to6choose6which6type6of6pay
ment6plan?
a.6Initial6Lump6Sum
b.6Modified6Tenure
c.6Modified6Term
d.6Tenure6-6ans--c
A6"forward"6mortgage6is6a6type6of6loan6in6which:
a.6extra6principal6payments6are6made,6so6that6the6payoff6date6is6moved6forward.
b.6payments6are6made6on6a6regular6schedule,6gradually6reducing6the6debt6and6building6
equity.6-6ans--b
Which6of6the6following6is6true6of6proprietary6reverse6mortgages?
a.6Borrowers6do6not6have6to6pay6for6FHA6mortgage6insurance.
b.6Proprietary6reverse6mortgages6are6typically6designed6for6high6value6homes6(those6be
yond6FHA6mortgage6limits).
c.6Proprietary6reverse6mortgages6typically6have6lower6loan-to-value6ratio6than6HECMs.
d.6All6of6the6above6-6ans--d
When6could6a675-year6old,6married6to6a655-year6old,6be6eligible6for6a6reverse6mortgage?
a.6Only6if6the6556year6old6does6not6live6in6the6home6and6they6have6a6legal6separation6agr
eement.
b.6Only6if6the655-year-old6is6not6an6owner6of6the6home.
c.6Only6if6the6556year6old6signs6an6agreement6that6they6will6not6inherit6the6property.
d.6Only6if6the6556year6old6has6no6more6than6a6life-estate6interest6in6the6property.6-6ans--b
A6reverse6mortgage6differs6from6a6forward6mortgage6in6that6it6is6usually6a6loan6with:
a.6increasing6debt6and6increasing6equity.
b.6increasing6debt6and6decreasing6equity.
c.6decreasing6debt6and6increasing6equity.6-6ans--b
To6be6eligible6for6a6HECM6homeowners6must6live6in6their6homes:
a.6more6than636months6of6each6year.
b.6more6than666months6of6each6year.
c.6more6than676months6of6each6year.
, d.6126months6of6each6calendar6year.6-6ans--b
When6a6mortgage6is6described6as6a6"non-recourse6loan",6this6means6that6the6borrower:
a.6has6no6right6to6cure6a6default6once6foreclosure6begins.
b.6may6not6refinance6the6loan6to6obtain6additional6funds6if6the6home6value6increases.
c.6may6not6make6partial6prepayments6and6then6borrow6the6funds6again6at6a6later6date.
d.6may6not6be6held6personally6liable6for6loan6amounts6that6are6greater6than6the6home6val
ue.6-6ans--d
T/F6A6home6located6in6a6Planned6Unit6Development6(PUD),6such6as6a6golf-
course6community,6may6be6eligible6for6a6HECM.6-6ans--True
Mr.6Behm's6home6is6valued6at6$200,000.6His6home6needs6a6new6roof,6a6new6furnace,6an
d6electrical6work6which6will6cost6$25,000.6Which6of6the6following6is6true?
a.6If6repairs6are6not6done6before6closing,6the6repair6set6aside6will6be6$37,500.
b.6Mr.6Behm6cannot6get6a6HECM6because6the6repair6set6aside6cannot6be6more6than615
%6of6the6maximum6claim6amount.
c.6Mr.6Behm6will6have6to6make6some6of6the6repairs6before6closing6in6order6to6qualify6for6a
6HECM.6-6ans--a
Required6follow-up6after6a6HECM6counseling6session6may6completed6by:
a.6a6phone6call6from6the6counselor.
b.6a6survey6mailed6to6the6client.
c.6a6phone6call6from6any6agency6employee.
d.6any6of6the6above6-6ans--a
In6the6case6of6a6couple6where6only6one6spouse6will6be6a6borrower6on6the6HECM6loan,6th
e6counselor6should:
a.6confirm6that6the6non-borrowing6spouse6has6removed6his/
her6name6from6the6title,6then6proceed6to6counsel6only6the6borrowing6spouse.
b.6advise6the6client6to6call6the6lender6to6learn6whether6the6underwriter6requires6counselin
g6for6a6non-borrower6spouse.
c.6inform6the6borrower6and6non-
borrowing6spouse6that6they6both6must6participate6in6counseling6in6order6to6obtain6a6HEC
M.
d.6refuse6to6complete6any6counseling6session6unless6the6non-
borrowing6spouse6is6included.6-6ans--c
Any6complete6HECM6counseling6file6must6have:
a.6a6copy6of6an6amortization6schedule.
b.6a6copy6of6the6client's6driver's6license.
c.6a6copy6of6a6bank6statement6or6other6documentation6of6the6client's6income.
d.6a6copy6of6the6client's6credit6report.6-6ans--a
A6HECM6counselor6must6NEVER6provide6information6on6the:
a.6prevailing6interest6rate6margins.
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