NRMLA CRMP flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- HECM maximum claim amount
- The lesser of the appraised value, the purchase price, or the FHA national mortgage limit; used to calculate principal limit and mortgage insurance premiums.
- Principal limit factor
- A percentage set by HUD based on the youngest borrower's age, expected interest rate, and margin; it determines the principal limit available to the borrower.
- Non-borrowing spouse
- A spouse who is not a borrower but is disclosed at closing; may defer repayment after the borrower's death if eligibility and obligation rules were met.
- Financial assessment
- A mandatory lender analysis of credit history, income, assets, and expenses to determine whether the borrower can pay property taxes, insurance, and maintenance.
- HECM counseling
- Independent third-party counseling by a HUD-approved counselor required before application; the certificate must be obtained before processing begins.
- Tenure payment option
- A fixed monthly payment to the borrower for as long as at least one borrower occupies the home as a principal residence.
- Line of credit option
- A draw option that grows over time at the note rate; unused funds increase the available credit and cannot be reduced by the lender.
- Upfront mortgage insurance premium
- A fee of 2% of the maximum claim amount (0.5% for HECM for Purchase under 60% initial draw) charged at closing.
- Annual mortgage insurance premium
- A recurring premium of 0.5% of the outstanding loan balance, accrued monthly and added to the loan balance.
- Non-recourse feature
- Limits the borrower's total debt to the lesser of the loan balance or the property's appraised value or sale proceeds.
- HECM for Purchase
- A reverse mortgage used to buy a principal residence with a one-time draw; the borrower must contribute a down payment and occupy within 60 days.
- Right of rescission
- A three-business-day period after closing during which the borrower may cancel the HECM; funds cannot be disbursed until it expires.
- Property charge set-aside
- Funds reserved from the principal limit to pay property taxes and insurance when the financial assessment shows a risk of nonpayment.
- Loss mitigation waterfall
- A HUD-prescribed sequence of options (repayment plan, forbearance, modification, deed-in-lieu) that servicers must follow before foreclosure.
- Occupancy certification
- A periodic borrower statement confirming the home remains the principal residence; failure to certify can trigger default and repayment.
- Maturity event
- A trigger that makes the loan due, such as death of the last borrower, sale of the home, permanent move-out, or failure to pay property charges.
- Eligible non-borrowing spouse
- A spouse disclosed at closing who meets HUD criteria and may remain in the home after the borrower's death without immediate repayment.
- Initial disbursement limit
- The first-year draw is generally capped at 60% of the principal limit unless mandatory obligations require a higher amount.
- Expected interest rate
- The rate used to calculate the principal limit; for adjustable loans it equals the initial rate plus the margin used by HUD.
- Fixed-rate HECM
- A reverse mortgage with a fixed interest rate that requires a single lump-sum draw at closing; no monthly payment options available.
- Adjustable-rate HECM
- A reverse mortgage with an interest rate that adjusts monthly or annually; allows all payment options including tenure, term, and line of credit.
- Servicing fee cap
- A monthly fee capped at $30 for fixed and annually adjusting loans and $35 for monthly adjusting loans, adjusted by HUD for inflation.
- Residual income test
- A financial assessment calculation comparing income remaining after expenses to HUD thresholds; insufficient residual income may require a set-aside.
- Anti-steering rule
- A prohibition on steering borrowers to affiliated service providers or higher-cost products without disclosure and without a legitimate benefit.
- HECM advertising rules
- Materials must identify the lender, avoid implying HUD/FHA endorsement, and clearly disclose that the product is a reverse mortgage.
- Fair lending compliance
- Adherence to ECOA and the Fair Housing Act; prohibits discrimination based on race, sex, religion, national origin, disability, or familial status.
- Privacy notice requirement
- Under the Gramm-Leach-Bliley Act, lenders must provide annual privacy notices and safeguard nonpublic personal information.
- Conflict of interest disclosure
- Originators must disclose referral relationships and compensation and avoid self-dealing in appraisals, title, or other settlement services.
- Fraud reporting duty
- Suspected fraud must be reported to HUD's Office of Inspector General; records must be accurate and available for audit.
- HECM loan application
- A standardized document provided at application that discloses loan terms, costs, and the amortization schedule to the borrower.
- Appraisal and MPR
- An FHA appraisal must confirm the home meets Minimum Property Requirements; repairs may be funded through a repair set-aside.
- Delinquent federal debt
- Borrowers with delinquent federal debt are generally ineligible for FHA-insured HECMs unless the debt is resolved before closing.