HECM UPDATED FINAL PAPER QUESTIONS AND
SOLUTIONS RATED A+
✔✔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. - ✔✔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.
d. prices charged by any specific lender. - ✔✔d
✔✔Counselors may create a HECM counseling certificate using:
a. any HUD-approved Client Management System.
b. HUD Housing Counseling System (HCS).
c. FHA Connection.
d. the most recent approved form, located on HUD's website. - ✔✔c
✔✔A reverse mortgage lender decides to set up a nonprofit arm to provide HECM
counseling for its own clients. This would be allowable by HUD:
a. as long as the nonprofit receives 501(c)3 status and applies for approval from HUD.
b. as long as the nonprofit employs counselors who are on the HECM roster.
c. as long as the counselors provide objective information about the HECM product.
d. under no circumstances. - ✔✔d
✔✔When counseling the client who is using the HECM for Purchase option, which of
the following must be covered in addition to the standard HECM topics?
a. Approved funding sources for the borrower's downpayment.
b. Techniques for finding comparable sales before making a loan offer.
c. Ways to find a good realtor.
d. The use of "soft second" loans to supplement HECM funds. - ✔✔a
✔✔An intake interview is important for which of the following reasons?
a. To determine if the client has special needs that will affect counseling.
b. To find out the appraised value of the client's home.
c. To determine whether the client has enough equity to proceed with a HECM
application. - ✔✔a
✔✔The HECM Counseling Protocol is included in HUD Handbook:
a. 4235.1
b. 4330.1
, c. 4425.1
d. 7610.1 - ✔✔d
✔✔One of the advantages of a home equity loan, compared to a HECM is:
a. relaxed income and credit qualifications for seniors.
b. closing costs are lower.
c. home equity loans will not affect public benefits.
d. homeowner cannot default on a home equity loan as long as the property taxes are
paid. - ✔✔b
✔✔Which of the following are needs-based public benefit programs?
a. Medicare, Supplemental Security Income
b. Medicaid, Medicare
c. Social Security, Medicare
d. Supplemental Security Income, Medicaid - ✔✔d
✔✔There are several different types of annuities. In a deferred annuity:
a. interest earnings are deferred until payments begin.
b. taxes on earnings are deferred until the maturity rate.
c. payments are deferred until the investment generates interest.
d. payments are deferred until a specified date. - ✔✔d
✔✔A reverse mortgage is
a) a loan against equity in a home
b) a loan providing cash advances to a borrower
c) a loan requiring no repayment until a future time
d) a, b, and c - ✔✔d
✔✔A reverse mortgage is different from a home equity loan because
a) you need a good income to qualify for a reverse mortgage
b) you need little home equity to get a reverse mortgage
c) you do not have to make monthly repayments on a reverse mortgage - ✔✔c
✔✔A reverse mortgage must be repaid
a) by the tenth of every month
b) when the borrower dies, sells, or permanently moves away
c) when the loan balance equals the value of the home
d) when the borrower uses up all available loan funds - ✔✔b
✔✔The purpose of a reverse mortgage is often
a) to buy a home
b) to sell a home
c) to generate cash - ✔✔c
SOLUTIONS RATED A+
✔✔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. - ✔✔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.
d. prices charged by any specific lender. - ✔✔d
✔✔Counselors may create a HECM counseling certificate using:
a. any HUD-approved Client Management System.
b. HUD Housing Counseling System (HCS).
c. FHA Connection.
d. the most recent approved form, located on HUD's website. - ✔✔c
✔✔A reverse mortgage lender decides to set up a nonprofit arm to provide HECM
counseling for its own clients. This would be allowable by HUD:
a. as long as the nonprofit receives 501(c)3 status and applies for approval from HUD.
b. as long as the nonprofit employs counselors who are on the HECM roster.
c. as long as the counselors provide objective information about the HECM product.
d. under no circumstances. - ✔✔d
✔✔When counseling the client who is using the HECM for Purchase option, which of
the following must be covered in addition to the standard HECM topics?
a. Approved funding sources for the borrower's downpayment.
b. Techniques for finding comparable sales before making a loan offer.
c. Ways to find a good realtor.
d. The use of "soft second" loans to supplement HECM funds. - ✔✔a
✔✔An intake interview is important for which of the following reasons?
a. To determine if the client has special needs that will affect counseling.
b. To find out the appraised value of the client's home.
c. To determine whether the client has enough equity to proceed with a HECM
application. - ✔✔a
✔✔The HECM Counseling Protocol is included in HUD Handbook:
a. 4235.1
b. 4330.1
, c. 4425.1
d. 7610.1 - ✔✔d
✔✔One of the advantages of a home equity loan, compared to a HECM is:
a. relaxed income and credit qualifications for seniors.
b. closing costs are lower.
c. home equity loans will not affect public benefits.
d. homeowner cannot default on a home equity loan as long as the property taxes are
paid. - ✔✔b
✔✔Which of the following are needs-based public benefit programs?
a. Medicare, Supplemental Security Income
b. Medicaid, Medicare
c. Social Security, Medicare
d. Supplemental Security Income, Medicaid - ✔✔d
✔✔There are several different types of annuities. In a deferred annuity:
a. interest earnings are deferred until payments begin.
b. taxes on earnings are deferred until the maturity rate.
c. payments are deferred until the investment generates interest.
d. payments are deferred until a specified date. - ✔✔d
✔✔A reverse mortgage is
a) a loan against equity in a home
b) a loan providing cash advances to a borrower
c) a loan requiring no repayment until a future time
d) a, b, and c - ✔✔d
✔✔A reverse mortgage is different from a home equity loan because
a) you need a good income to qualify for a reverse mortgage
b) you need little home equity to get a reverse mortgage
c) you do not have to make monthly repayments on a reverse mortgage - ✔✔c
✔✔A reverse mortgage must be repaid
a) by the tenth of every month
b) when the borrower dies, sells, or permanently moves away
c) when the loan balance equals the value of the home
d) when the borrower uses up all available loan funds - ✔✔b
✔✔The purpose of a reverse mortgage is often
a) to buy a home
b) to sell a home
c) to generate cash - ✔✔c
