HECM Practice 128 approved exam
100% correct.
The HECM Saver was introduced as an option to lower the upfront cost of a HECM by
reducing the upfront mortgage insurance premium to:
a. 0.
b. 0.01% of the Maximum Claim Amount.
c. 1% of the Maximum Claim Amount.
d. 1.25% of the Maximum Claim Amount. - ANSWER-b
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.
c. may not make partial prepayments and then borrow the funds again at a later date.
, d. may not be held personally liable for loan amounts that are greater than the home
value. - ANSWER-d
T/F A home located in a Planned Unit Development (PUD), such as a golf-course
community, may be eligible for a HECM. - ANSWER-True
Mr. Behm's home is valued at $200,000. His home needs a new roof, a new furnace,
and electrical work which will cost $25,000. Which of the following is true?
a. If repairs are not done before closing, the repair set aside will be $37,500.
b. Mr. Behm cannot get a HECM because the repair set aside cannot be more than
15% of the maximum claim amount.
c. Mr. Behm will have to make some of the repairs before closing in order to qualify for a
HECM. - ANSWER-a
Required follow-up after a HECM counseling session may completed by:
a. a phone call from the counselor.
b. a survey mailed to the client.
c. a phone call from any agency employee.
d. any of the above - ANSWER-a
In the case of a couple where only one spouse will be a borrower on the HECM loan,
the counselor should:
a. confirm that the non-borrowing spouse has removed his/her name from the title, then
proceed to counsel only the borrowing spouse.
b. advise the client to call the lender to learn whether the underwriter requires
counseling for a non-borrower spouse.
c. inform the borrower and non-borrowing spouse that they both must participate in
counseling in order to obtain a HECM.
d. refuse to complete any counseling session unless the non-borrowing spouse is
included. - ANSWER-c
Any complete HECM counseling file must have:
a. a copy of an amortization schedule.
b. a copy of the client's driver's license.
c. a copy of a bank statement or other documentation of the client's income.
d. a copy of the client's credit report. - ANSWER-a
A HECM counselor must NEVER provide information on the:
a. prevailing interest rate margins.
b. costs that may vary from lender to lender.
c. third party costs required to obtain a HECM.
d. prices charged by any specific lender. - ANSWER-d
Counselors may create a HECM counseling certificate using:
a. any HUD-approved Client Management System.
b. HUD Housing Counseling System (HCS).
100% correct.
The HECM Saver was introduced as an option to lower the upfront cost of a HECM by
reducing the upfront mortgage insurance premium to:
a. 0.
b. 0.01% of the Maximum Claim Amount.
c. 1% of the Maximum Claim Amount.
d. 1.25% of the Maximum Claim Amount. - ANSWER-b
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.
c. may not make partial prepayments and then borrow the funds again at a later date.
, d. may not be held personally liable for loan amounts that are greater than the home
value. - ANSWER-d
T/F A home located in a Planned Unit Development (PUD), such as a golf-course
community, may be eligible for a HECM. - ANSWER-True
Mr. Behm's home is valued at $200,000. His home needs a new roof, a new furnace,
and electrical work which will cost $25,000. Which of the following is true?
a. If repairs are not done before closing, the repair set aside will be $37,500.
b. Mr. Behm cannot get a HECM because the repair set aside cannot be more than
15% of the maximum claim amount.
c. Mr. Behm will have to make some of the repairs before closing in order to qualify for a
HECM. - ANSWER-a
Required follow-up after a HECM counseling session may completed by:
a. a phone call from the counselor.
b. a survey mailed to the client.
c. a phone call from any agency employee.
d. any of the above - ANSWER-a
In the case of a couple where only one spouse will be a borrower on the HECM loan,
the counselor should:
a. confirm that the non-borrowing spouse has removed his/her name from the title, then
proceed to counsel only the borrowing spouse.
b. advise the client to call the lender to learn whether the underwriter requires
counseling for a non-borrower spouse.
c. inform the borrower and non-borrowing spouse that they both must participate in
counseling in order to obtain a HECM.
d. refuse to complete any counseling session unless the non-borrowing spouse is
included. - ANSWER-c
Any complete HECM counseling file must have:
a. a copy of an amortization schedule.
b. a copy of the client's driver's license.
c. a copy of a bank statement or other documentation of the client's income.
d. a copy of the client's credit report. - ANSWER-a
A HECM counselor must NEVER provide information on the:
a. prevailing interest rate margins.
b. costs that may vary from lender to lender.
c. third party costs required to obtain a HECM.
d. prices charged by any specific lender. - ANSWER-d
Counselors may create a HECM counseling certificate using:
a. any HUD-approved Client Management System.
b. HUD Housing Counseling System (HCS).
