Practice Test Geeks(CRMP) Certified Reverse Mortgage Professional Practice Test
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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

  1. A borrower has a $120,000 existing mortgage on a home appraised at $350,000. Can they obtain a HECM?

    Answer: Yes, but only if the existing mortgage is paid off with HECM proceeds at closing

    Existing mortgages must be paid off using HECM proceeds at or before closing because the HECM must be in a first-lien position.

  2. Which property type is NOT eligible for a standard HECM loan?

    Answer: Cooperative (co-op) unit in most states

    Co-op units are generally ineligible for HECMs because the borrower owns shares, not real property, which does not meet FHA's collateral requirements.

  3. What is the significance of the 'initial disbursement limit' in the first year of a HECM?

    Answer: It limits draws to 60% of the principal limit (or mandatory obligations plus 10%) in the first 12 months

    HUD's initial disbursement limit restricts first-year draws to 60% of the principal limit, or mandatory obligations plus 10%, whichever is greater, to prevent rapid equity depletion.

  4. A HECM borrower passes away. Their estate has 30 days after notification to repay the loan. What additional time extensions may be available?

    Answer: Up to two 90-day extensions if the estate is actively working to sell or refinance

    HUD allows up to two 90-day extensions (for a total of up to 12 months from the due date) if the heirs are actively marketing the property or pursuing refinancing.

  5. What is the purpose of the mortgage insurance premium (MIP) collected at HECM closing?

    Answer: It funds the FHA Mutual Mortgage Insurance Fund, which guarantees the loan

    The upfront MIP goes into the FHA Mutual Mortgage Insurance Fund, which protects borrowers by guaranteeing loan advances if the lender fails and ensuring non-recourse protection.

  6. Under HECM rules, which of the following individuals may NOT serve as an agent or power of attorney for a borrower during the application process without prior HUD approval?

    Answer: The HECM originating lender or its employees

    The originating lender and its employees are prohibited from serving as the borrower's power of attorney due to the inherent conflict of interest.

  7. Which occupancy requirement must a HECM borrower satisfy on an ongoing basis to keep the loan in good standing?

    Answer: The home must remain the borrower's principal residence

    The HECM requirement is that the property must remain the borrower's principal residence; there is no precise day count, but abandonment or permanent relocation triggers a maturity event.