HECM TERMINOLOGY EXAM Questions
With 100% Correct Answers 2025
GRADED A+
The risk of loan losses in reverse mortgage lending is
controlled by
a) controlling the amount of the loan advances
b) limiting loan advances to 28% of income
c) charging a premium on all loans to create a reserve fund
d) a and / or c above - Correct Answer-d
To qualify for a HECM loan
a) The home must be completely paid off
b) the home must have been originally financed with an FHA
"forward" mortgage
c) the borrower must live in the home as a principal residence
d) the borrower must be low-income - Correct Answer-c
To qualify for a HECM loan
a) at least one owner must be aged 65 or over
,b) a mobile home or cooperative must be FHA-approved
c) a home must be debt free prior to loan application
d) none of the above - Correct Answer-d
When a HECM loan is repaid, the borrower must pay back
a) only the funds they received
b) the funds received plus simple interest
c) the funds received plus loan fees such as mortgage
insurance and servicing fees
d) the funds received plus loan fees and interest compounded
on the entire balance - Correct Answer-d
The payment options in the HECM program include
a) a fixed monthly advance for as long as a borrower lives in
the home
b) a fixed monthly advance for a period chosen by the
borrower
c) a creditline that lets the borrower select the timing and
amount of the advances
d) a combination of monthly advances and creditline
e) all of the above - Correct Answer-e
, The HECM loan may be used to pay for
a) repairs needed to meet FHA minimum property standards
b) standard closing costs
c) 2% mortgage insurance premium
d) the origination fee
e) all of the above - Correct Answer-e
When the adjustable interest rate on a reverse mortgage goes
up
a) the monthly payments to the borrower go down
b) the rate at which the creditline grows goes up
c) the loan balance grows faster
d) b and c above - Correct Answer-d
Name three eligibility requirements for HECM borrowers. -
Correct Answer-Be age 62 or over, own the home, and occupy
the home as a principal residence.
Name one property type that may or may not be eligible for a
HECM, depending on the lender. - Correct Answer-Homes in
Planned Unit Developments
With 100% Correct Answers 2025
GRADED A+
The risk of loan losses in reverse mortgage lending is
controlled by
a) controlling the amount of the loan advances
b) limiting loan advances to 28% of income
c) charging a premium on all loans to create a reserve fund
d) a and / or c above - Correct Answer-d
To qualify for a HECM loan
a) The home must be completely paid off
b) the home must have been originally financed with an FHA
"forward" mortgage
c) the borrower must live in the home as a principal residence
d) the borrower must be low-income - Correct Answer-c
To qualify for a HECM loan
a) at least one owner must be aged 65 or over
,b) a mobile home or cooperative must be FHA-approved
c) a home must be debt free prior to loan application
d) none of the above - Correct Answer-d
When a HECM loan is repaid, the borrower must pay back
a) only the funds they received
b) the funds received plus simple interest
c) the funds received plus loan fees such as mortgage
insurance and servicing fees
d) the funds received plus loan fees and interest compounded
on the entire balance - Correct Answer-d
The payment options in the HECM program include
a) a fixed monthly advance for as long as a borrower lives in
the home
b) a fixed monthly advance for a period chosen by the
borrower
c) a creditline that lets the borrower select the timing and
amount of the advances
d) a combination of monthly advances and creditline
e) all of the above - Correct Answer-e
, The HECM loan may be used to pay for
a) repairs needed to meet FHA minimum property standards
b) standard closing costs
c) 2% mortgage insurance premium
d) the origination fee
e) all of the above - Correct Answer-e
When the adjustable interest rate on a reverse mortgage goes
up
a) the monthly payments to the borrower go down
b) the rate at which the creditline grows goes up
c) the loan balance grows faster
d) b and c above - Correct Answer-d
Name three eligibility requirements for HECM borrowers. -
Correct Answer-Be age 62 or over, own the home, and occupy
the home as a principal residence.
Name one property type that may or may not be eligible for a
HECM, depending on the lender. - Correct Answer-Homes in
Planned Unit Developments
