Loan Officer Practice Exam

___________, the HECM program requires prospective borrowers to participate in a consumer counseling session given by an approved counselor.

1. A) Before they can apply for the loan

2. B) Within 10 days of loan consummation

3. C) Within three business days of loan application

4. D) Prior to loan consummation

The correct answer is: A) Before they can apply for the loan

The correct response highlights a critical requirement of the Home Equity Conversion Mortgage (HECM) program, which is that prospective borrowers must engage in a consumer counseling session with an approved counselor before they can apply for the loan. This requirement is in place to ensure that borrowers are fully informed about the specifics of the HECM program, including its costs, implications, and their rights and responsibilities, thereby promoting sound financial decisions. By mandating this counseling session prior to the loan application, the program aims to protect consumers from making uninformed decisions regarding a reverse mortgage, which can significantly impact their financial future. It also helps to ensure that borrowers understand how a HECM can affect their home equity and their heirs. This step is particularly important given the complexities involved in reverse mortgages. Borrowers who have received appropriate counseling are better equipped to weigh their options and understand the long-term implications of their borrowing decisions. Thus, a primary goal of this counseling is consumer protection and empowerment, which underpins the integrity of the HECM program.