HECM UPDATED REVISION EXAMS QUESTIONS AND
SOLUTIONS RATED A+
✔✔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. - ✔✔False
✔✔T/F A borrower's request to change payment plans must be made in writing. -
✔✔False
✔✔T/F Borrowers pay the MIP directly to HUD. - ✔✔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? - ✔✔NO
✔✔T/F Adjustable rates change on the same date for all borrowers in a given region. -
✔✔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 - ✔✔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 - ✔✔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 - ✔✔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. - ✔✔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 - ✔✔E
✔✔T/F HUD must approve before a HECM property can be foreclosed on by a
mortgagee - ✔✔TRUE
✔✔A woman sells her home to her son, and the son has given her a life estate in the
property. This means___.
A. She is ineligible for a reverse mortgage
B. She can get a reverse mortgage without the consent of her son
C. She will need a durable POA executed
D. She can live in the home as long as she wants - ✔✔D
✔✔When the last remaining HECM borrower passes away___.
A. The title of the home passes through to the lender
B. The will is probated, the heirs have one year to sell the property or pay off the
reverse mortgage
C. The executor of the estate must make arrangements to pay off the HECM and
distribute any remaining equity to the heirs
D. The heirs may being making monthly payments - ✔✔C
✔✔What is the effect of an interest rate increase on a HECM?
A. Tenure payments are reduced, line of credit increases
B. Term payments are reduced, line of credit remains the same
C. Term payments are the same, the rate the outstanding loan balance grows increases
D. Tenure payments are the same, line of credit remains the same - ✔✔C
✔✔A borrower got her HECM loan many years ago when the lending limit for her county
was $600,000. Her home is appraised for $800,000. What is the most her repayment of
the loan could be?
A. $600,000
B. $800,000
C. 75% of appraised value
D. Net proceeds from selling the home - ✔✔D
✔✔Mr. Jones has net proceeds from the sale of his home of $150,000. He wasn't to
purchase a new home that has appraised for $200,000. The HECM purchase program
SOLUTIONS RATED A+
✔✔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. - ✔✔False
✔✔T/F A borrower's request to change payment plans must be made in writing. -
✔✔False
✔✔T/F Borrowers pay the MIP directly to HUD. - ✔✔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? - ✔✔NO
✔✔T/F Adjustable rates change on the same date for all borrowers in a given region. -
✔✔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 - ✔✔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 - ✔✔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 - ✔✔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. - ✔✔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 - ✔✔E
✔✔T/F HUD must approve before a HECM property can be foreclosed on by a
mortgagee - ✔✔TRUE
✔✔A woman sells her home to her son, and the son has given her a life estate in the
property. This means___.
A. She is ineligible for a reverse mortgage
B. She can get a reverse mortgage without the consent of her son
C. She will need a durable POA executed
D. She can live in the home as long as she wants - ✔✔D
✔✔When the last remaining HECM borrower passes away___.
A. The title of the home passes through to the lender
B. The will is probated, the heirs have one year to sell the property or pay off the
reverse mortgage
C. The executor of the estate must make arrangements to pay off the HECM and
distribute any remaining equity to the heirs
D. The heirs may being making monthly payments - ✔✔C
✔✔What is the effect of an interest rate increase on a HECM?
A. Tenure payments are reduced, line of credit increases
B. Term payments are reduced, line of credit remains the same
C. Term payments are the same, the rate the outstanding loan balance grows increases
D. Tenure payments are the same, line of credit remains the same - ✔✔C
✔✔A borrower got her HECM loan many years ago when the lending limit for her county
was $600,000. Her home is appraised for $800,000. What is the most her repayment of
the loan could be?
A. $600,000
B. $800,000
C. 75% of appraised value
D. Net proceeds from selling the home - ✔✔D
✔✔Mr. Jones has net proceeds from the sale of his home of $150,000. He wasn't to
purchase a new home that has appraised for $200,000. The HECM purchase program
