HECM TEST PRACTICE EXAM Questions with
100% Verified Correct Answers Latest Updates
2025 TOP RATED A+
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 - Correct 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 - Correct 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. - Correct 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 - Correct Answer-E
T/F HUD must approve before a HECM property can be foreclosed on by a mortgagee -
Correct Answer-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 - Correct Answer-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 - Correct Answer-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 - Correct Answer-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 - Correct Answer-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
will contribute $115,000. How much of the net proceeds from Mr. Jones' home will be
required to pay at closing to purchase the new home?
A. $115,000
B. 150,000
C. $50,000
D. $85,000 - Correct Answer-D
Compared to a HELOC, HECMs___.
A. Have lower costs
B. Easier credit requirements
C. Have less flexibility in how the money is used
D. Result in a smaller lien again the property - Correct 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 - Correct Answer-C
T/F The holder of the reverse mortgage is not always necessarily the loan servicer. -
Correct 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 - Correct 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. $6000
B. $12,510
C. $16,000
D. None of the above - Correct 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. - Correct 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 - Correct 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. - Correct 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 - Correct 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
100% Verified Correct Answers Latest Updates
2025 TOP RATED A+
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 - Correct 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 - Correct 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. - Correct 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 - Correct Answer-E
T/F HUD must approve before a HECM property can be foreclosed on by a mortgagee -
Correct Answer-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 - Correct Answer-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 - Correct Answer-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 - Correct Answer-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 - Correct Answer-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
will contribute $115,000. How much of the net proceeds from Mr. Jones' home will be
required to pay at closing to purchase the new home?
A. $115,000
B. 150,000
C. $50,000
D. $85,000 - Correct Answer-D
Compared to a HELOC, HECMs___.
A. Have lower costs
B. Easier credit requirements
C. Have less flexibility in how the money is used
D. Result in a smaller lien again the property - Correct 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 - Correct Answer-C
T/F The holder of the reverse mortgage is not always necessarily the loan servicer. -
Correct 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 - Correct 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. $6000
B. $12,510
C. $16,000
D. None of the above - Correct 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. - Correct 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 - Correct 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. - Correct 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 - Correct 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
