Reverse Mortgage Counseling Guidelines, Exams of Advanced Education

Download Reverse Mortgage Counseling Guidelines and more Exams Advanced Education in PDF only on Docsity! HECM Test 5 Exam With 100% Correct Answers 2024 The objective of reverse mortgage counseling is to educate clients on - Correct Answer-how reverse mortgages work and their implications · the appropriateness of a reverse mortgage for their personal and financial situations, and · possible financial alternatives to reverse mortgages The following topics must be thoroughly covered in every reverse mortgage counseling session - Correct Answer-client needs and circumstances · features of a reverse mortgage · client responsibilities under a reverse mortgage · costs to obtain a reverse mortgage · financial/tax implications of a reverse mortgage · financial or social service alternatives to a reverse mortgage, and · warnings about potential reverse mortgage/insurance fraud schemes and elder abuse. Once the counseling session is complete, the counselor should complete the client file, either paper or electronic is acceptable. As stated in HUD's Housing Counseling Handbook, all counseling agencies must maintain a separate, confidential file for each client. The counselor must ensure that the file contains all of the following conten - Correct Answer-File number: A file number for the unique counseling interaction; □ Financial Analysis/Budget: Evidence of analysis of the client's unique financial and credit circumstances as they relate to the reverse mortgage; □ Required Data: All required fields listed in the Interface Control Document (ICD) of the Client Management System - details regarding these fields can be found at: http://www.hud.gov/counselors/. □ Activity Log: A record of the date, time, duration, and description of each interaction or The employer HCS (Housing Counseling System) ID of the counseling entity; The date and signature of both the counselor and all prospective borrowers; The date that that the client completed counseling; The expiration date for the certificate provided by the counselor; The type of counseling performed (face-to-face or telephone); The duration of the counseling session(s); and If applicable, the signature of the client's legal representative talc general overview - Correct Answer-Although the counselor can provide a general overview of reverse mortgage costs to a client, only a lender can provide the client with the actual costs of a specific product. Only the client can weigh the costs and benefits of a reverse mortgage for himself or herself to determine whether or not the loan would meets his or her needs and circumstances talc rates loan cost - Correct Answer-The TALC rate is the annual average rate that includes all loan costs and takes into account the future loan balance including all loan advances. The TALC is what the interest rate would be if all loan costs had to be included in the interest rate TALC rates depend on - Correct Answer-The payment option and the timing and size of the loan advances The loan term Home appreciation or depreciation TALC Rates: Payment Options and Timing of Loan - Correct Answer-Advances TALC rates are high at the beginning of the loan because up-front costs are a large part of the total amount owed. Smaller loan advances in the early years generate higher TALC rates because up-front costs are a large percent of the loan balance. However, when these up-front costs are spread out over more years, they become a smaller percent of the loan balance. Larger loan advances create lower TALC rates because they reduce the impact of the up-front costs TALC Rates and Home Appreciation - Correct Answer-The loan balance reaches the principal limit over time With higher appreciation of the home's value over time, the rising loan balance is less likely to exceed the principal limit or property value As the home value appreciates over time, TALC rates become higher When refinancing an existing HECM - Correct Answer-When refinancing an existing HECM, the mortgage insurance premium is reduced to cover only 2% of the difference between the original maximum claim amount and the new maximum claim amount. refinancing an existing HECM - Correct Answer-HECM Anti- Churning Disclosure- HUD form 92901 The total cost of the HECM refinance The increase in the principal limit as measured by the estimated initial principal limit on the mortgage to be insured less the current principal limit on the HECM that is being refinanced The lender must provide a best estimate of funds available to the borrower minus any closing costs and other fees. This ensures that the borrower is provided with information to assist in understanding the amount of new funding that will be available after refinancing the existing HECM.. The Federal Truth-in-Lending Act (TILA) recognizes the unique difficulty of evaluating the total cost of a reverse mortgage that is used to purchase an annuity. Counselors must supplement specialized TILA cost disclosures for these two- part transactions by giving clients who are considering annuities the document in Attachment C.9 of this protocol supplemental security income ssi - Correct Answer- Supplemental Security Income (SSI) provides monthly cash payments to qualifying lowincome persons age 65 and over. To be eligible in 2008, an applicant's liquid resources (cash and savings) could not be greater than $2,000 ($3,000 for a couple), not including the value of a home or car. Monthly "countable income" could not be greater than $637 for a single person and $956 for a couple. Some earned income can be excluded from the countable total. Some states also provide additional supplements to the federal SSI benefit. See www.ssa.gov/ssi for current details aaa area agencies on aging - Correct Answer-Area Agencies on Aging (AAAs) coordinate the delivery of a variety of services to meet the needs of the older population, including information and referral, outreach, transportation, inhome care, legal and protective services, counseling, socialization, recreation, and education. Most AAAs are not in the direct service business meaning that they contract out this work to local agencies who provide such services to the older population. The local agencies may be a county Department of Aging, or a nonprofit Council on Aging, or may go by other names. AAA and local agency contact information can be obtained from the Eldercare Locator available at www.eldercare.gov or by telephone at (800) 677-1116 - Correct Answer-Fraud and Coercion Although fraud and coercion are not limited to clients with impaired ability to understand and make decisions, cognitively impaired clients are more vulnerable to such exploitation. Counselors should be especially sensitive to the possibility that such a client is being pushed into an inappropriate choice by others who do not have the client's best interests at heart. If the counselor feels that: 1) the client was coerced into pursuing a reverse mortgage, or 2) the client may be a victim of elder abuse or exploitation, the counselor should advise clients that each state has an elder abuse hotline and provide them with the hotline phone number in the client's state. Hotline numbers can be found at http://www.ncea.aoa.gov/NCEAroot/Main_Site/Find_Help/H elp_Hotline.aspx If they don't answer 5 out of 10 questions correctly - Correct Answer-The counselor will offer one or more of the following in order to answer the 5 out of 10 questions correctly. Schedule an additional session to allow more time to review important topics and possibly at a different time of day, Help the client to arrange a face-to-face counseling session with the original counselor or another counselor Ask the client if there is someone else he or she could bring with them to or could join in a phone counseling session and schedule another session to include this person. During any additional counseling sessions, the counselor will ask the review questions again. If the client again is not able to correctly answer five out of the ten questions, the counselor will ask the client if they would like additional time and invite them to come back at a later date after they have had more time to study the materials. A certificate cannot be issued until the client correctly answers 5 out of the 10 questions debt against your home from an existing mortgage - Correct Answer-If you have debt against your home from an existing mortgage, you must either pay it off before getting a reverse mortgage or use an immediate cash advance from the reverse mortgage to pay it off. If you do not pay off the debt beforehand, or do not qualify for an adequate cash advance to do so, you will not be able to get a reverse mortgage back all of the cash advances, any fees or costs financed as part of the loan, and all interest that has been charged to date. The loan becomes due and payable when the last surviving borrower: 1. Passes away 2. The property is no longer the primary residence of the borrower 3. The last surviving borrower has been unable to occupy the home for more than 12 consecutive months 4. The borrower sells or otherwise transfers ownership of the property, or 5. The borrower fails to perform an obligation under the mortgage If your home is sold to pay off the loan, you or your estate will not have to pay back more than the amount received from the sale of the home. However, if your heirs or your estate choose to keep the home, they must pay the entire loan balance even if it is greater than the value of the home. This may occur if the home's value depreciates, if interest rates go up, or if the total payments made during the life of the loan exceed the value of the home. mortgage insurance premium - Correct Answer-What is the mortgage insurance premium? (For a HECM, it is 2 % of the Maximum Claim Amount plus an Annual Premium of 0.5 % of the loan balance origination fee - Correct Answer-What is the origination fee? (The origination fee must cover all origination activities. HECM product defines the origination fee as the greater of $2,500 or two percent of the maximum claim amount of the mortgage, up to a maximum claim amount of $200,000, plus one percent of any portion of the maximum claim amount that is greater than $200,000. The total loan origination fee may not exceed $6,000. The lender may accept a lower origination fee when appropriate.) regular review for loans - Correct Answer-The HECM adjustable interest rate will adjust every month or year depending on the period selected by the borrower. This is also the case with many other reverse mortgage products. In the case of a HECM, the lender will notify you of a change at least 25 days before the new rate is charged to the loan. It is your responsibility to review this notice. The lender is required to send a statement that summarizes your mortgage activity. Statements for HECMs are issued at least annually and may be issued more frequently by some lenders. You should review this statement when you receive it. open-end and closed-end - Correct Answer-Most products allow "open-end" credit: you may pay back some of the loan balance and then reborrow the money at another time. ¾ Other products have "closed-end" credit, meaning that you may not re-borrow principal that is prepaid on the loan. If you are considering using your reverse mortgage to purchase an annuity, here are some facts and features you need to know about: - Correct Answer- follow up - Correct Answer-Verbal follow up - 60 days after the counseling session (in person or telephone) • Review information discussed during the counseling session and the materials provided to the client, and • emphasize that client may call at any time with questions or concerns. Follow up letter or an e-mail (if unsuccessful at verbal follow up) Request that client contact the housing counseling agency no later than 30 days from the date sent, to help the agency assess if • additional client services are necessary to assist the client in achieving his/her housing goals, or • the agency should terminate counseling services. follow up after emergency counseling - Correct Answer-Client Follow Up (cont.) Follow-up to Emergency Counseling, if applicable