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

  1. A HECM borrower with a $400,000 home has a Principal Limit of $240,000. Their existing mortgage balance is $180,000. How much additional cash can they access at closing under the initial disbursement limit rules?

    Answer: $24,000

    Mandatory obligations ($180,000) exceed 60% ($144,000) of the $240,000 PL, so borrowers may draw mandatory obligations plus 10% of PL ($24,000) in year one.

  2. Which HUD form must be signed by a HECM counselor and borrower to certify that counseling was completed before loan application?

    Answer: HUD-9902 (HECM Counseling Certificate)

    The HUD-9902 is the HECM counseling certificate that must be issued by an independent HUD-approved counselor before the lender can take a loan application.

  3. What is the primary purpose of the HECM Financial Assessment introduced by HUD in 2015?

    Answer: To evaluate the borrower's willingness and capacity to meet ongoing loan obligations such as taxes and insurance

    The Financial Assessment evaluates the borrower's credit history and residual income to determine their ability to pay taxes, insurance, and other property charges.

  4. When a Life Expectancy Set-Aside (LESA) is required after Financial Assessment, how are property charge payments handled?

    Answer: A portion of the Principal Limit is set aside and the servicer pays property charges on the borrower's behalf

    A LESA reserves a calculated portion of the Principal Limit from which the servicer disburses property taxes and insurance premiums directly, removing the risk of borrower non-payment.

  5. Which statement about HECM loan limits is accurate as it relates to the Maximum Claim Amount (MCA)?

    Answer: The MCA is the lesser of the appraised value or the FHA national lending limit

    The Maximum Claim Amount is the lesser of the property's appraised value or the FHA HECM lending limit, capping the base for Principal Limit calculations.

  6. A borrower wants to use a HECM to purchase a manufactured home. What is the primary eligibility requirement for the manufactured home to qualify?

    Answer: The home must meet HUD's manufactured housing standards and be classified as real property

    Manufactured homes must meet HUD's construction and safety standards (post-June 15, 1976 HUD tag) and must be titled as real property to be eligible for HECM.

  7. Under the HECM program's non-recourse feature, which party absorbs any shortfall when the loan balance exceeds the home's sale proceeds at loan termination?

    Answer: FHA through the Mutual Mortgage Insurance Fund (MMIF)

    FHA's Mutual Mortgage Insurance Fund absorbs any shortfall when HECM loan balances exceed net sale proceeds, protecting both borrowers and lenders.