HECM Practice (2025) Actual Exam
Questions and Answers A+ Graded
The .HECM .Saver .was .introduced .as .an .option .to .lower .the .upfront .cost .of .a
.HECM .by .reducing .the .upfront .mortgage .insurance .premium .to: .
a. .0.
b. .0.01% .of .the .Maximum .Claim .Amount.
c. .1% .of .the .Maximum .Claim .Amount.
d. .1.25% .of .the .Maximum .Claim .Amount. .- .CORRECT .ANSWER .-b
If .repairs .are .required .but .can .be .completed .after .closing, .the .lender .will .create
.a .repair .set-aside .in .the .amount .of:
a. .15% .of .the .maximum .claim .amount.
b. .100% .of .the .actual .cost .of .repairs.
c. .100% .of .the .estimated .cost .of .repairs.
d. .150% .of .the .estimated .cost .of .repairs. .- .CORRECT .ANSWER .-d
TALC .rates .generally .are .greatest .when .borrowers .live:
a. .less .than .their .life .expectancies.
b. .to .their .full .life .expectances.
c. .longer .than .their .life .expectancies .- .CORRECT .ANSWER .-a
The .net .principal .limit .at .closing .is:
a. .a .percentage .of .the .maximum .claim .amount .before .any .funds .are .set-aside
.or .any .fees .are .paid.
b. .the .credit .remaining .after .all .set-asides .and .fees .have .been .deducted.
c. .the .lesser .of .the .home's .appraised .value .or .the .lending .limit.
d. .the .most .HUD .will .pay .on .an .insurance .claim. .- .CORRECT .ANSWER .-b
Mr. .Martin .is .83 .and .his .wife .is .65. .If .Mrs. .Martin .is .removed .from .the .title .to
.the .home, .the .HECM .principal .limit .would .be:
a.smaller.
b. .the .same.
c. .larger. .- .CORRECT .ANSWER .-c
T/F .Most .lenders .require .that .borrowers .take .a .lump .sum .payment .if .they
.choose .an .adjustable .rate .and .only .allow .a .creditline .with .a .fixed .interest .rate
.HECM. .- .CORRECT .ANSWER .-False
T/F .Given .the .same .principal .limit, .a .term .payment .plan .will .provide .a .larger
.monthly .payment .than .a .tenure .payment .plan. .- .CORRECT .ANSWER .-True
,HECM .term .advances:
a. .are .generally .larger .than .tenure .advances.
b. .are .monthly .payments .for .a .fixed .number .of .months .chosen .by .the .lender.
c. .do .not .allow .unscheduled .lump .sum .draws. .- .CORRECT .ANSWER .-a
A .borrower .who .needs .a .monthly .payment .for .a .short .period .of .time .and .then
.wants .to .have .the .opportunity .to .borrow .more .in .the .future .may .want .to
.choose .which .type .of .payment .plan?
a. .Initial .Lump .Sum
b. .Modified .Tenure
c. .Modified .Term
d. .Tenure .- .CORRECT .ANSWER .-c
A ."forward" .mortgage .is .a .type .of .loan .in .which:
a. .extra .principal .payments .are .made, .so .that .the .payoff .date .is .moved .forward.
b. .payments .are .made .on .a .regular .schedule, .gradually .reducing .the .debt .and
.building .equity. .- .CORRECT .ANSWER .-b
Which .of .the .following .is .true .of .proprietary .reverse .mortgages?
a. .Borrowers .do .not .have .to .pay .for .FHA .mortgage .insurance.
b. .Proprietary .reverse .mortgages .are .typically .designed .for .high .value .homes
.(those .beyond .FHA .mortgage .limits).
c. .Proprietary .reverse .mortgages .typically .have .lower .loan-to-value .ratio .than
.HECMs.
d. .All .of .the .above .- .CORRECT .ANSWER .-d
When .could .a .75-year .old, .married .to .a .55-year .old, .be .eligible .for .a .reverse
.mortgage?
a. .Only .if .the .55 .year .old .does .not .live .in .the .home .and .they .have .a .legal
.separation .agreement.
b. .Only .if .the .55-year-old .is .not .an .owner .of .the .home.
c. .Only .if .the .55 .year .old .signs .an .agreement .that .they .will .not .inherit .the
.property.
d. .Only .if .the .55 .year .old .has .no .more .than .a .life-estate .interest .in .the .property.
.- .CORRECT .ANSWER .-b
A .reverse .mortgage .differs .from .a .forward .mortgage .in .that .it .is .usually .a .loan
.with:
a. .increasing .debt .and .increasing .equity.
b. .increasing .debt .and .decreasing .equity.
c. .decreasing .debt .and .increasing .equity. .- .CORRECT .ANSWER .-b
To .be .eligible .for .a .HECM .homeowners .must .live .in .their .homes:
a. .more .than .3 .months .of .each .year.
b. .more .than .6 .months .of .each .year.
c. .more .than .7 .months .of .each .year.
d. .12 .months .of .each .calendar .year. .- .CORRECT .ANSWER .-b
, When .a .mortgage .is .described .as .a ."non-recourse .loan", .this .means .that .the
.borrower:
a. .has .no .right .to .cure .a .default .once .foreclosure .begins.
b. .may .not .refinance .the .loan .to .obtain .additional .funds .if .the .home .value
.increases.
c. .may .not .make .partial .prepayments .and .then .borrow .the .funds .again .at .a
.later .date.
d. .may .not .be .held .personally .liable .for .loan .amounts .that .are .greater .than .the
.home .value. .- .CORRECT .ANSWER .-d
T/F .A .home .located .in .a .Planned .Unit .Development .(PUD), .such .as .a .golf-
course .community, .may .be .eligible .for .a .HECM. .- .CORRECT .ANSWER .-True
Mr. .Behm's .home .is .valued .at .$200,000. .His .home .needs .a .new .roof, .a .new
.furnace, .and .electrical .work .which .will .cost .$25,000. .Which .of .the .following .is
.true?
a. .If .repairs .are .not .done .before .closing, .the .repair .set .aside .will .be .$37,500.
b. .Mr. .Behm .cannot .get .a .HECM .because .the .repair .set .aside .cannot .be .more
.than .15% .of .the .maximum .claim .amount.
c. .Mr. .Behm .will .have .to .make .some .of .the .repairs .before .closing .in .order .to
.qualify .for .a .HECM. .- .CORRECT .ANSWER .-a
Required .follow-up .after .a .HECM .counseling .session .may .completed .by:
a. .a .phone .call .from .the .counselor.
b. .a .survey .mailed .to .the .client.
c. .a .phone .call .from .any .agency .employee.
d. .any .of .the .above .- .CORRECT .ANSWER .-a
In .the .case .of .a .couple .where .only .one .spouse .will .be .a .borrower .on .the .HECM
.loan, .the .counselor .should:
a. .confirm .that .the .non-borrowing .spouse .has .removed .his/her .name .from .the
.title, .then .proceed .to .counsel .only .the .borrowing .spouse.
b. .advise .the .client .to .call .the .lender .to .learn .whether .the .underwriter .requires
.counseling .for .a .non-borrower .spouse.
c. .inform .the .borrower .and .non-borrowing .spouse .that .they .both .must
.participate .in .counseling .in .order .to .obtain .a .HECM.
d. .refuse .to .complete .any .counseling .session .unless .the .non-borrowing .spouse
.is .included. .- .CORRECT .ANSWER .-c
Any .complete .HECM .counseling .file .must .have:
a. .a .copy .of .an .amortization .schedule.
b. .a .copy .of .the .client's .driver's .license.
c. .a .copy .of .a .bank .statement .or .other .documentation .of .the .client's .income.
d. .a .copy .of .the .client's .credit .report. .- .CORRECT .ANSWER .-a
A .HECM .counselor .must .NEVER .provide .information .on .the:
a. .prevailing .interest .rate .margins.
b. .costs .that .may .vary .from .lender .to .lender.
c. .third .party .costs .required .to .obtain .a .HECM.
Questions and Answers A+ Graded
The .HECM .Saver .was .introduced .as .an .option .to .lower .the .upfront .cost .of .a
.HECM .by .reducing .the .upfront .mortgage .insurance .premium .to: .
a. .0.
b. .0.01% .of .the .Maximum .Claim .Amount.
c. .1% .of .the .Maximum .Claim .Amount.
d. .1.25% .of .the .Maximum .Claim .Amount. .- .CORRECT .ANSWER .-b
If .repairs .are .required .but .can .be .completed .after .closing, .the .lender .will .create
.a .repair .set-aside .in .the .amount .of:
a. .15% .of .the .maximum .claim .amount.
b. .100% .of .the .actual .cost .of .repairs.
c. .100% .of .the .estimated .cost .of .repairs.
d. .150% .of .the .estimated .cost .of .repairs. .- .CORRECT .ANSWER .-d
TALC .rates .generally .are .greatest .when .borrowers .live:
a. .less .than .their .life .expectancies.
b. .to .their .full .life .expectances.
c. .longer .than .their .life .expectancies .- .CORRECT .ANSWER .-a
The .net .principal .limit .at .closing .is:
a. .a .percentage .of .the .maximum .claim .amount .before .any .funds .are .set-aside
.or .any .fees .are .paid.
b. .the .credit .remaining .after .all .set-asides .and .fees .have .been .deducted.
c. .the .lesser .of .the .home's .appraised .value .or .the .lending .limit.
d. .the .most .HUD .will .pay .on .an .insurance .claim. .- .CORRECT .ANSWER .-b
Mr. .Martin .is .83 .and .his .wife .is .65. .If .Mrs. .Martin .is .removed .from .the .title .to
.the .home, .the .HECM .principal .limit .would .be:
a.smaller.
b. .the .same.
c. .larger. .- .CORRECT .ANSWER .-c
T/F .Most .lenders .require .that .borrowers .take .a .lump .sum .payment .if .they
.choose .an .adjustable .rate .and .only .allow .a .creditline .with .a .fixed .interest .rate
.HECM. .- .CORRECT .ANSWER .-False
T/F .Given .the .same .principal .limit, .a .term .payment .plan .will .provide .a .larger
.monthly .payment .than .a .tenure .payment .plan. .- .CORRECT .ANSWER .-True
,HECM .term .advances:
a. .are .generally .larger .than .tenure .advances.
b. .are .monthly .payments .for .a .fixed .number .of .months .chosen .by .the .lender.
c. .do .not .allow .unscheduled .lump .sum .draws. .- .CORRECT .ANSWER .-a
A .borrower .who .needs .a .monthly .payment .for .a .short .period .of .time .and .then
.wants .to .have .the .opportunity .to .borrow .more .in .the .future .may .want .to
.choose .which .type .of .payment .plan?
a. .Initial .Lump .Sum
b. .Modified .Tenure
c. .Modified .Term
d. .Tenure .- .CORRECT .ANSWER .-c
A ."forward" .mortgage .is .a .type .of .loan .in .which:
a. .extra .principal .payments .are .made, .so .that .the .payoff .date .is .moved .forward.
b. .payments .are .made .on .a .regular .schedule, .gradually .reducing .the .debt .and
.building .equity. .- .CORRECT .ANSWER .-b
Which .of .the .following .is .true .of .proprietary .reverse .mortgages?
a. .Borrowers .do .not .have .to .pay .for .FHA .mortgage .insurance.
b. .Proprietary .reverse .mortgages .are .typically .designed .for .high .value .homes
.(those .beyond .FHA .mortgage .limits).
c. .Proprietary .reverse .mortgages .typically .have .lower .loan-to-value .ratio .than
.HECMs.
d. .All .of .the .above .- .CORRECT .ANSWER .-d
When .could .a .75-year .old, .married .to .a .55-year .old, .be .eligible .for .a .reverse
.mortgage?
a. .Only .if .the .55 .year .old .does .not .live .in .the .home .and .they .have .a .legal
.separation .agreement.
b. .Only .if .the .55-year-old .is .not .an .owner .of .the .home.
c. .Only .if .the .55 .year .old .signs .an .agreement .that .they .will .not .inherit .the
.property.
d. .Only .if .the .55 .year .old .has .no .more .than .a .life-estate .interest .in .the .property.
.- .CORRECT .ANSWER .-b
A .reverse .mortgage .differs .from .a .forward .mortgage .in .that .it .is .usually .a .loan
.with:
a. .increasing .debt .and .increasing .equity.
b. .increasing .debt .and .decreasing .equity.
c. .decreasing .debt .and .increasing .equity. .- .CORRECT .ANSWER .-b
To .be .eligible .for .a .HECM .homeowners .must .live .in .their .homes:
a. .more .than .3 .months .of .each .year.
b. .more .than .6 .months .of .each .year.
c. .more .than .7 .months .of .each .year.
d. .12 .months .of .each .calendar .year. .- .CORRECT .ANSWER .-b
, When .a .mortgage .is .described .as .a ."non-recourse .loan", .this .means .that .the
.borrower:
a. .has .no .right .to .cure .a .default .once .foreclosure .begins.
b. .may .not .refinance .the .loan .to .obtain .additional .funds .if .the .home .value
.increases.
c. .may .not .make .partial .prepayments .and .then .borrow .the .funds .again .at .a
.later .date.
d. .may .not .be .held .personally .liable .for .loan .amounts .that .are .greater .than .the
.home .value. .- .CORRECT .ANSWER .-d
T/F .A .home .located .in .a .Planned .Unit .Development .(PUD), .such .as .a .golf-
course .community, .may .be .eligible .for .a .HECM. .- .CORRECT .ANSWER .-True
Mr. .Behm's .home .is .valued .at .$200,000. .His .home .needs .a .new .roof, .a .new
.furnace, .and .electrical .work .which .will .cost .$25,000. .Which .of .the .following .is
.true?
a. .If .repairs .are .not .done .before .closing, .the .repair .set .aside .will .be .$37,500.
b. .Mr. .Behm .cannot .get .a .HECM .because .the .repair .set .aside .cannot .be .more
.than .15% .of .the .maximum .claim .amount.
c. .Mr. .Behm .will .have .to .make .some .of .the .repairs .before .closing .in .order .to
.qualify .for .a .HECM. .- .CORRECT .ANSWER .-a
Required .follow-up .after .a .HECM .counseling .session .may .completed .by:
a. .a .phone .call .from .the .counselor.
b. .a .survey .mailed .to .the .client.
c. .a .phone .call .from .any .agency .employee.
d. .any .of .the .above .- .CORRECT .ANSWER .-a
In .the .case .of .a .couple .where .only .one .spouse .will .be .a .borrower .on .the .HECM
.loan, .the .counselor .should:
a. .confirm .that .the .non-borrowing .spouse .has .removed .his/her .name .from .the
.title, .then .proceed .to .counsel .only .the .borrowing .spouse.
b. .advise .the .client .to .call .the .lender .to .learn .whether .the .underwriter .requires
.counseling .for .a .non-borrower .spouse.
c. .inform .the .borrower .and .non-borrowing .spouse .that .they .both .must
.participate .in .counseling .in .order .to .obtain .a .HECM.
d. .refuse .to .complete .any .counseling .session .unless .the .non-borrowing .spouse
.is .included. .- .CORRECT .ANSWER .-c
Any .complete .HECM .counseling .file .must .have:
a. .a .copy .of .an .amortization .schedule.
b. .a .copy .of .the .client's .driver's .license.
c. .a .copy .of .a .bank .statement .or .other .documentation .of .the .client's .income.
d. .a .copy .of .the .client's .credit .report. .- .CORRECT .ANSWER .-a
A .HECM .counselor .must .NEVER .provide .information .on .the:
a. .prevailing .interest .rate .margins.
b. .costs .that .may .vary .from .lender .to .lender.
c. .third .party .costs .required .to .obtain .a .HECM.
