HECM EXAM AND PRACTICE EXAM -

HECM EXAM AND PRACTICE EXAM -

ACTUAL EXAM 250 QUESTIONS AND CORRECT

DETAILED ANSWERS (100% VERIFIED ANSWERS)

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HECM ACTUAL EXAM

All of the following property types are eligible to receive HECM loans provided

they meet the necessary HUD requirements EXCEPT:

• Manufactured Homes
• Condominium Units
• Properties located in PUDs
• Cooperative Housing Units
• All are eligible property types - ANSWER- D

T/F All borrowers are expected to maintain Hazard (Homeowners) Insurance and Flood Insurance under HECM guidelines. - ANSWER- False

How long does a borrower have to complete required repairs after closing?

• 3 months
• 6 months
• 9 months
• 12 months
• Time period specified in the loan agreement - ANSWER- E

T/F Required repairs that are estimated to cost less than 15% of the maximum claim amount must be completed before closing. - ANSWER- False 1 / 4

The repair administration fee is paid to_____.

• The lender
• The borrower after repairs are completed
• The HUD inspector
• The appraiser - ANSWER- 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

• Not enough information has been provided to answer the question - ANSWER-

B

T/F Unlike a traditional mortgage, the closing costs of a HECM are taken out of the loan proceeds. - ANSWER- True

T/F The borrower does not pay any interest on any of the closing costs that were taken out of the loan proceeds. - ANSWER- 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 - ANSWER- B 2 / 4

Monthly adjustable rates can't adjust by more than___.

• Two percentage points per year

B.Five percentage points per year

• Two percentage points over the life of the loan
• Ten percentage points over the life of the loan - ANSWER- D

Borrowers with delinquent federal debt are not eligible for a HECM___.

• Ever
• Until the debt is satisfied
• For 2 years after the debt is satisfied
• For 7 years after the debt is satisfied - ANSWER- B

A lender must screen all borrowers on which of the following:

A. LDP

B. GSA

C. CAIVRS

• All of the above - ANSWER- D

A borrower must be what age before signing a loan application in order to receive a HECM?

• 60
• 61
• 62

D. 63 - ANSWER- B

• / 4

T/F Only one HECM borrower must be living in the home in order for the HECM loan to close. - ANSWER- True

When is a borrower able to close in the name of a Living Trust for a HECM?

• When all the beneficiaries of the trust are eligible HECM borrowers
• When all the trustees of the trust are eligible HECM borrowers
• Both a and b above
• Can't be done - ANSWER- A

T/F A Durable Power of Attorney is not permitted on HECM loans; only a court appointed Guardianship. - ANSWER- 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

• Not enough information to answer the question - ANSWER- 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. - ANSWER- True

T/F The counseling certificate is generated by each counseling agency on their own letterhead. - ANSWER- False

What is a mortgagee letter?

• / 4