Oregon Broker PSI Practice Exam

In a reverse mortgage setup, payments are made to the homeowner by which entity?

1. The investor

2. The borrower

3. The lender

4. The title company

The correct answer is: The lender

In a reverse mortgage setup, the homeowner receives payments from the lender. This financial product is specifically designed for older homeowners, allowing them to access a portion of their home equity without requiring them to sell their home or make monthly mortgage payments. Instead, the lender pays the homeowner, usually as a lump sum, monthly payments, or a line of credit. The loan is repaid only when the homeowner sells the house, moves out, or passes away, at which point the loan balance, including accumulated interest and fees, is settled. The other options represent parties that play different roles in typical mortgage transactions; however, they do not provide payments directly to the homeowner in a reverse mortgage arrangement. Investors may provide capital to lenders but do not engage directly in the mortgage transaction with homeowners. Borrowers, in a standard mortgage, make payments to the lender, while a title company assists with closing but does not handle payment flows in reverse mortgages.