CRMP Ethics and Counseling Requirements 4 — Questions and Answers
Question 1: A CRMP suspects a borrower has been the victim of a home repair scam where contractor receives HECM proceeds directly. What is the appropriate response?
- Allow the transaction if the borrower consents in writing
- Report the suspected fraud to HUD and recommend the borrower consult an attorney (Correct answer)
- Restructure the loan to pay the contractor in installments
- Refer the borrower to a different lender
Correct answer: Report the suspected fraud to HUD and recommend the borrower consult an attorney
Direct payment to contractors from HECM proceeds in scam scenarios constitutes financial exploitation and must be reported to HUD.
Question 2: Under what circumstance may a HECM lender pay for a borrower's HUD-required counseling?
- Never — lender payment for counseling is always prohibited
- Only after the borrower has received the counseling completion certificate (Correct answer)
- At any time, as long as the amount does not exceed the HUD maximum fee
- Only for borrowers below 150% of the federal poverty line
Correct answer: Only after the borrower has received the counseling completion certificate
Lenders may pay for counseling only after the borrower receives the completion certificate, to prevent any appearance of influencing the counseling outcome.
Question 3: A CRMP's primary ethical obligation when advising a senior borrower is to whom?
- The lender providing the wholesale funding
- The borrower's family members
- The borrower themselves (Correct answer)
- HUD and FHA as guarantor
Correct answer: The borrower themselves
The CRMP's paramount ethical duty is to the borrower, ensuring recommendations are in the borrower's best interest.
Question 4: Which of the following best describes 'suitability' in the CRMP context?
- Confirming the borrower qualifies financially under FHA guidelines
- Ensuring the reverse mortgage product genuinely meets the borrower's financial and personal needs (Correct answer)
- Verifying the property meets minimum HUD standards
- Determining whether the borrower can pay closing costs
Correct answer: Ensuring the reverse mortgage product genuinely meets the borrower's financial and personal needs
Suitability means the product fits the borrower's actual goals and circumstances, not merely that they qualify.
Question 5: Which of the following topics is NOT required to be covered during mandatory HECM counseling?
- Loan costs and fee structure
- Alternatives to a reverse mortgage
- Specific investment advice for loan proceeds (Correct answer)
- Impact on estate and heirs
Correct answer: Specific investment advice for loan proceeds
Counselors must be neutral and cannot provide personalized investment advice; they cover loan mechanics, alternatives, and obligations.
Question 6: A CRMP is offered a gift worth $200 from a title company seeking reverse mortgage referrals. Under RESPA and NRMLA ethics, this is:
- Acceptable if disclosed to the borrower
- Prohibited as it constitutes an illegal kickback (Correct answer)
- Permissible if the gift is given after closing
- Allowed up to $250 per calendar year
Correct answer: Prohibited as it constitutes an illegal kickback
RESPA Section 8 prohibits kickbacks and unearned fees in settlement services; gifts in exchange for referrals are illegal regardless of timing.
Question 7: When a borrower asks a CRMP to rush the process so counseling happens on the same day as the application signing, the CRMP must explain that:
- Same-day completion is allowed if the borrower waives the waiting period in writing
- HUD requires a minimum 7-business-day waiting period between counseling and application signing (Correct answer)
- The counselor can issue an expedited certificate for an additional fee
- The lender can override the waiting period for financial hardship cases
Correct answer: HUD requires a minimum 7-business-day waiting period between counseling and application signing
HUD's mandatory waiting period of 7 business days between counseling and application signing cannot be waived by the borrower or lender.
CRMP Ethics and Counseling Requirements 4
A CRMP suspects a borrower has been the victim of a home repair scam where contractor receives HECM proceeds directly.
What is the appropriate response?