Borrower Qualification Requirements Flashcards

A borrower's home has been cited for health and safety deficiencies in the FHA appraisal. What must happen before the HECM closes?

Answer: Required repairs must be completed and re-inspected, or repair set-asides must be established at closing

FHA requires that health-and-safety repair items be addressed either before closing or through an escrow/set-aside arrangement managed by the servicer.

Which statement about condominiums and HECM eligibility is correct?

Answer: Only FHA-approved condominium projects are eligible for HECM, or units in projects that receive spot approval

HECM eligibility for condos requires the project to be on HUD's approved condominium list or to receive single-unit (spot) approval under FHA guidelines.

Under the Non-Borrowing Spouse (NBS) Deferral Policy, what is required for the NBS to remain in the home after the borrower's death?

Answer: The NBS must have been legally married to the borrower at loan closing and continue to occupy the home as their primary residence

HUD's NBS Deferral Policy requires the NBS to have been married to the borrower at loan origination and at the time of death, and to continue living in the home as their primary residence.

An applicant has a credit score of 580 but no history of delinquent property charges. How is this handled under HECM Financial Assessment?

Answer: HECM has no minimum credit score; the FA focuses on property charge payment history and residual income

Unlike conventional loans, HECM Financial Assessment does not use a minimum credit score threshold; instead it evaluates property charge history and residual income capacity.

What is the maximum period a HECM borrower may be absent from their home for non-medical reasons before the loan becomes due and payable?

Answer: 6 consecutive months

For non-medical absences, the HECM becomes due and payable if the property is not occupied as a primary residence for more than 6 consecutive months.

A surviving Non-Borrowing Spouse wants to remain in the home after the HECM borrower's death. Must she repay the loan at that time?

Answer: No, an eligible NBS may defer repayment and remain in the home without making payments during the deferral period

An eligible NBS under HUD's Deferral Policy may stay in the home and defer repayment of the HECM balance throughout the deferral period without making loan payments.

Which of the following would most likely result in HECM loan call due to failure to meet ongoing borrower obligations?

Answer: The borrower's homeowners insurance policy lapses and is not reinstated

Allowing homeowners insurance to lapse is a direct violation of HECM obligations and can trigger a due-and-payable event after servicer notice and cure period.