source:
  type: guide
  id: hud-4000-1-iii-b-mortgagee-optional-election-assignment
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — b. Mortgagee
    Optional Election Assignment (04/29/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — b. Mortgagee
    Optional Election Assignment (04/29/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-b-mortgagee-optional-election-assignment-full
  canonical_id: hud-4000-1-iii-b-mortgagee-optional-election-assignment-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — b. Mortgagee
    Optional Election Assignment (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 — b. Mortgagee
      Optional Election Assignment (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: 'b. Mortgagee Optional Election Assignment (04/29/2024) The Mortgagee
      Optional Election (MOE) provides the Mortgagee an option to assign the HECM
      or foreclose in accordance with the terms of the HECM. The option is available
      for cases with an FHA case number assigned prior to August 4, 2014 and associated
      with an Eligible Surviving Non-Borrowing Spouse (NBS). A MOE Assignment claim
      is the only alternative path to claim payment outside of existing regulations
      for HECMs with FHA case numbers assigned prior to August 4, 2014; no other alternative
      path to claim payment exists. The Mortgagee may elect to proceed in accordance
      with the amendment provided by this section, which provides for a MOE Assignment
      of an eligible HECM immediately after the death of the last surviving Borrower
      or upon a Borrower’s residence in a health care facility for more than 12 consecutive
      months, provided all of the conditions and requirements III. SERVICING AND LOSS
      MITIGATION B. Title II Insured Housing Programs Reverse Mortgages 3. Programs
      and Products - Mortgagee Optional Election Assignment (04/29/2024) Handbook
      4000.1 1521 Last Revised: 11/26/2025 established in this section are satisfied.
      If the Mortgagee elects the MOE Assignment option, the Mortgagee must adhere
      to the guidance herein. Alternatively, the Mortgagee may elect to enforce its
      private contractual rights in accordance with the terms of the Note, security
      instrument, or HECM loan agreement. If the Mortgagee elects to foreclose in
      accordance with the terms of the HECM, the Mortgagee must adhere to HUD’s Due
      and Payable policies. i. Definitions HECM Borrower refers to the original Borrower
      under a Note and Mortgage. The term does not include successors or assigns of
      a Borrower. MOE Assignment Deferral Period refers to the period of time following
      the death of the last surviving Borrower for an eligible HECM with an FHA case
      number assigned prior to August 4, 2014, and associated with an Eligible Surviving
      NBS, during which time the Due and Payable status of a HECM is deferred based
      on the continued satisfaction of the requirements for an Eligible Surviving
      NBS under this section and all other FHA requirements. Non-Borrowing Spouse
      (NBS) refers to the spouse of a HECM Borrower who is not also a Borrower. Eligible
      Surviving Non-Borrowing Spouse (NBS), for the purpose of MOE Assignment, refers
      to an NBS of a HECM Borrower where the HECM was assigned an FHA case number
      prior to August 4, 2014 and meets the eligibility requirements identified by
      HUD. Principal Residence refers to the dwelling where the Borrower and, if applicable,
      an NBS maintain their permanent place of abode, and typically spend the majority
      of the calendar year. A person may have only one Principal Residence at any
      one time and the Property is considered to be the Principal Residence: • of
      any Borrower who is temporarily in a health care institution provided the Borrower’s
      confinement to a health care institution does not exceed 12 consecutive months;
      • of any NBS who is temporarily in a health care institution, as long as the
      Property is the Principal Residence of their Borrower spouse, who physically
      resides in the Property; • of any NBS who occupies the property as their Principal
      Residence, when the Borrower resides in a health care institution for a length
      of time; and • during a Deferral Period of the NBS, who is temporarily in a
      health care institution, provided the Eligible NBS physically occupied the Property
      immediately prior to entering the health care institution and such confinement
      does not exceed 12 consecutive months. III. SERVICING AND LOSS MITIGATION B.
      Title II Insured Housing Programs Reverse Mortgages 3. Programs and Products
      - Mortgagee Optional Election Assignment (04/29/2024) Handbook 4000.1 1522 Last
      Revised: 11/26/2025 Due and Payable Date, for purposes of MOE claim payment,
      refers to the date when a Mortgagee notifies HUD that it has determined not
      to utilize the MOE Assignment or has determined that the HECM is not eligible
      for assignment. Ability to Purchase or Sell After the death of the last Borrower,
      an NBS may elect to satisfy the HECM and retain the Property securing the HECM
      for the lesser of the unpaid principal balance or 95 percent of the Property’s
      appraised value. Regardless of the presence of any NBS, the Property securing
      the HECM may be sold by the Borrower’s estate for the lesser of the unpaid principal
      balance or 95 percent of the Property’s appraised value. Nothing in this section
      may be construed as interrupting or interfering with the ability of the Borrower’s
      estate to dispose of the Property if they are otherwise legally entitled to
      do so. Regardless of a Mortgagee’s election under this section, the Mortgagee
      may provide any Eligible Surviving NBS or the Borrower’s estate with an opportunity
      to purchase or to market and sell the Property in accordance with HUD’s Due
      and Payable policies. ii. Standard (A) Required Notifications (1) Notification
      to Borrower of Assignment When a HECM with an FHA case number assigned before
      August 4, 2014 reaches 98 percent of the Maximum Claim Amount (MCA) prior to
      the death of the last surviving Borrower and the Mortgagee exercises its option
      to assign the HECM to the Secretary, the Mortgagee must notify the Borrower:
      • that the HECM is being assigned to the Secretary; • that if the Borrower is
      married to an NBS, the NBS may be eligible for a Deferral Period provided the
      qualifications of an Eligible Surviving NBS are met and all of the conditions
      and requirements for a Deferral Period are, and continue to be, met; and • of
      the requirements for an Eligible Surviving NBS as well as the conditions and
      requirements for an applicable Deferral Period. (2) Notice of Election to Eligible
      Surviving Non-Borrowing Spouse and/or Borrower’s Estate Within 30 Days after
      the Mortgagee’s election to either pursue a MOE Assignment or foreclose, the
      Mortgagee must provide notice based on the election made under this section.
      III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse
      Mortgages 3. Programs and Products - Mortgagee Optional Election Assignment
      (04/29/2024) Handbook 4000.1 1523 Last Revised: 11/26/2025 If the Mortgagee
      elects to pursue a MOE Assignment, the Mortgagee must provide the eligibility
      requirements to the Eligible Surviving NBS and Borrower’s estate. If the Mortgagee
      elects to pursue foreclosure, the Mortgagee must inform the Eligible Surviving
      NBS and the Borrower’s estate that the Mortgagee will provide a period not to
      exceed six months during which the Eligible Surviving NBS or the Borrower’s
      estate may satisfy the HECM or market and sell the Property in accordance with
      this section. (3) Notification to HUD of Borrower’s Death Within 60 Days of
      the Borrower’s death, the Mortgagee must notify HUD, via HERMIT, that the HECM
      is eligible to be called Due and Payable under the original terms of the HECM
      entered into between the Mortgagee and the Borrower. (4) Mortgagee Optional
      Election to Assign for HECMs with Case Numbers Assigned before August 4, 2014
      For cases where the last surviving Borrower is survived by an NBS, the Mortgagee
      must enter the Borrower’s date of death in HERMIT and then follow the requirements
      and conditions for the Mortgagee Optional Election to assign. Where the Mortgagee
      elects to pursue a MOE Assignment, the Mortgagee must not complete the Due and
      Payable timeline in HERMIT until such time as the Deferral Period ends. Where
      the Mortgagee elects to foreclose in accordance with the terms of the HECM,
      the Mortgagee must complete the appropriate Due and Payable timeline in order
      to provide HUD the required notification. (B) Mortgagee Election of MOE Assignment
      To notify HUD of its election to pursue a MOE Assignment, the Mortgagee must
      upload into HERMIT a statement of such election on company letterhead, at which
      time the HECM will begin a Deferral Period. (C) MOE Assessment The Mortgagee
      must perform an assessment to determine whether the NBS and the HECM meet the
      eligibility requirements for a MOE Assignment. III. SERVICING AND LOSS MITIGATION
      B. Title II Insured Housing Programs Reverse Mortgages 3. Programs and Products
      - Mortgagee Optional Election Assignment (04/29/2024) Handbook 4000.1 1524 Last
      Revised: 11/26/2025 iii. Eligibility Requirements for MOE Assignment (A) Non-Borrowing
      Spouse Eligibility Requirements Where the Mortgagee has made the MOE Assignment
      election, an NBS of a Borrower is an Eligible Surviving NBS when the NBS: •
      was either: • legally married, as determined by the law of the state in which
      the spouse and Borrower reside(d) or the state of celebration, to the Borrower
      at the time of HECM closing and remained married to the Borrower until the Borrower’s
      death; or • engaged in a committed relationship with the Borrower akin to marriage
      but was prohibited, at the time of HECM origination, from legally marrying the
      Borrower based on the sex of both the Borrower and the NBS, but was legally
      married prior to the death of the Borrower, as determined by the law of the
      state in which the spouse and the Borrower reside(d) or the state of celebration,
      to the Borrower and: ▪ remained married until the Borrower’s death; or ▪ remains
      married to the Borrower, in situations in which the Borrower has resided in
      a health care institution for more than 12 consecutive months; and • currently
      resides and resided in the Property secured by the HECM as their Principal Residence
      at origination of the HECM and throughout the duration of the Borrower’s life.
      (B) HECM Eligibility Requirements for MOE Assignment to HUD Where the Mortgagee
      has made the MOE Assignment election, only a HECM that satisfies the following
      requirements can be assigned: • the HECM was assigned an FHA case number prior
      to August 4, 2014; • there is an Eligible Surviving NBS; • the Eligible Surviving
      NBS agrees to certify annually that all eligibility requirements continue to
      be satisfied; • the HECM is not in default or eligible to be called Due and
      Payable for any reason other than the death of the last surviving Borrower;
      • there are no allegations or claims that would invalidate the HECM or any such
      allegations or claims have been judicially resolved in favor of the Mortgagee;
      • the Mortgagee has taken all steps necessary to ensure the HECM remains a valid
      and legally enforceable first lien under state law and no statute of limitations
      or other barrier exists to the exercising of rights to gain good, marketable
      title under the HECM; • the Mortgagee agrees to indemnify the Secretary for
      any loss incurred as a result of any impediment to the Secretary obtaining good
      and marketable title, unless such loss is solely due to acts of the Secretary
      after assignment; and III. SERVICING AND LOSS MITIGATION B. Title II Insured
      Housing Programs Reverse Mortgages 3. Programs and Products - Mortgagee Optional
      Election Assignment (04/29/2024) Handbook 4000.1 1525 Last Revised: 11/26/2025
      • the Mortgagee has obtained all required information, certifications, and agreements
      from any Eligible Surviving NBS and any other necessary party as set forth herein.
      A HECM that is subject to a pre-existing loss mitigation Repayment Plan for
      unpaid Property Charges must be brought current on all Property Charges in order
      for the HECM to be eligible for a MOE assignment. iv. MOE Assignment Process
      and Documentation Requirements A Mortgagee may not assign a HECM to HUD where
      the MOE Assignment Deferral Period has ceased, but may assign a HECM after the
      MOE Assignment Deferral Period has been reinstated in accordance with Termination
      and Reinstatement of the MOE Assignment Deferral Period. The Mortgagee must
      initiate the MOE Assignment process through HERMIT. (A) Modification of Contract
      Prior to MOE Assignment The Mortgagee must ensure that appropriate protections
      are put in place to ensure a valid, legally enforceable first lien will be assigned
      to HUD, which may include a modification of the HECM documents to provide the
      following provisions: • a deferral of the Due and Payable status that ordinarily
      results from the death of the last surviving Borrower; • the deferral must immediately
      cease upon the earliest occurrence of: • the death of any such Eligible Surviving
      NBS; • an Eligible Surviving NBS ceases to satisfy the definition requirements;
      or • the occurrence of an event besides death that would make the HECM eligible
      to be called Due and Payable; • an obligation of any Eligible Surviving NBS
      to continue to meet all contractual obligations of the Borrower; • an obligation
      of any Eligible Surviving NBS to meet the certification and other requirements;
      and • an express waiver of any right to any Disbursement under the HECM Note,
      security agreement, and loan agreement. The Mortgagee must take whatever action
      necessary, including modification if the Mortgagee deems it necessary, to preserve
      its ability to foreclose on the HECM should any of the following occur before
      the assignment to the Secretary has been completed: • the NBS dies; • the MOE
      Assignment Deferral Period ends; or • any event of default, other than the death
      of the Borrower, occurs. III. SERVICING AND LOSS MITIGATION B. Title II Insured
      Housing Programs Reverse Mortgages 3. Programs and Products - Mortgagee Optional
      Election Assignment (04/29/2024) Handbook 4000.1 1526 Last Revised: 11/26/2025
      (B) Required Certifications (1) MOE Assignment Required Mortgagee Certification
      The Mortgagee must certify at assignment to the following: “I, , as authorized
      representative of , the Mortgagee, certify that I have personally reviewed the
      HECM documents as well as the information provided by , the Eligible Surviving
      Non-Borrowing Spouse, and certify that the following are true and correct: 1.
      The HECM is not eligible to be called Due and Payable for any reason other than
      in the case of the death of the last surviving Borrower or non-occupancy because
      the Borrower has resided in a health care facility for more than 12 consecutive
      months and all other obligations of the HECM Borrower have been and continue
      to be met; 2. There are no allegations or claims that would invalidate the HECM
      or any such allegations or claims have been judicially resolved in favor of
      the Mortgagee; 3. There is a valid, legally enforceable first lien with no impediments
      to securing good, marketable title; 4. [Insert as applicable based on Mortgagee’s
      election: The HECM note, security agreement, and loan agreement have been modified
      establishing the conditions and requirements for the deferral of Due and Payable
      status as well as obligating any Eligible Surviving Non- Borrowing Spouse to
      continue to meet all contractual obligations and expressly waiving any right
      to any disbursements under the HECM note, security agreement, and the loan agreement];
      and 5. I have determined that there [is/are] [#] Eligible Surviving Non- Borrowing
      Spouse(s), identified as [insert names], and have obtained all required information,
      acknowledgements, agreements, and certifications from such Eligible Surviving
      Non-Borrowing Spouse(s). I certify that the information provided in connection
      with this assignment is true and correct. I hereby agree on behalf of the Mortgagee
      that it will indemnify the Secretary for any amounts paid pursuant to this election
      should any of the information provided prove false. Further, I hereby agree
      on behalf of the Mortgagee that it will indemnify the Secretary any amounts
      paid pursuant to this election in the event the Secretary is subsequently impeded
      from obtaining good and marketable title as a result of the Mortgagee’s failure
      to assign a valid, legally enforceable first lien.” I, the undersigned, certify
      under penalty of perjury that the information provided above is true and correct.
      WARNING: Anyone who knowingly submits a false claim or makes a false statement
      is subject to criminal and/or civil penalties, including confinement for up
      to 5 years, fines, and civil and III. SERVICING AND LOSS MITIGATION B. Title
      II Insured Housing Programs Reverse Mortgages 3. Programs and Products - Mortgagee
      Optional Election Assignment (04/29/2024) Handbook 4000.1 1527 Last Revised:
      11/26/2025 administrative penalties. (18 U.S.C. §§287, 1001, 1010, 1012, 1014;
      31 U.S.C. §3729, 3802). (2) Optional Revision to Mortgagee Certification Where
      a Mortgagee is unable, due to state law requirements, to truthfully certify
      to item number three in the Mortgagee Certification, the optional language that
      may be used is as follows: “At assignment, there is a valid, legally enforceable
      first lien with no impediments to securing good, marketable title, and upon
      assignment, the Secretary will have a valid, legally enforceable first lien
      with no impediments to securing good and marketable title.” Additionally, where
      a Mortgagee is unable, due to state law, to certify using the aforementioned
      language as is written, the Mortgagee may use the language below in lieu of
      the last sentence in the Mortgagee Certification: “Further, I hereby agree on
      behalf of the Mortgagee that it will indemnify the Secretary for any amounts
      paid pursuant to this election in the event the Secretary is subsequently impeded
      from obtaining good and marketable title as a result of the Secretary’s inability
      to enforce a valid, legally enforceable first lien.” (3) MOE Assignment Required
      Eligible Surviving Non-Borrowing Spouse Certification at MOE Assignment Election
      The Mortgagee must obtain a signed agreement, acknowledgement, and certification
      at assignment from any Eligible Surviving NBS verifying the established conditions
      and requirements are met. The agreement, acknowledgement, and certification
      must state: “I hereby agree, acknowledge, and certify that I was married to
      and remained married to _____________, a HECM Borrower, at the time the HECM
      was originated and throughout the remainder of their life. I certify that the
      information provided in this agreement, acknowledgement, and certification is
      true and correct. I acknowledge that my spouse’s HECM is currently eligible
      to be called Due and Payable under the original terms of the HECM contract as
      a result of [his/her] death and that the Mortgagee is electing to assign my
      spouse’s HECM to FHA. I further acknowledge and agree that if assignment is
      accepted, the HECM will not be called Due and Payable until my death or such
      time as I cease to be eligible for a deferral. As a result, I acknowledge that
      I will be permitted to remain in the property until my death provided I continue
      to comply with the terms of this agreement and certification. I further understand
      and agree that in order to qualify for a deferral of Due and Payable status,
      I must: III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs
      Reverse Mortgages 3. Programs and Products - Mortgagee Optional Election Assignment
      (04/29/2024) Handbook 4000.1 1528 Last Revised: 11/26/2025 1. disclose and provide
      consent to the verification of my Social Security Number; 2. continue to occupy
      the property securing my spouse’s HECM as my principal residence; 3. acknowledge
      and agree that I will receive no disbursements from my spouse’s HECM; 4. ensure
      that all obligations of the HECM Borrower continue to be satisfied without reliance
      on any disbursement from the HECM, including the obligation to pay property
      charges and insurance even if the HECM would have allowed for the payment of
      these charges from the available proceeds; 5. ensure the HECM is not and will
      not become eligible to be Due and Payable for any reason other than the death
      of the last surviving Borrower or non-occupancy because the Borrower has resided
      in a health care facility for more than 12 consecutive months; 6. annually certify
      that all conditions necessary for assignment are and continue to be met; and
      7. provide any documentation required by the Mortgagee to evidence my compliance
      with the requirements of the assignment and deferral of Due and Payable status.
      I agree and acknowledge that should any of these obligations cease to be met
      the Deferral Period shall cease, my spouse’s HECM will immediately become Due
      and Payable, and, as a result, I must satisfy the HECM in accordance with existing
      HUD policy in order to remain in the property further.” I, the undersigned,
      certify under penalty of perjury that the information provided above is true
      and correct. WARNING: Anyone who knowingly submits a false claim or makes a
      false statement is subject to criminal and/or civil penalties, including confinement
      for up to 5 years, fines, and civil and administrative penalties. (18 U.S.C.
      §§ 287, 1001, 1010, 1012, 1014; 31 U.S.C. §§ 3729, 3802). (C) Required Documentation
      The Mortgagee must secure the following information, certifications, and enforceable
      agreements and provide documentation of such with the assignment: • any Eligible
      Surviving NBS’s Social Security Number (SSN); • that the Property is and has
      been, since the origination of the HECM, the Principal Residence of any Eligible
      Surviving NBS, and obtain a written agreement from such Eligible Surviving NBS
      that they will continue to occupy the Property securing the HECM as their Principal
      Residence; • that all obligations of the Borrower(s) contained in the HECM documents
      have been and continue to be satisfied, and obtain a written agreement from
      any Eligible Surviving NBS to continue to satisfy the obligations of the Borrower(s);
      III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse
      Mortgages 3. Programs and Products - Mortgagee Optional Election Assignment
      (04/29/2024) Handbook 4000.1 1529 Last Revised: 11/26/2025 • written acknowledgement
      and agreement from the Eligible Surviving NBS that no further Disbursements
      under the HECM are required to be or will be made; • written acknowledgement
      and agreement from the Eligible Surviving NBS that the HECM may immediately
      be called Due and Payable if any event of default other than the death of the
      last surviving Borrower or non-occupancy because the Borrower has resided in
      a health care facility for more than 12 consecutive months occurs at any time;
      and • written acknowledgement and agreement from any Eligible Surviving NBS
      that the HECM will become immediately Due and Payable should the Eligible Surviving
      NBS cease to meet any of the eligibility requirements, conditions for acceptance,
      or ongoing obligations under the HECM. v. Termination and Reinstatement of the
      MOE Assignment Deferral Period If an NBS fails to meet, or ceases to meet at
      any time, the definition of an Eligible Surviving NBS, the MOE Assignment Deferral
      Period terminates immediately and there is no opportunity to cure the failure
      to meet this required definition. When the MOE Assignment Deferral Period ceases
      or is determined to be unavailable solely because the HECM is eligible to be
      called Due and Payable for a reason other than the death of the Borrower, the
      Mortgagee must provide an Eligible Surviving NBS 30 Days to cure the default
      and reinstate the MOE Assignment Deferral Period as follows: • all defaults
      must be cured in fact within the time period permitted; a default is not cured
      by entering into a Repayment Plan; • if the default is cured within such time,
      the MOE Assignment Deferral Period must be reinstated, unless: • reinstatement
      of the MOE Assignment Deferral Period has occurred within the past two years
      immediately preceding the current notification to the Eligible Surviving NBS
      that the HECM is Due and Payable; • reinstatement of the MOE Assignment Deferral
      Period will preclude foreclosure if the HECM becomes Due and Payable at a later
      date; or • reinstatement of the MOE Assignment Deferral Period will adversely
      affect the priority of the HECM lien; • if the default is not cured within such
      time, the Mortgagee must proceed in accordance with the established time frames
      to initiate foreclosure and reasonable diligence in prosecuting foreclosure
      as required by 24 CFR § 206.125 and all other regulations and requirements if
      it wishes to perfect its claim for insurance benefits; and • even after a foreclosure
      proceeding begins, an Eligible Surviving NBS may cure the condition which resulted
      in the MOE Assignment Deferral Period ceasing, thus reinstating the HECM and
      MOE Assignment Deferral Period and allowing the mortgage insurance to remain
      in effect. The Mortgagee may require the Eligible Surviving NBS to pay any costs
      that the Mortgagee incurred to reinstate the HECM, including foreclosure costs
      and reasonable attorney’s fees. Such costs III. SERVICING AND LOSS MITIGATION
      B. Title II Insured Housing Programs Reverse Mortgages'
  judgment: false
