HECM LATEST 2026 STUDY GUIDE QUESTIONS AND
SOLUTIONS RATED A+
✔✔A HECM counselor must discuss all of the following with a potential borrower
EXCEPT:
A. Financial implications
B. Necessary credit qualifications
C. Alternatives to a HECM
D. Consequences to receiving a HECM - ✔✔B
✔✔T/F Other parties involved in the reverse mortgage transaction including children,
financial advisors, and loan officers are encouraged to participate in the HECM
counseling session. - ✔✔False
✔✔A good source for both borrowers and agencies for additional information on
available resources for elderly homeowners is known as
A. The Area Agency on Aging
B. AARP
C. www.hud.gov
D. Consumer Credit Counseling Services (CCCS) - ✔✔A
✔✔Which of the following is prohibited until the borrower receives counseling?
A. Appraisal Inspection
B. Preliminary Title Search
C. Pulling an AVM
D. Taking a loan application - ✔✔A
✔✔All of the following are true regarding ordering appraisals EXCEPT:
A. An FHA Case # is required before an appraisal can be ordered
B. An appraiser cannot be chosen directly by a Loan Officer
C. If a borrower had an appraisal done on their home before speaking to a lender, the
lender may use that appraisal as part of the HECM transaction. (The appraisal must be
ordered by the lender and completed by a HUD-approved appraiser. )
D. All of the above are true - ✔✔C
✔✔T/F The final decision regarding the classification of the property is made by the
lender. - ✔✔False
✔✔All of the following property types are eligible to receive HECM loans provided they
meet the necessary HUD requirements EXCEPT:
A. Manufactured Homes
B. Condominium Units
C. Properties located in PUDs
D. Cooperative Housing Units
,E. All are eligible property types - ✔✔D
✔✔T/F All borrowers are expected to maintain Hazard (Homeowners) Insurance and
Flood Insurance under HECM guidelines. - ✔✔False
✔✔How long does a borrower have to complete required repairs after closing?
A. 3 months
B. 6 months
C. 9 months
D. 12 months
E. Time period specified in the loan agreement - ✔✔E
✔✔T/F Required repairs that are estimated to cost less than 15% of the maximum claim
amount must be completed before closing. - ✔✔False
✔✔The repair administration fee is paid to_____.
A. The lender
B. The borrower after repairs are completed
C. The HUD inspector
D. The appraiser - ✔✔A
✔✔The lending limit is $625,500, and a borrower has a principal limit of $420,000 and
appraised value is $700,000. What is the max claim amount?
A. $625,500
B. $420,000
C. $700,000
D. Not enough information has been provided to answer the question - ✔✔B
✔✔T/F Unlike a traditional mortgage, the closing costs of a HECM are taken out of the
loan proceeds. - ✔✔True
✔✔T/F The borrower does not pay any interest on any of the closing costs that were
taken out of the loan proceeds. - ✔✔False
✔✔A borrower has a $200,000 home value. What is the likely upfront cost added to the
loan balance at closing? (Revisit. Where is the formula?)
A. $7,000
B. $10,000
C. $15,000
D. $20,000 - ✔✔B
✔✔Monthly adjustable rates can't adjust by more than___.
A. Two percentage points per year
B.Five percentage points per year
, C. Two percentage points over the life of the loan
D. Ten percentage points over the life of the loan - ✔✔D
✔✔Borrowers with delinquent federal debt are not eligible for a HECM___.
A. Ever
B. Until the debt is satisfied
C. For 2 years after the debt is satisfied
D. For 7 years after the debt is satisfied - ✔✔B
✔✔A lender must screen all borrowers on which of the following:
A. LDP
B. GSA
C. CAIVRS
D. All of the above - ✔✔D
✔✔A borrower must be what age before signing a loan application in order to receive a
HECM?
A. 60
B. 61
C. 62
D. 63 - ✔✔B
✔✔T/F Only one HECM borrower must be living in the home in order for the HECM loan
to close. - ✔✔True
✔✔When is a borrower able to close in the name of a Living Trust for a HECM?
A. When all the beneficiaries of the trust are eligible HECM borrowers
B. When all the trustees of the trust are eligible HECM borrowers
C. Both a and b above
D. Can't be done - ✔✔A
✔✔T/F A Durable Power of Attorney is not permitted on HECM loans; only a court
appointed Guardianship. - ✔✔False
✔✔A borrower's appraised value is $750,000. What is the required title insurance
amount?
A. $750,000
B. $525,000
C. $625,500
D. Not enough information to answer the question - ✔✔A
✔✔T/F Generally, unsecured debts other than delinquent Federal debts (i.e. credit card
debt), regardless of their status should not impact negatively on the borrower's eligibility.
- ✔✔True
SOLUTIONS RATED A+
✔✔A HECM counselor must discuss all of the following with a potential borrower
EXCEPT:
A. Financial implications
B. Necessary credit qualifications
C. Alternatives to a HECM
D. Consequences to receiving a HECM - ✔✔B
✔✔T/F Other parties involved in the reverse mortgage transaction including children,
financial advisors, and loan officers are encouraged to participate in the HECM
counseling session. - ✔✔False
✔✔A good source for both borrowers and agencies for additional information on
available resources for elderly homeowners is known as
A. The Area Agency on Aging
B. AARP
C. www.hud.gov
D. Consumer Credit Counseling Services (CCCS) - ✔✔A
✔✔Which of the following is prohibited until the borrower receives counseling?
A. Appraisal Inspection
B. Preliminary Title Search
C. Pulling an AVM
D. Taking a loan application - ✔✔A
✔✔All of the following are true regarding ordering appraisals EXCEPT:
A. An FHA Case # is required before an appraisal can be ordered
B. An appraiser cannot be chosen directly by a Loan Officer
C. If a borrower had an appraisal done on their home before speaking to a lender, the
lender may use that appraisal as part of the HECM transaction. (The appraisal must be
ordered by the lender and completed by a HUD-approved appraiser. )
D. All of the above are true - ✔✔C
✔✔T/F The final decision regarding the classification of the property is made by the
lender. - ✔✔False
✔✔All of the following property types are eligible to receive HECM loans provided they
meet the necessary HUD requirements EXCEPT:
A. Manufactured Homes
B. Condominium Units
C. Properties located in PUDs
D. Cooperative Housing Units
,E. All are eligible property types - ✔✔D
✔✔T/F All borrowers are expected to maintain Hazard (Homeowners) Insurance and
Flood Insurance under HECM guidelines. - ✔✔False
✔✔How long does a borrower have to complete required repairs after closing?
A. 3 months
B. 6 months
C. 9 months
D. 12 months
E. Time period specified in the loan agreement - ✔✔E
✔✔T/F Required repairs that are estimated to cost less than 15% of the maximum claim
amount must be completed before closing. - ✔✔False
✔✔The repair administration fee is paid to_____.
A. The lender
B. The borrower after repairs are completed
C. The HUD inspector
D. The appraiser - ✔✔A
✔✔The lending limit is $625,500, and a borrower has a principal limit of $420,000 and
appraised value is $700,000. What is the max claim amount?
A. $625,500
B. $420,000
C. $700,000
D. Not enough information has been provided to answer the question - ✔✔B
✔✔T/F Unlike a traditional mortgage, the closing costs of a HECM are taken out of the
loan proceeds. - ✔✔True
✔✔T/F The borrower does not pay any interest on any of the closing costs that were
taken out of the loan proceeds. - ✔✔False
✔✔A borrower has a $200,000 home value. What is the likely upfront cost added to the
loan balance at closing? (Revisit. Where is the formula?)
A. $7,000
B. $10,000
C. $15,000
D. $20,000 - ✔✔B
✔✔Monthly adjustable rates can't adjust by more than___.
A. Two percentage points per year
B.Five percentage points per year
, C. Two percentage points over the life of the loan
D. Ten percentage points over the life of the loan - ✔✔D
✔✔Borrowers with delinquent federal debt are not eligible for a HECM___.
A. Ever
B. Until the debt is satisfied
C. For 2 years after the debt is satisfied
D. For 7 years after the debt is satisfied - ✔✔B
✔✔A lender must screen all borrowers on which of the following:
A. LDP
B. GSA
C. CAIVRS
D. All of the above - ✔✔D
✔✔A borrower must be what age before signing a loan application in order to receive a
HECM?
A. 60
B. 61
C. 62
D. 63 - ✔✔B
✔✔T/F Only one HECM borrower must be living in the home in order for the HECM loan
to close. - ✔✔True
✔✔When is a borrower able to close in the name of a Living Trust for a HECM?
A. When all the beneficiaries of the trust are eligible HECM borrowers
B. When all the trustees of the trust are eligible HECM borrowers
C. Both a and b above
D. Can't be done - ✔✔A
✔✔T/F A Durable Power of Attorney is not permitted on HECM loans; only a court
appointed Guardianship. - ✔✔False
✔✔A borrower's appraised value is $750,000. What is the required title insurance
amount?
A. $750,000
B. $525,000
C. $625,500
D. Not enough information to answer the question - ✔✔A
✔✔T/F Generally, unsecured debts other than delinquent Federal debts (i.e. credit card
debt), regardless of their status should not impact negatively on the borrower's eligibility.
- ✔✔True
