source:
  type: guide
  id: hud-4000-1-ii-b-restrictions-on-processing-of-applications-before-completion
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Restrictions
    on Processing of Applications Before Completion of HECM Counseling (04/29/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Restrictions
    on Processing of Applications Before Completion of HECM Counseling (04/29/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-b-restrictions-on-processing-of-applications-before-completion-full
  canonical_id: hud-4000-1-ii-b-restrictions-on-processing-of-applications-before-completion-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Restrictions
    on Processing of Applications Before Completion of HECM Counseling (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 II — b. Restrictions
      on Processing of Applications Before Completion of HECM Counseling (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. Restrictions on Processing of Applications Before Completion
      of HECM Counseling (04/29/2024) i. Definition A Third-Party Originator (TPO)
      is an entity that originates FHA Mortgages for an FHA- approved Mortgagee acting
      as its sponsor. A TPO may be an FHA-approved Mortgagee or a non-FHA-approved
      entity. ii. Standard Before HECM counseling has been completed by all individuals
      required to receive counseling, the Mortgagee and/or sponsored TPO may only
      perform the functions listed below: • accept the Fannie Mae Form 1009, Residential
      Loan Application for Reverse Mortgages (RLARM), and provide required disclosures;
      • lock in the Expected Average Mortgage Interest Rate (Expected Rate); • explain
      the HECM program to the Borrower; • discuss whether the Borrower is eligible
      for HECM financing; • provide information regarding the fees and charges associated
      with the HECM product; II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title
      II Insured Housing Programs Reverse Mortgages 1. Origination/Counseling Requirements
      Handbook 4000.1 540 Last Revised: 11/26/2025 • describe the potential financial
      implications of a HECM for the Borrower; • provide the Borrower with sample
      copies of the HECM Note, Mortgage, and loan agreement; • order preliminary title
      search; • order Automated Valuation Model (AVM); and • order credit report to
      perform a preliminary credit review of the Borrower’s financial obligations.
      The Mortgagee and sponsored TPO may not collect any fee or the Borrower’s banking
      account and credit card information before closing, or in connection with any
      function permitted above if the function is performed before receipt of a signed
      and dated Certificate of HECM Counseling for each individual required to receive
      counseling. If the Borrower obtains the HECM, Mortgagees may only collect the
      cost of the credit report and the preliminary title search at loan closing;
      the cost of the AVM must be paid from the loan origination fee. If the HECM
      does not close, the Borrower may not be charged for any of these services.'
  judgment: false
