HECM TEST 2026 CERTIFICATION EVALUATION
COMPLETE SOLUTION PASSED
◉ If repairs are required but can be completed after closing, the
lender will create a repair set-aside in the amount of:
a. 15% of the maximum claim amount.
b. 100% of the actual cost of repairs.
c. 100% of the estimated cost of repairs.
d. 150% of the estimated cost of repairs. Answer: d
◉ TALC rates generally are greatest when borrowers live:
a. less than their life expectancies.
b. to their full life expectances.
c. longer than their life expectancies Answer: a
◉ The net principal limit at closing is:
a. a percentage of the maximum claim amount before any funds are
set-aside or any fees are paid.
b. the credit remaining after all set-asides and fees have been
deducted.
c. the lesser of the home's appraised value or the lending limit.
d. the most HUD will pay on an insurance claim. Answer: b
,◉ Mr. Martin is 83 and his wife is 65. If Mrs. Martin is removed from
the title to the home, the HECM principal limit would be:
a.smaller.
b. the same.
c. larger. Answer: c
◉ T/F Most lenders require that borrowers take a lump sum
payment if they choose an adjustable rate and only allow a creditline
with a fixed interest rate HECM. Answer: False
◉ T/F Given the same principal limit, a term payment plan will
provide a larger monthly payment than a tenure payment plan.
Answer: True
◉ HECM term advances:
a. are generally larger than tenure advances.
b. are monthly payments for a fixed number of months chosen by the
lender.
c. do not allow unscheduled lump sum draws. Answer: a
◉ A borrower who needs a monthly payment for a short period of
time and then wants to have the opportunity to borrow more in the
future may want to choose which type of payment plan?
,a. Initial Lump Sum
b. Modified Tenure
c. Modified Term
d. Tenure Answer: c
◉ A "forward" mortgage is a type of loan in which:
a. extra principal payments are made, so that the payoff date is
moved forward.
b. payments are made on a regular schedule, gradually reducing the
debt and building equity. Answer: b
◉ Which of the following is true of proprietary reverse mortgages?
a. Borrowers do not have to pay for FHA mortgage insurance.
b. Proprietary reverse mortgages are typically designed for high
value homes (those beyond FHA mortgage limits).
c. Proprietary reverse mortgages typically have lower loan-to-value
ratio than HECMs.
d. All of the above Answer: d
◉ When could a 75-year old, married to a 55-year old, be eligible for
a reverse mortgage?
a. Only if the 55 year old does not live in the home and they have a
legal separation agreement.
, b. Only if the 55-year-old is not an owner of the home.
c. Only if the 55 year old signs an agreement that they will not
inherit the property.
d. Only if the 55 year old has no more than a life-estate interest in
the property. Answer: b
◉ A reverse mortgage differs from a forward mortgage in that it is
usually a loan with:
a. increasing debt and increasing equity.
b. increasing debt and decreasing equity.
c. decreasing debt and increasing equity. Answer: b
◉ To be eligible for a HECM homeowners must live in their homes:
a. more than 3 months of each year.
b. more than 6 months of each year.
c. more than 7 months of each year.
d. 12 months of each calendar year. Answer: b
◉ When a mortgage is described as a "non-recourse loan", this
means that the borrower:
a. has no right to cure a default once foreclosure begins.
b. may not refinance the loan to obtain additional funds if the home
value increases.
COMPLETE SOLUTION PASSED
◉ If repairs are required but can be completed after closing, the
lender will create a repair set-aside in the amount of:
a. 15% of the maximum claim amount.
b. 100% of the actual cost of repairs.
c. 100% of the estimated cost of repairs.
d. 150% of the estimated cost of repairs. Answer: d
◉ TALC rates generally are greatest when borrowers live:
a. less than their life expectancies.
b. to their full life expectances.
c. longer than their life expectancies Answer: a
◉ The net principal limit at closing is:
a. a percentage of the maximum claim amount before any funds are
set-aside or any fees are paid.
b. the credit remaining after all set-asides and fees have been
deducted.
c. the lesser of the home's appraised value or the lending limit.
d. the most HUD will pay on an insurance claim. Answer: b
,◉ Mr. Martin is 83 and his wife is 65. If Mrs. Martin is removed from
the title to the home, the HECM principal limit would be:
a.smaller.
b. the same.
c. larger. Answer: c
◉ T/F Most lenders require that borrowers take a lump sum
payment if they choose an adjustable rate and only allow a creditline
with a fixed interest rate HECM. Answer: False
◉ T/F Given the same principal limit, a term payment plan will
provide a larger monthly payment than a tenure payment plan.
Answer: True
◉ HECM term advances:
a. are generally larger than tenure advances.
b. are monthly payments for a fixed number of months chosen by the
lender.
c. do not allow unscheduled lump sum draws. Answer: a
◉ A borrower who needs a monthly payment for a short period of
time and then wants to have the opportunity to borrow more in the
future may want to choose which type of payment plan?
,a. Initial Lump Sum
b. Modified Tenure
c. Modified Term
d. Tenure Answer: c
◉ A "forward" mortgage is a type of loan in which:
a. extra principal payments are made, so that the payoff date is
moved forward.
b. payments are made on a regular schedule, gradually reducing the
debt and building equity. Answer: b
◉ Which of the following is true of proprietary reverse mortgages?
a. Borrowers do not have to pay for FHA mortgage insurance.
b. Proprietary reverse mortgages are typically designed for high
value homes (those beyond FHA mortgage limits).
c. Proprietary reverse mortgages typically have lower loan-to-value
ratio than HECMs.
d. All of the above Answer: d
◉ When could a 75-year old, married to a 55-year old, be eligible for
a reverse mortgage?
a. Only if the 55 year old does not live in the home and they have a
legal separation agreement.
, b. Only if the 55-year-old is not an owner of the home.
c. Only if the 55 year old signs an agreement that they will not
inherit the property.
d. Only if the 55 year old has no more than a life-estate interest in
the property. Answer: b
◉ A reverse mortgage differs from a forward mortgage in that it is
usually a loan with:
a. increasing debt and increasing equity.
b. increasing debt and decreasing equity.
c. decreasing debt and increasing equity. Answer: b
◉ To be eligible for a HECM homeowners must live in their homes:
a. more than 3 months of each year.
b. more than 6 months of each year.
c. more than 7 months of each year.
d. 12 months of each calendar year. Answer: b
◉ When a mortgage is described as a "non-recourse loan", this
means that the borrower:
a. has no right to cure a default once foreclosure begins.
b. may not refinance the loan to obtain additional funds if the home
value increases.
