source:
  type: regulation
  id: hud-4000-1-programs-and-products-hecm-refinance
  authority: HUD Handbook 4000.1 — Programs and Products - HECM Refinance (04/29/2024)
  description: "HUD Handbook 4000.1 section \"Programs and Products - HECM Refinance\". Gap-fill (verbatim,\
    \ title-diff). \n"
obligations:
- id: hud-4000-1-programs-and-products-hecm-refinance-full
  canonical_id: hud-4000-1-programs-and-products-hecm-refinance-full
  section: HUD Handbook 4000.1
  description: "Programs and Products - HECM Refinance: b. HECM Refinance (04/29/2024) \nHECMs to be insured\
    \ under the HECM Refinance program must be processed and \nunderwritten in accordance with the requirements\
    \ in Origination through Postclosing/Endorsement, except where noted otherwise in this section. \n\
    HECM-to-HECM Refinance (HECM Refinance) refers t…"
  type: do
  tags:
  - regulator-direct
  - section-complete
  - hud
  - 4000-1
  - curated
  primary_source:
    tier: 1
    authority: HUD Handbook 4000.1 — Programs and Products - HECM Refinance (04/29/2024)
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-06-18T00:00:00+00:00'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: "b. HECM Refinance (04/29/2024) \nHECMs to be insured under the HECM Refinance program\
      \ must be processed and \nunderwritten in accordance with the requirements in Origination through\
      \ Postclosing/Endorsement, except where noted otherwise in this section. \nHECM-to-HECM Refinance\
      \ (HECM Refinance) refers to a new HECM where the \nproceeds will be used to pay off the property\
      \ indebtedness of the current HECM and any \nexisting eligible lien. \nOriginal HECM refers to the\
      \ first HECM that was endorsed by FHA. \nMortgagee Optional Election (MOE) Assignment refers to\
      \ an assignment option available \nto Mortgagees for cases where an FHA case number was assigned\
      \ prior to August 4, \n2014, and is associated with an Eligible Surviving NBS. \nThe Borrower must\
      \ pay off any existing non-HECM lien on the subject Property that \ncannot be subordinated to the\
      \ first and second HECM liens, and costs associated with the \nrefinance transaction. \nWhen the\
      \ HECM is in a deferred Due and Payable status, due to the death of all \nBorrowers, and the Eligible\
      \ Non-Borrowing Spouse (NBS) seeks to obtain a HECM as a \nBorrower on the Property serving as collateral\
      \ for the existing HECM, the transaction \ncannot be originated as a HECM Refinance, but must be\
      \ originated as a traditional \ntransaction provided that all Borrower eligibility requirements\
      \ are met. \niii. Counseling Requirements \nWaiver of Counseling on HECM Refinances \nThe Borrower\
      \ and NBS may elect not to receive counseling in a HECM Refinance if the \nfollowing conditions\
      \ are met: \n(i) \nthe original HECM was assigned a case number on or after August 4, 2014, and\
      \ \nthe Borrower and NBS, if applicable, received HECM counseling; or the \noriginal HECM was assigned\
      \ a case number prior to August 4, 2014, and there \nis no NBS as determined by the MOE Assignment\
      \ policies; \n(ii) the Borrower has received form HUD-92901, Home Equity Conversion \nMortgage (HECM)\
      \ Anti-Churning Disclosure. See HECM Anti-Churning \nDisclosure; \n(iii) the increase in the Borrower’s\
      \ Principal Limit (block 2 of form HUD-92901) \nexceeds the total cost of the refinancing by an\
      \ amount equal to five times the \ncost of the transaction (block 1 of form HUD-92901); and \n\n\
      \ \n(iv) the time between the date of closing on the original HECM (i.e., the first time \nthe Borrower\
      \ obtains an FHA-insured HECM) and the application for \nrefinancing does not exceed five years,\
      \ even if less than five years have passed \nsince a previous refinancing. \nThe five-year period\
      \ in bullet (iv) above does not restart with each new refinance, even \nwhen the Borrower has received\
      \ HECM counseling since the original HECM. \nMortgagees are responsible for obtaining documentation\
      \ to confirm the date of closing of \nthe original HECM. \niv. Processing of a HECM Refinance \n\
      (A) Churning \nChurning refers to a practice whereby Mortgagees engage in multiple refinances \n\
      to generate additional profit from fees and charges. The churned HECMs are not \nmade in the interest\
      \ of the Borrower and provide no financial benefit to the \nThe Mortgagee must provide the Borrower\
      \ with a completed form HUD-92901, \nwithin three Days of taking initial loan application, disclosing:\
      \ \n• their best estimate of the total cost of the mortgage transaction; \n• the increase or decrease\
      \ in the Borrower’s Principal Limit; and \n• the amount of any additional HECM funds that will be\
      \ available to the \nBorrower as a result of the refinancing. \nIf the Principal Limit of the HECM\
      \ Refinance is lower than the Borrower’s \ncurrent Principal Limit, the change must be entered as\
      \ a negative number. \nHECM Anti-Churning Disclosure \nConfirm the original form HUD-92901 is signed\
      \ and dated by the Borrower. \nThe Settlement Statement or similar legal document must indicate\
      \ that all existing \nmortgage liens have been fully satisfied or are subordinate to the first and\
      \ second \nHECM liens. \n(B) Ordering a Case Number \nThe Mortgagee must enter the FHA case number\
      \ of the existing HECM being \nrefinanced. FHAC will not issue a case number if the existing case\
      \ number is \n\n \n“terminated” or Due and Payable. The Mortgagee must terminate the existing case\
      \ \nnumber in HERMIT after closing and once the outstanding loan balance of the \nexisting HECM\
      \ is satisfied. \nv. Property Eligibility \nCondominium Refinances \nHECM Refinance transactions\
      \ do not require Condominium Project Approval or SingleUnit Approval. If the Unit is in a Condominium\
      \ Project that has an FHA Condo ID, the \nvi. Allowable Mortgage Parameters \n(A) Reduction of Initial\
      \ Mortgage Insurance Premium \nAt least one Borrower from the original HECM must be a Borrower on\
      \ the HECM \nRefinance for the transaction to be eligible for reduced Initial Mortgage Insurance\
      \ \nPremium (IMIP). \n(B) Calculation of Initial Mortgage Insurance Premium \nMortgagees must use\
      \ the formula below to determine IMIP due (IMIPdue) to HUD: \n(1) \nIMIPnew = MCAnew × IMIP ratenew\
      \ \n(2) \nIMIPold = MCAold × IMIP rateold \nor, if this HECM has previously been refinanced: \n\
      IMIPold = MCAold × IMIP rateold −previous IMIP credit \n(3) \nIMIPlimit = [(MCAnew −MCAold) × 0.03]\
      \ −IMIPold \n(4) \nIMIPdue = min\nx≥0 (IMIPlimit, IMIPnew) \nIMIPnew is calculated by multiplying\
      \ the new IMIP rate by the new MCA of the \nproperty being refinanced. \nFor HECMs being refinanced\
      \ for the first time, IMIPold is calculated by multiplying \nthe original IMIP rate by the original\
      \ MCA of the property being refinanced. \nFor HECMs previously refinanced, IMIPold is calculated\
      \ by multiplying the prior \nIMIP rate by the prior MCA of the property being refinanced, then subtracting\
      \ IMIP \ncredit previously applied. \nIMIPlimit is calculated by multiplying 0.03 by the difference\
      \ between the new MCA \nand old MCA, then subtracting the value calculated for IMIPold. \nIMIPdue\
      \ is the lesser of IMIPlimit or IMIPnew, but cannot be less than zero."
    drafter_attestation: Verbatim section from snapshot 8c03836f77f317e1; boundary human-curated + substring-verified
      (2026-07-23).
  judgment: false
