Practice Test Geeks(CRMP) Certified Reverse Mortgage Professional Practice Test
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Financial Assessment and Underwriting 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 Financial Assessment and Underwriting flashcards as text

  1. During a HECM financial assessment, a borrower has a monthly residual income of $450. The required residual income threshold for a household of two in a non-Northeast region is $529. What must the lender do?

    Answer: Require a Life Expectancy Set-Aside (LESA)

    When residual income falls below HUD's threshold, the lender must establish a LESA to cover future property charges.

  2. Which of the following credit events during the financial assessment would typically require a satisfactory explanation letter but would NOT automatically disqualify a borrower?

    Answer: Medical-related derogatory credit

    HUD guidelines allow medical derogatory credit to be disregarded or explained away as an extenuating circumstance.

  3. For HECM financial assessment purposes, how far back must the lender review a borrower's housing payment history?

    Answer: 24 months

    HUD requires lenders to review 24 months of housing payment history (mortgage or rent) as part of financial assessment.

  4. A borrower receives Social Security income of $1,800/month and part-time wages of $600/month. The part-time income has been received for only 14 months. How should the lender treat the part-time wages?

    Answer: Exclude the wages because 24 months of history is required

    Employment income typically requires a two-year history to be counted; 14 months does not meet that threshold.

  5. A Fully-Funded LESA differs from a Partially-Funded LESA in that the Fully-Funded LESA:

    Answer: Is funded entirely by loan proceeds upfront to pay all future property charges

    A Fully-Funded LESA is established when both credit and residual income are unsatisfactory, funding all projected property charges from loan proceeds.

  6. When assessing a borrower's cash flow, which of the following recurring obligations is NOT typically included as a monthly liability?

    Answer: Utility bills

    Utility bills are accounted for in the residual income budget, not counted as a credit liability in the debt ratio.

  7. A borrower is in a repayment plan with the IRS for a federal tax debt of $12,000. How should the lender treat this during financial assessment?

    Answer: Count the repayment plan payment as a monthly liability if in good standing

    An IRS repayment plan in good standing is treated as a monthly liability rather than a disqualifying event.