HECM Counselor Exam Guide
Sample Questions

Sample Questions
Sample Answers

Sample Questions

The questions on this page are similar in format to the 100 multiple-choice questions in the HECM Counselor Exam. But they do not represent the complete range or difficulty of the material covered by the exam. The answers are provided at the bottom of the page.

DIRECTIONS: Each of the questions or incomplete statements below is followed by four suggested answers or completions. Select the one which is best in each case.

1. Which of the following is NOT a closing cost?

a. Appraisal fee
b. Recording fee
c. Servicing fee
d. Title insurance
 

2. Which margin does Fannie Mae require for an annually adjustable HECM loan?

a. 1.20%
b. 1.50%
c. 1.80%
d. 3.10%

3. The most complete measure of the total cost of a reverse mortgage is the:

a. APR rate.
b. TALC rate.
c. Interest rate.
d. combined total of the origination fee, all third-party closing costs, insurance premiums, and servicing fees.

4. Which of the following can be affected by the receipt of HECM loan advances?

a. SSI
b. 401-k account
c. Social Security
d. Private pension

5. Which of the following does NOT make a reverse mortgage due and payable?

a. The borrower sells the property.
b. The last surviving borrower dies.
c. The borrower marries a non-resident alien.
d. The borrower conveys title of the property to children.

6. Which of the following is most likely to qualify for the largest HECM loan amount?

a. A man aged 85
b. A woman aged 75
c. A couple aged 75 and 80
d. A couple aged 80 and 85

7. Compounding means that interest is charged on:

a. the mortgage insurance premium.
b. all loan fees financed with the loan.
c. the interest previously added to the loan balance.
d. the combination of principal, property taxes, and insurance.

8. Which of the following describes how HUD controls the risk of losses on HECMs?

a. Insurance premiums are assessed on the lender for each HECM.
b. Loan amounts are based on the borrower's age and home value.
c. Loan balances are limited to 80% of home values.
d. Heirs are liable for HECM loan balances.

9. Upon a HECM borrower's death, a home is sold to repay the loan. How much cash will be left for the estate?

a. The gross sale proceeds plus the net principal limit
b. The net sale proceeds minus the total amount owed
c. The maximum claim amount plus the total amount owed
d. The maximum claim amount minus the gross principal limit

10. Which of the following is most likely to provide the largest lump sum loan amount on a home valued at $1.2 million?

a. HUD's HECM
b. Fannie Mae's Home Keeper
c. Financial Freedom's Cash Account
d. any state's property tax deferral program

11. Which of the following grows larger over time?

a. Each HECM term loan advance
b. Each Home Keeper tenure loan advance
c. Funds remaining available in a HECM creditline
d. Projected TALC rates on a typical Home Keeper loan

12. If the estimated cost of required repairs is $20,000 and the HECM maximum claim amount is $100,000, then:

a. the home is not eligible for a HECM.
b. the repairs must be completed before closing.
c. the lender must include a repair rider in the closing documents.
d. the lender must set aside $30,000 to complete the repairs after closing.

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Sample Answers

1-c, 2-d, 3-b, 4-a, 5-c, 6-a, 7-c, 8-b, 9-b, 10-c, 11-c, 12-b

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