Application and Origination Flashcards
7 cards from real CRMP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Application and Origination flashcards as text
A borrower's non-borrowing spouse is 57 years old and is listed on the title. What must occur before the HECM loan can close?
Answer: The spouse must attend counseling and be designated as an Eligible Non-Borrowing Spouse
A non-borrowing spouse under 62 must be designated as an Eligible Non-Borrowing Spouse and attend counseling so deferral protections apply after the borrower's death.
Which document formally initiates the HECM application process and must be signed by the borrower?
Answer: Uniform Residential Loan Application (1003)
The Uniform Residential Loan Application (Form 1003) is the standard document that formally initiates any mortgage application, including HECMs.
For a HECM for Purchase, what is the primary source of the required down payment?
Answer: The borrower's own funds or gift proceeds
HUD requires that the down payment for a HECM for Purchase come from the borrower's own funds or eligible gifts, not borrowed funds.
What is the purpose of the expected average mortgage interest rate (AEI/Expected Rate) in HECM calculations?
Answer: It is used to calculate the principal limit at origination
The expected (average) interest rate is used in HUD's principal limit factor tables to determine how much a borrower can receive at origination.
A borrower owns a home worth $900,000. What is the maximum property value used to calculate the HECM principal limit?
Answer: $822,375
HUD caps the property value used in HECM calculations at the national lending limit (FHA maximum claim amount), which is $822,375 for 2023.
Which flood zone designation generally makes a property ineligible for a HECM unless flood insurance is obtained?
Answer: Zone A or V
Properties in FEMA Special Flood Hazard Areas (Zone A or V) require mandatory flood insurance as a condition of HECM eligibility.
If a HECM borrower has an outstanding federal tax lien on the property, what must typically happen before closing?
Answer: The lien must be satisfied or a payment plan approved by the IRS must be in place
Federal tax liens must be paid off or a subordination/payment agreement must be in place because the HECM must hold a first-lien position.