HECM UPDATED EXAMS STUDY GUIDE QUESTIONS AND
SOLUTIONS RATED A+
✔✔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 - ✔✔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. - ✔✔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. - ✔✔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 - ✔✔C
✔✔T/F If the property is vested in a Trust, all contingent beneficiaries must receive
counseling. - ✔✔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 - ✔✔A
✔✔T/F HUD requires the social security number of the borrower to be on the mortgage
for identifying purposes. - ✔✔True
✔✔Mr. Wheels has a manufactured home built in 1970. He's maintained it very well so
there are no repairs required by HUD or the lender. What do we know is true?
A. An appraisal has already been completed and approved by an underwriter
B. This property is not eligible for a HECM
C. A repair rider will NOT be included in his loan agreement
D. A repair rider will be included in his loan agreement - ✔✔B
✔✔When reviewing the TALC, the borrower notices he has the same cost in years two
and eight, but in year seventeen it shows a 1.83 at 0% appreciation, and 8% for
appreciation at 4yrs and 8yrs. Why?
A. TALC increases when interest rates decrease, and vice versa
B. Loan balance becomes limited by nonrecourse
C. Origination fee charges may become a bigger part of the loan balance
D. Servicing fee set aside amount is typically larger than what is needed until the
maturity of the loan - ✔✔D
✔✔The TALC must show appreciation options of
A. 0%, 2%, and 4%
B. 2%, 4%, and 8%
C. 0%, 5%, and 10%
D. 0%, 4%, and 8% - ✔✔D
✔✔Which of the following best describes the TALC?
A. Shows the most the lender can charge for the loan
B. Shows all the costs associated with a reverse mortgage
C. Shows the cost of investments purchased with loan proceeds
D. Shows how much the home is worth - ✔✔B
✔✔The TALC must show___. TALC- total annual loan rate
A. Cost of annuities
B. Cost of mutual funds
C. Money market account options
D. Credit line growth projections - ✔✔A
✔✔An adjustable rate TALC with a credit line option___.
A. Assumes a borrower takes half of proceeds at closing and no more the life of the
loan
SOLUTIONS RATED A+
✔✔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 - ✔✔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. - ✔✔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. - ✔✔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 - ✔✔C
✔✔T/F If the property is vested in a Trust, all contingent beneficiaries must receive
counseling. - ✔✔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 - ✔✔A
✔✔T/F HUD requires the social security number of the borrower to be on the mortgage
for identifying purposes. - ✔✔True
✔✔Mr. Wheels has a manufactured home built in 1970. He's maintained it very well so
there are no repairs required by HUD or the lender. What do we know is true?
A. An appraisal has already been completed and approved by an underwriter
B. This property is not eligible for a HECM
C. A repair rider will NOT be included in his loan agreement
D. A repair rider will be included in his loan agreement - ✔✔B
✔✔When reviewing the TALC, the borrower notices he has the same cost in years two
and eight, but in year seventeen it shows a 1.83 at 0% appreciation, and 8% for
appreciation at 4yrs and 8yrs. Why?
A. TALC increases when interest rates decrease, and vice versa
B. Loan balance becomes limited by nonrecourse
C. Origination fee charges may become a bigger part of the loan balance
D. Servicing fee set aside amount is typically larger than what is needed until the
maturity of the loan - ✔✔D
✔✔The TALC must show appreciation options of
A. 0%, 2%, and 4%
B. 2%, 4%, and 8%
C. 0%, 5%, and 10%
D. 0%, 4%, and 8% - ✔✔D
✔✔Which of the following best describes the TALC?
A. Shows the most the lender can charge for the loan
B. Shows all the costs associated with a reverse mortgage
C. Shows the cost of investments purchased with loan proceeds
D. Shows how much the home is worth - ✔✔B
✔✔The TALC must show___. TALC- total annual loan rate
A. Cost of annuities
B. Cost of mutual funds
C. Money market account options
D. Credit line growth projections - ✔✔A
✔✔An adjustable rate TALC with a credit line option___.
A. Assumes a borrower takes half of proceeds at closing and no more the life of the
loan
