source:
  type: guide
  id: hud-4000-1-iii-t-repurchase-of-previously-assigned-hecm
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — t. Repurchase
    of Previously Assigned HECM (04/29/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — t. Repurchase
    of Previously Assigned HECM (04/29/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-t-repurchase-of-previously-assigned-hecm-full
  canonical_id: hud-4000-1-iii-t-repurchase-of-previously-assigned-hecm-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — t. Repurchase
    of Previously Assigned HECM (04/29/2024)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — t. Repurchase
      of Previously Assigned HECM (04/29/2024)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 't. Repurchase of Previously Assigned HECM (04/29/2024) i. Definition
      Repurchase refers to HUD’s requirement that the HECM be returned to the Mortgagee
      who assigned it due to the discovery of the Mortgagee’s noncompliance with the
      regulations, which allowed a condition to exist that would have made the HECM
      unassignable. ii. Standard The Mortgagee must repurchase a HECM upon notification
      from HUD if any of the following conditions of noncompliance occurred at or
      prior to the time of assignment: • a title defect discovered in relation to
      preparations for a foreclosure or Deed-In- Lieu (DIL) after assignment or after
      HUD acquired the Property through foreclosure; or • an occurrence of a Due and
      Payable event of which HUD was not made aware. (A) Initiating the Repurchase
      Process HUD initiates a repurchase using the repurchase timeline in HERMIT.
      HUD will provide a repurchase notification to the Mortgagee. III. SERVICING
      AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages 1.
      Servicing of FHA-Insured HECMs Handbook 4000.1 1482 Last Revised: 11/26/2025
      (1) Curable Defects HUD will provide the Mortgagee with a pre-repurchase letter,
      detailing the defect and allowing up to 30 Days to cure. The Mortgagee must
      take the appropriate action to correct a defect if curable and provide HUD with
      supporting documentation of such correction. The Mortgagee may request a maximum
      of three 30-Day extensions. The Mortgagee must submit any request for extension
      in HERMIT. HUD will cancel the repurchase timeline if the Mortgagee cures the
      defect within the 30-Day period or any extension period approved by HUD. (2)
      Incurable Defects The Mortgagee must proceed with the repurchase within 30 Days
      of receipt of HUD’s repurchase notification where: • a title defect exists that
      cannot be corrected; or • the repurchase involves a HECM that was eligible to
      be Due and Payable when it was assigned. (B) Completing the Repurchase Process
      If the repurchase defect is incurable or the Mortgagee fails to cure the defect
      before the pre-repurchase period has expired, the Mortgagee must authorize HUD
      to draft the applicable funds from the Mortgagee’s specified account. The Mortgagee
      must complete this action in HERMIT within 30 Days of the date HUD created the
      repurchase timeline or the expiration of the pre-repurchase period, if applicable.
      The Mortgagee must prepare one of the following documents for HUD’s execution:
      • an assignment transferring the HECM from HUD to the Mortgagee; or • a deed
      reconveying the Property for which HUD holds title to the Mortgagee. Upon receipt
      of the executed document from HUD, the Mortgagee must have the document recorded
      and coordinate with HUD’s HECM servicing contractor to transfer servicing back
      to the Mortgagee. The Mortgagee must reimburse HUD for all expenses incurred
      in connection with the acquisition and reassignment or reconveyance. The reimbursement
      must include: • interest on the amount of the insurance benefits refunded by
      the Mortgagee from the date the claim was paid to the date of the refund at
      an interest rate set in accordance with the Treasury Financial Manual; and •
      HUD’s cost of holding the Property and servicing the HECM, accruing on a daily
      basis, from the date of assignment to the date of reassignment. III. SERVICING
      AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages 1.
      Servicing of FHA-Insured HECMs Handbook 4000.1 1483 Last Revised: 11/26/2025
      iii. Required Documentation The Mortgagee must send the Borrower and upload
      in HERMIT a notification that the HECM has been transferred back to the Mortgagee.
      iv. Subsequent Application for Insurance Benefits The Mortgagee may re-apply
      for insurance benefits at a subsequent date. The Mortgagee will not be reimbursed
      for any expenses incurred in connection with the Property after it has been
      reconveyed or the HECM reassigned, or paid any debenture interest accrued after
      the date of initial conveyance. Any reduction in HUD’s estimate of the value
      of the Property occurring from the time of reconveyance to the time of reapplication
      will be deducted from the insurance benefits.'
  judgment: false
