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A Counseling Agency's failure to follow all basic requirements required by HUD could result in which of the following: A. Termination of agency's HUD approval B. Suspension of agency's HUD approval C. Forfeiture of remaining federal grant funds D. Fines and or imprisonment E. a , b , and c F. all of the above - ANSWER-E. Termination of agency's HUD approval Suspension of agency's HUD approval Forfeiture of remaining federal grant funds T/F A counseling agency must offer and provide face-to-face counseling to clients that prefer this format whenever possible. - ANSWER-True All of the below statements are requirements that each agency must follow EXCEPT: A .In cases where an agency does not offer unique services requested by the client, the agency must refer the client to another participating agency, preferably in the client's area. B. An agency must maintain a national license and a separate license for each state in which services are provided. C. An agency must make reasonable efforts to provide language assistance to persons who are Limited English Proficiency (LEP). D. An agency must notify HUD and provide a copy of the updated Work Plan prior to implementation of any changes to the agency's Work Plan - ANSWER-B T/F Reverse Mortgage counselors must discuss an action plan during each counseling session. - ANSWER-False All of the following are true of the client's required "follow up" EXCEPT: A. The follow-up must be completed by a Certified HECM Counselor B. verbal attempts must be made to contact the client for follow-up C. A written letter to the client must request the client contact the agency within 30 days of the date of the letter. D. Issuing surveys to assess housing outcomes does not fully meet the requirement for the client follow-up and hiring a third party agency to conduct the follow up is not prohibited. - ANSWER-D. Which of the follow best defines a Reverse Mortgage: A. A federally insured loan that allows borrowers 62 years and older to convert the equity in their home into available cash and which will be paid by heirs of the borrowers upon their passing. (HECM) Commented [K1]:
B. A mortgage available to those with 100% equity and a home in good condition that requires no repairs. C. A mortgage product that pays a homeowner loan proceeds drawn from accumulated home equity and that requires no repayment until a future time. D. A refinance of an existing mortgage only for borrowers 62 years or older. - ANSWER- C T/F Agencies are permitted to conduct marketing and outreach including providing general information about housing opportunities and raising awareness about critical housing topics. - ANSWER-True An agency's staff will be required to have an up-to-date knowledge of which of the following: A. All FHA Single Family mortgage programs B.Lender product availability and rate offerings C.Mortgagee letters D. HUD's website for information on products and guidelines (www.hud.gov) E. a , b , c F. a , c , d - ANSWER-F T/F To receive a FHA HECM loan, a borrower must first receive One-on-One Counseling from a certified HECM Counselor. - ANSWER-True T/F A reverse mortgage counseling agency may charge a fee that exceeds the actual cost to provide the service but only clients and related parties that are able to afford the fee. - ANSWER-False T/F Clients must not be turned away because of an inability to pay counseling fee - ANSWER-False All are true of entities eligible to provide Reverse Mortgage Counseling EXCEPT: A.An agency must have an affiliating lending institution in order to stay updated with updating lending practices. B. An agency must be have an Active Status on the HECM Roster C. An agency must receive continuing education every two years D. An agency must have access to a technology that allows for adequate HUD reporting
- ANSWER-A. What are the names of the 2 HUD Booklets that each client must receive before completing a counseling session? - ANSWER-Preparing for Your Counseling Session Use Your Home to Stay at Home - A Guide for Homeowners Who Need Help Now Each counseling session must include discussion on all of the following EXCEPT: A. Basic Requirements to the Reverse Mortgage B. Alternatives to the Reverse Mortgage C. Fees and costs associated with the Reverse Mortgage
B. A HECM is a "non-recourse" loan which means that repayment is not required until the last remaining borrower dies C. Receiving a HECM results in 2 mortgages on the title D. Only a free and clear title can receive a HECM - ANSWER-D Principal limit on a HECM loan is best described as: A. Maximum initial loan amount B.Maximum loan balance for the life of the loan C.Maximum home value insured by HUD D. Appraised value or nation HECM mortgage limit, whichever is less - ANSWER-B T/F If a public or private non-profit housing counseling agency is not available in a particular area, it is permissible for local HUD office staff to become trained in order to counsel prospective HECM borrowers. All HUD offices maintain a staff of trained counselors. - ANSWER-False T/F A borrower's first step in receiving a reverse mortgage is to receive counseling from a certified HECM counselor. - ANSWER-True T/F It is not permissible for a lender to discuss or disclose estimated loan figures with a borrower before that borrower receives counseling from a certified HECM counselor - ANSWER-True (California being the only exception) Mr. Shadrick has spoken with Bob Loanman about getting a reverse mortgage. Mr. Shadrick was expected to be at his daughter's wedding in Hawaii so he will be completing his reverse mortgage counseling on the telephone while on vacation. Before he goes on vacation he's going to go ahead and get his appraisal inspection done by a licensed appraiser. What is the best way to describe how the appraisal will be paid for? A. The lender cannot charge Mr. Shadrick for this appraisal B.The borrower must pay for the appraisal upfront directly to the appraiser C. The borrower has the option of paying for the appraisal as a part of the closing costs when the reverse mortgage is closed D. The lender is responsible for the appraisal fee in all transactions - ANSWER-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 - ANSWER-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. - ANSWER-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) - ANSWER-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 - ANSWER-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 - ANSWER-C T/F The final decision regarding the classification of the property is made by the lender.
- ANSWER-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 - 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? A. 3 months B. 6 months C. 9 months D. 12 months E. 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 The repair administration fee is paid to_____. A. The lender B. The borrower after repairs are completed
D. 63 - ANSWER-B
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? 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 - 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, B. $525, C. $625, D. 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? A. Program updates that may revise or revoke parts of the other standard sources. B. Daily rate changes C. Letters to the borrower notifying them of changes to their mortgage D. Letters sent between lenders - ANSWER-A What is the monthly servicing cap for adjustable rate mortgages? A. $ B. $ C. $ D. $40 - ANSWER-C Robert Rogers is a reverse mortgage loan officer and one of his former clients has contact him in refinancing his current reverse mortgage. Which Mortgagee Letter should Mr. Rogers review before telling his client that he might qualify for this refinance - ANSWER- 04 - 18 A dwelling is allowed to have up to how many units in order to be eligible for a HECM? A. 1 unit
B. 2 units C. 3 units D. 4 units - ANSWER-D Mr. Noetal received counseling 8 months ago. He signed an application with a lender a week after the completing the counseling session. His loan process was delayed because of repairs that took longer than expected. Upon preparing documents for closing the loan, his lender realized that his counseling certificate had expired. Which of the following is true? A. HUD requires Mr. Noetal to be counseled again and receive a new certificate. B. Because Mr. Noetal signed his application before the counseling certificate expired, he is not required to be re-counseled by HUD. C. If Mr. Noetal does not believe he would benefit from receiving counseling again, he can verbally decline receiving a second session. D.Mr. Noetal does not have to be re-counseled per HUD, but he DOES have to sign a new application. - ANSWER-B Mortgagee Letter 06-20 permits judgments and liens to subordinate the reverse mortgage in order to close a HECM loan. Which of the following is true? A. Getting a subordination means that the lender who holds the reverse mortgage agrees to remain in second position behind the original lien. B. Getting a subordination means that HUD agrees to remain in second position behind the original lien. C. Getting a subordination completed by the lender who holds a lien means that they agree to have their lien remain in second position behind the reverse mortgage. D. Getting a subordination completed by the lender who holds a lien means that they agree to have their lien remain in third position behind the reverse mortgage. - ANSWER-D The first numbers in a mortgagee letter indicate___. A. The level of importance B. The year in which entities will be required to comply C. The year in which it was released D. The type of entity required to comply - ANSWER-C T/F If the property is vested in a Trust, all contingent beneficiaries must receive counseling. - ANSWER-True A lender will use a Certificate of Occupancy ___. A. To verify that a property is habitable B. To verify that a borrower is using the property as a primary residence C. In lieu of an appraisal D. In lieu of a chain of title - ANSWER-A T/F HUD requires the social security number of the borrower to be on the mortgage for identifying purposes. - ANSWER-True
D. 180% of life expectancy - ANSWER-B When will the borrower receive a copy of the loan agreement? A. Upon closing B. As part of the loan application C. Upon changing payment plans D. In the proposal package - ANSWER-A Generally speaking, the costs of a loan are highest at the beginning of the loan term because___. A. The upfront costs become a smaller part of the growing loan balance B. The likelihood increases that the loan balance will be limited by the loan's non- recourse limit C. Both A and B D. None of the above - ANSWER-C How many copies of the loan agreement with the borrower sign at closing? A. One B. Two C. Three D. Four - ANSWER-C Y/N Before closing on his HECM loan, Mr. Dump had make many repairs to his home. Will a Repair Rider be attached to his Loan Agreement at closing? - ANSWER-No What amount is set aside if a borrower is making repairs after closing? A. 100% of the bid amount B. 150% of the bid amount C. 200% of the bid amount D. Amount to be determined by the lender - ANSWER-B Who is the mortgagor? A. The borrower B.The lender C. The loan officer D. HUD - ANSWER-A When is the maturity date on a reverse mortgage? A. When the borrower turns 100 B. When the mortgage balance reaches the appraised value amount C. 30 years D. There is no maturity date on a reverse mortgage - ANSWER-D T/F Upon request of payment plan change, and assuming the borrower has chosen a viable plan option, the lender must make the request immediately. - ANSWER-False
T/F A borrower's request to change payment plans must be made in writing. - ANSWER-False T/F Borrowers pay the MIP directly to HUD. - ANSWER-FALSE Y/N Mrs. Jones likes to live life on the edge. She's never had homeowner's insurance before because she owns her home free and clear. Upon receiving her reverse mortgage she will be required to maintain hazard insurance. She is scheduled to close on 1/25/2012. Her new insurance will become effective on 1/28/2012 once the insurance company receives the disbursement check with the funds from her HECM. Will she be able to close on the scheduled date? - ANSWER-NO T/F Adjustable rates change on the same date for all borrowers in a given region. - ANSWER-False Mrs. Butters received his annual statement from Reverse Mortgage Solutions on January 20, 2012. In it he found a list of all payments, total interest accrued, and the principal limits. What is missing? A. Her property address B. Her max claim amount C. Her outstanding balance D. Her lender's contact information - ANSWER-C A borrower on an adjustable rate product must be notified of the first rate change within___. A. 25 days of the B. 30 days of the change C. One calendar month D. No notice required - ANSWER-A HECMs can only be taken on primary residences. How does the mortgagee monitor this? A. Annually - Within 30 days before/or after anniversary date B. Bi-annually C. Within 30 days after closing D. Each lender can maintain their own monitoring system - ANSWER-A T/F Johnny Adventureman is going on safari for 4 months but is NOT changing his principal residence. He must notify his mortgagee of the absence. - ANSWER-FALSE Which of the following would cause the HECM loan to become due and payable? A. All borrowers no longer live in the property B. Required repairs were not completed C. Homeowners insurance was not renewed and therefore cancelled D. Property taxes were not paid E. All of the above - ANSWER-E
D. Result in a smaller lien again the property - ANSWER-B Twin sisters with identical appraised values and principal limits close their HECM loans on the same day. One sister takes a lump sum, the other puts her money into a line of credit. In 10 years, both have exhausted the funds from their HECM loans. Which of the following is true? A. Sister who took the lump sum will have a lower balance to pay off B. Sister who took the LOC will have a higher loan balance to pay off C. Sister who took the LOC will have gotten the most total cash from her HECM D. The answer depends on how the line of credit was utilized - ANSWER-C T/F The holder of the reverse mortgage is not always necessarily the loan servicer. - ANSWER-TRUE Mr. Butcavage lost his mortgage statement. Who should he call to find out what his mortgage balance? A. His mortgage holder B. HUD C. His loan servicer D. His mom - ANSWER-B Mrs. Richlady just closed on her HECM loan. She took a lump sum at closing and put the money under her mattress and ending up with a principal limit of $420,000. Her home appraised for $800,000. What did she pay in initial MIP? A. $ B. $12, C. $16, D. None of the above - ANSWER-D Which of the following is true regarding Monthly MIP? A. Each month the lender submits the balance of the mortgage and the monthly MIP is calculated on that amount B. Each year the lender submits the balance of the mortgage and the monthly MIP is calculated on that amount by divided the necessary figures by 12. C. Monthly MIP payments are calculated based on the principal limit and factored into the loan balance at the beginning of the loan term. D. None of the above are true. - ANSWER-A MIP is calculated as A. 2% of principal limit B. 2% of max claim amount C. 2% of the origination fee D. 2% of the outstanding loan balance - ANSWER-B To be eligible for a HECM, the borrower must live in the home at least___. A. More than 3 months out of the year
B. More than 6 months out of the year C. More than 7 months out of the year D. More than 10 months out of the year. - ANSWER-B When is a homeowner in foreclosure eligible for a HECM? A. Can't happen B. If delinquent loan is paid off at closing C. If the homeowner declares bankruptcy D. Foreclosing lender agrees to monthly payments - ANSWER-B What happens to the interest rate and margin on an adjustable rate loan? A. Index can increase and decrease, margin stays the same B. Margin can increase and decrease, index stays the same C. Either the index or the margin can increase or decrease D. Both the index and the margin remain constant - ANSWER-A Mr. Jones' home is in his name only. His wife will inherit the property after his passing. If he got a reverse mortgage without changing the title and Mr. Jones passes away, Mrs. Jones___. A. Can assume the loan B. Will have at least one year to pay off the HECM C. Can remain in the home as long as she wants D. Will have to pay off the HECM Immediately - ANSWER-B Which of the following must be paid to get a HECM? A. Unpaid income taxes B. Personal debt C. Delinquent federal debt D. Past due Medicare Part D premiums - ANSWER-C Mr. Smith has an outstanding loan balance of $98,000. The appraised value of his home is $100,000. What happens when his loan balance reaches $100,000? A. Line of credit growth stops B. No additional debt can be incurred C. Monthly advances not effected D. Monthly advances cease - ANSWER-B Which of the following causes a HECM to become due and payable? A. Borrower doesn't make required repairs B. Borrower doesn't pay federal income taxes C. One of the borrowers remains in a nursing home for 9 consecutive months D. One of two co-borrowers moves out of the home permanently - ANSWER-A HUD prohibits HECM borrowers from doing which of the following? A. Obtaining another loan after closing that will subordinate to the HECM loan B. Taking out another loan of any kind in order to receive a HECM loan
The HECM program provides___. A. Funding for the HECM loans B. Insurance for the HECM loans C. Servicing for HECM loans D. Selling of HECM loans to investors after closing - ANSWER-A How many payment plan options can the borrower chose from? A. 2 B. 3 C. 4 D. 5 - ANSWER-D A tenure plan is more flexible than a fixed rate annuity because___. A. It requires no repayment until the borrower dies, sells the home, or moves away B. Payments continue as long as the borrower is in the home C. Monthly loan advances are not taxable D. It can be converted into a line of credit at any time - ANSWER-D What best describes a term payment plan? A. Provides a lower payment amount than a tenure plan B. Provides fixed monthly payments with a term set by the lender C. Provides fixed monthly payments with a term set by the borrower D. Can be charged to a tenure if the borrower outlives the term - ANSWER-C Which of the following best describes a HECM line of credit (LOC)? A. Loan advances are made as long as the loan balance is less than the home value B. Interest is charged on funds before drawn C. Growth on line of credit is less than interest rate index D. Minimum draw of $500 - ANSWER-A When does a borrower have access to the proceeds of their reverse mortgage? A. Immediately following the closing of the loan B. After the 3 day rescission period C. 1st day of the calendar month following closing D. When the existing liens on the property are paid in full - ANSWER-B What is the late penalty paid to the borrower if the lender is late with their payment? A. $ B. 1% of the payment amount C. 5% of the payment amount D. 10% of the payment amount - ANSWER-D Monthly payments from the lender to the borrower must be made by A. 1st calendar day of the month B. 5th calendar day of the month C. 15th calendar day of the month
D. Last calendar day of the month - ANSWER-A Mr. Orr wants to change his tenure payment plan into a term payment plan. Which of the following is true? A. A lender can charge up to $20 to the borrower to make the change B. Mr. Orr must refinance his loan C. There is no option to change payment plans D. Mr. Orr can only change the payment plan if he currently has a line of credit - ANSWER-D Line of Credit payments must be paid to the borrower within A. 5 calendar days of the request B. 5 business days of the request C. 7 business days of the request D. 10 calendar days of the request - ANSWER-B A credit line grows with the___. A. Initial interest rate B. Expected interest rate C. Current interest rate D. A credit line will not grow - ANSWER-C Mrs. Gallo is expected to close on her reverse mortgage in July of 2012. Her date of birth is December 15, 1920. What age is used to calculate her principal limit? A. 90 B. 91 C. 92 D. Not enough information provided - ANSWER-C Tenure payments will stop ___. A. When the borrower reaches 100 years old B. When the borrower dies or moves away from the home permanently. C. When the outstanding loan balance exceeds the value of the home D. Only at the borrower's request - ANSWER-B Which of the following is not one of the three key pieces of information that are needed to calculate a borrower's principal limit? A. Appraised value B. Date of Birth C. Current interest rate D. Expected interest rate - ANSWER-C T/F The present value of a fixed monthly servicing fee of $25, given a term of 300 months and a compounding rate of .0825 divided by 12 is $3,192.58. This amount should be subtracted from the principal limit to arrive at the net principal limit that is used for determining monthly payments or a line of credit. - ANSWER-TRUE
A. The lender B. The state/local government C. The Federal government D. There is only a first mortgage on a HECM - ANSWER-C Which of the following is required to be in the case binder submitted by the lender to the local HUD office? A. Original first and second note B. Original first and second mortgage C. Original loan agreement (which includes all the documents) D. Original HUD-1 Settlement Statement - ANSWER-C T/F The borrower may never be charged for document preparation. - ANSWER-FALSE Where is the final resting place for case binders? A. The local HUD office B. HUD headquarters C. The lender D. The borrower - ANSWER-B
