HECM TEST 4 EXAM Questions with
100% Verified Correct Answers
Latest Updates 2025 GRADED A+
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) - Correct 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 - Correct 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 - Correct Answer-C
T/F The final decision regarding the classification of the property is made by the lender.
- Correct 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 - Correct Answer-D
T/F All borrowers are expected to maintain Hazard (Homeowners) Insurance and Flood
Insurance under HECM guidelines. - Correct 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 - Correct Answer-E
T/F Required repairs that are estimated to cost less than 15% of the maximum claim
amount must be completed before closing. - Correct Answer-False
The repair administration fee is paid to_____.
A. The lender
B. The borrower after repairs are completed
C. The HUD inspector
D. The appraiser - Correct 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
D. Not enough information has been provided to answer the question - Correct Answer-
B
T/F Unlike a traditional mortgage, the closing costs of a HECM are taken out of the loan
proceeds. - Correct 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. - Correct 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 - Correct Answer-B
Monthly adjustable rates can't adjust by more than___.
A. Two percentage points per year
B.Five percentage points per year
C. Two percentage points over the life of the loan
D. Ten percentage points over the life of the loan - Correct Answer-D
Borrowers with delinquent federal debt are not eligible for a HECM___.
A. Ever
B. Until the debt is satisfied
C. For 2 years after the debt is satisfied
D. For 7 years after the debt is satisfied - Correct Answer-B
, A lender must screen all borrowers on which of the following:
A. LDP
B. GSA
C. CAIVRS
D. All of the above - Correct Answer-D
A borrower must be what age before signing a loan application in order to receive a
HECM?
A. 60
B. 61
C. 62
D. 63 - Correct Answer-B
T/F Only one HECM borrower must be living in the home in order for the HECM loan to
close. - Correct 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 - Correct Answer-A
T/F A Durable Power of Attorney is not permitted on HECM loans; only a court
appointed Guardianship. - Correct 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
D. Not enough information to answer the question - Correct 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.
- Correct Answer-True
T/F The counseling certificate is generated by each counseling agency on their own
letterhead. - Correct 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 - Correct Answer-A
What is the monthly servicing cap for adjustable rate mortgages?
A. $25
100% Verified Correct Answers
Latest Updates 2025 GRADED A+
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) - Correct 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 - Correct 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 - Correct Answer-C
T/F The final decision regarding the classification of the property is made by the lender.
- Correct 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 - Correct Answer-D
T/F All borrowers are expected to maintain Hazard (Homeowners) Insurance and Flood
Insurance under HECM guidelines. - Correct 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 - Correct Answer-E
T/F Required repairs that are estimated to cost less than 15% of the maximum claim
amount must be completed before closing. - Correct Answer-False
The repair administration fee is paid to_____.
A. The lender
B. The borrower after repairs are completed
C. The HUD inspector
D. The appraiser - Correct 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
D. Not enough information has been provided to answer the question - Correct Answer-
B
T/F Unlike a traditional mortgage, the closing costs of a HECM are taken out of the loan
proceeds. - Correct 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. - Correct 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 - Correct Answer-B
Monthly adjustable rates can't adjust by more than___.
A. Two percentage points per year
B.Five percentage points per year
C. Two percentage points over the life of the loan
D. Ten percentage points over the life of the loan - Correct Answer-D
Borrowers with delinquent federal debt are not eligible for a HECM___.
A. Ever
B. Until the debt is satisfied
C. For 2 years after the debt is satisfied
D. For 7 years after the debt is satisfied - Correct Answer-B
, A lender must screen all borrowers on which of the following:
A. LDP
B. GSA
C. CAIVRS
D. All of the above - Correct Answer-D
A borrower must be what age before signing a loan application in order to receive a
HECM?
A. 60
B. 61
C. 62
D. 63 - Correct Answer-B
T/F Only one HECM borrower must be living in the home in order for the HECM loan to
close. - Correct 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 - Correct Answer-A
T/F A Durable Power of Attorney is not permitted on HECM loans; only a court
appointed Guardianship. - Correct 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
D. Not enough information to answer the question - Correct 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.
- Correct Answer-True
T/F The counseling certificate is generated by each counseling agency on their own
letterhead. - Correct 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 - Correct Answer-A
What is the monthly servicing cap for adjustable rate mortgages?
A. $25
