Which of the following is a mandatory feature of all reverse mortgages?
Correct Answer
B) The borrower cannot owe more than the home's value at repayment
Reverse mortgages are non-recourse loans, meaning the borrower (or their heirs) cannot owe more than the home's value when the loan becomes due. This is a key protection built into reverse mortgages. If the loan balance exceeds the home value, the FHA insurance covers the difference for HECM loans.
Why This Is the Correct Answer
Reverse mortgages are non-recourse loans, meaning the borrower (or their heirs) cannot owe more than the home's value when the loan becomes due. This is a key protection built into reverse mortgages. If the loan balance exceeds the home value, the FHA insurance covers the difference for HECM loans.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
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A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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