CRMP Loan Servicing and Post-Closing Requirements Questions and Answers Flashcards

What document must a HECM servicer send annually to notify the borrower that the loan is still active?

Answer: Annual Occupancy Certification

Servicers must send an Annual Occupancy Certification to confirm the borrower still occupies the home as their primary residence.

Under a HECM tenure payment plan, what happens to monthly payments if the borrower outlives the original loan term estimate?

Answer: Payments continue for life as long as the borrower occupies the home

Tenure payments continue for the life of the loan as long as the borrower lives in and maintains the home as their primary residence.

What is the primary purpose of a Life Expectancy Set-Aside (LESA) in HECM servicing?

Answer: To reserve funds to pay future property taxes and insurance

A LESA reserves a portion of the borrower's available equity to pay future property taxes and homeowner's insurance, preventing default.

If a borrower wants to change their HECM payment plan from a line of credit to monthly tenure payments, what must they do?

Answer: Submit a payment plan change request to the servicer

Borrowers may request a payment plan change from their servicer without refinancing, subject to current availability of funds.

What is the key difference between a full LESA and a partial LESA in HECM underwriting?

Answer: A full LESA is funded entirely from loan proceeds; a partial LESA requires the borrower to contribute

A full LESA is funded entirely from loan proceeds when the borrower cannot demonstrate ability to pay charges; a partial LESA requires borrower contributions.

Which entity is responsible for assigning a HECM to HUD when the loan balance reaches 98% of the Maximum Claim Amount?

Answer: The loan servicer

The loan servicer is responsible for assigning the HECM to HUD when the balance reaches 98% of the MCA to receive insurance claim payments.