CRMP Counseling and Disclosures 2 — Questions and Answers
Question 1: Which federal agency oversees the approval and oversight of HUD-approved reverse mortgage counseling agencies?
- The Consumer Financial Protection Bureau (CFPB)
- The Office of Housing Counseling (OHC) within HUD (Correct answer)
- The Federal Housing Finance Agency (FHFA)
- The Federal Reserve Board
Correct answer: The Office of Housing Counseling (OHC) within HUD
HUD's Office of Housing Counseling (OHC) is responsible for approving and overseeing agencies that provide HECM counseling.
Question 2: A borrower wishes to complete HECM counseling by telephone rather than in person. Under HUD guidelines, this is:
- Prohibited — in-person counseling is always required
- Permitted only if the borrower lives more than 50 miles from a counselor
- Permitted as an option available to all eligible borrowers (Correct answer)
- Permitted only with lender written approval
Correct answer: Permitted as an option available to all eligible borrowers
HUD allows telephone counseling as an option for all borrowers, not just those who live far from counseling agencies.
Question 3: During HECM counseling, the counselor is required to provide the borrower with a disclosure about the total annual loan cost (TALC). The TALC disclosure helps the borrower understand:
- The exact interest rate locked in at closing
- The projected annual average cost of the loan expressed as a rate (Correct answer)
- The monthly servicing fee charged by the lender
- The maximum principal limit available
Correct answer: The projected annual average cost of the loan expressed as a rate
The TALC expresses the overall projected cost of a reverse mortgage as an annualized rate, similar to an APR.
Question 4: Which of the following parties is explicitly prohibited from selecting or referring the borrower to a specific HECM counseling agency?
- A HUD-approved housing counseling intermediary
- The lender or mortgage broker originating the loan (Correct answer)
- A nonprofit organization not affiliated with the lender
- An Area Agency on Aging
Correct answer: The lender or mortgage broker originating the loan
HUD rules bar lenders and brokers from steering borrowers to a particular counselor to preserve counseling independence.
Question 5: A counselor discovers during a HECM session that the borrower has an existing tax lien on the property. What is the most appropriate counseling action?
- Refuse to complete the session until the lien is resolved
- Inform the borrower that they are ineligible and end the session
- Discuss how the lien may affect loan proceeds and eligibility, and advise the borrower to address it (Correct answer)
- Notify the lender immediately without informing the borrower
Correct answer: Discuss how the lien may affect loan proceeds and eligibility, and advise the borrower to address it
Counselors should educate borrowers on how outstanding liens can reduce net proceeds and affect closing, and encourage the borrower to resolve the issue.
Question 6: Under the HECM program, the Certificate of HECM Counseling is valid for how long after the counseling session date?
- 30 days
- 90 days
- 180 days (Correct answer)
- One year
Correct answer: 180 days
The counseling certificate is generally valid for 180 days from the date it is issued.
Question 7: If a borrower's non-borrowing spouse is present during HECM counseling, what is the counselor's responsibility regarding that spouse?
- Exclude the non-borrowing spouse from all counseling discussions
- Include the non-borrowing spouse in counseling and explain their rights and risks (Correct answer)
- Obtain separate written consent from the non-borrowing spouse before discussing anything
- Advise the non-borrowing spouse to seek independent legal counsel and end the session
Correct answer: Include the non-borrowing spouse in counseling and explain their rights and risks
HUD encourages including non-borrowing spouses in counseling so they fully understand how the loan affects them, including deferral period rights.
CRMP Counseling and Disclosures 2
Which federal agency oversees the approval and oversight of HUD-approved reverse mortgage counseling agencies?