HECM Program and Products 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 HECM Program and Products flashcards as text
A HECM borrower selects the adjustable-rate product with a monthly adjusting index. What index is most commonly used for HECM ARM products?
Answer: Constant Maturity Treasury (CMT) or SOFR
HECM ARM products are indexed to the Constant Maturity Treasury (CMT) or SOFR (which replaced LIBOR), with a margin added to determine the note rate.
Which of the following property types is NOT eligible for a HECM loan?
Answer: Cooperative (co-op) apartment
Cooperative apartments are not eligible for HECM financing because borrowers own shares in a corporation rather than holding real property title.
Under the HECM Initial Disbursement Limit rules, what percentage of the Principal Limit may a borrower access at closing if they have no mandatory obligations?
Answer: 60% of the Principal Limit during the first 12 months
Borrowers with no or low mandatory obligations are limited to 60% of the Principal Limit during the first 12 months to reduce early loan balance growth.
What is the ongoing Mortgage Insurance Premium (MIP) rate charged annually on the outstanding HECM loan balance?
Answer: 0.5% per year
The ongoing annual MIP for HECM loans is 0.5% of the outstanding loan balance, charged monthly.
A non-borrowing spouse (NBS) was properly disclosed and listed at loan origination. The borrowing spouse dies. Under current HUD guidelines, what protection does the NBS have?
Answer: The NBS may remain in the home under Deferral of Due and Payable status
A properly disclosed eligible non-borrowing spouse may remain in the home under Deferral of Due and Payable status as long as they continue to meet all HECM obligations.
Which statement best describes the HECM fixed-rate product compared to the adjustable-rate HECM?
Answer: The fixed-rate HECM requires full disbursement of available funds at closing as a lump sum
The HECM fixed-rate product requires a single lump-sum disbursement at closing; ongoing draws, tenure payments, and lines of credit are not available.
Under what circumstance may a HECM borrower borrow MORE than 60% of the Principal Limit in the first 12 months without triggering the higher upfront MIP?
Answer: When mandatory obligations (existing mortgage payoff, closing costs) exceed 60% of the Principal Limit
If mandatory obligations exceed 60% of the Principal Limit, borrowers may draw up to their mandatory obligations plus 10% in the first year while still paying the lower 2% upfront MIP.