source:
  type: guide
  id: hud-4000-1-iii-o-post-endorsement-hecm-amendments
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — o. Post-Endorsement
    HECM Amendments (04/29/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — o. Post-Endorsement
    HECM Amendments (04/29/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-o-post-endorsement-hecm-amendments-full
  canonical_id: hud-4000-1-iii-o-post-endorsement-hecm-amendments-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — o. Post-Endorsement
    HECM Amendments (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 — o. Post-Endorsement
      HECM Amendments (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: 'o. Post-Endorsement HECM Amendments (04/29/2024) i. Definition
      A Post-Endorsement HECM Amendment refers to a change to the HECM instruments,
      the nature of the obligation, or the security after the HECM has been insured.
      ii. Standard The Mortgagee must obtain HUD’s approval by submitting the required
      documents through the HERMIT System for all post-endorsement HECM amendments
      prior to completion of the proposed change. iii. Required Documentation The
      Mortgagee must retain a copy of all supporting documents submitted to HUD and
      HUD’s approval or rejection of the amendment in the Servicing File. iv. Types
      of Amendments (A) Partial Release of Security (1) Definition Partial Release
      of Security refers to a request to release a portion of the land that secures
      the HECM. Reasons for a partial release of security may include: • condemnation;
      • eminent domain (order of taking); • lot line dispute or adjustment; or • sale
      of a portion of the land. III. SERVICING AND LOSS MITIGATION B. Title II Insured
      Housing Programs Reverse Mortgages 1. Servicing of FHA-Insured HECMs Handbook
      4000.1 1467 Last Revised: 11/26/2025 (2) Request Process The Mortgagee must
      obtain HUD approval for any partial release of security. The Mortgagee must
      submit the following in HERMIT using the partial release of security request
      timeline: • a cover letter that includes: • Borrower’s name; • property address;
      • FHA case number of Borrower; • Maximum Claim Amount (MCA); • unpaid principal
      balance; • detailed reason for request, including how the land to be released
      will be used; and • Mortgagee’s reason for the recommendation to accept the
      Borrower’s request; • whether or not the HECM is in good standing; • the amount
      of the outstanding principal balance; • a complete legal description of the
      Property to be released; • a complete legal description of the Property to be
      retained; • the sales contract, if any, indicating monetary consideration to
      be received by the Borrower; • the amount of a prepayment, if any, to the HECM
      principal; • any restrictions to be imposed on the land to be released; • a
      survey or sketch of the Property showing: • the dimensions of the portion to
      be released and the portion to be retained; • the location of existing and proposed
      improvements; and • the relation of the Property to surrounding Properties;
      • plans and specifications, including Cost Estimates of any alterations proposed
      for the remaining Property after the release; • a valid FHA appraisal that reflects:
      • the value before the partial release of security; and • the value of the remaining
      Property after the partial release of security; • any applicable notice of taking
      through eminent domain; • copies of the first and any applicable second HECM;
      • copies of the prepared partial releases for the first and any applicable second
      HECM; and • any other supporting documentation the Mortgagee may deem appropriate.
      (3) HUD Review HUD will process the request for the partial release of security
      and notify the Mortgagee of the approval or rejection in HERMIT. If the request
      is approved, III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing
      Programs Reverse Mortgages 1. Servicing of FHA-Insured HECMs Handbook 4000.1
      1468 Last Revised: 11/26/2025 HUD will execute the partial release of security
      document, upload a copy into HERMIT, and mail the original to the Mortgagee
      for recording. (B) Substitution of Collateral (1) Definition A Substitution
      of Collateral refers to the substitution of security for the purpose of removing
      the dwelling to a new lot or replacing the dwelling with a similar or like kind
      on the existing lot under the following conditions: • the Mortgagee obtains
      a good and valid first lien on the Property to which the dwelling is removed
      or the existing lot upon which the dwelling is rebuilt; • all damages to the
      structure are repaired or all rebuilding of the structure is completed without
      cost to FHA; and • the Property to which the dwelling is removed or rebuilt
      is in an area known to be reasonably free from natural hazards or, if in a flood
      zone, the Borrower will insure or reinsure under the National Flood Insurance
      Program (NFIP). (2) Request Process The Mortgagee, working with the Borrower
      and the insurance adjuster’s report, must determine the extent of the damage.
      When it has been determined that substitution of a new dwelling is required,
      the Mortgagee must obtain HUD’s approval prior to completion of construction.
      The Mortgagee must ensure the new dwelling: • is comparable in value to the
      original dwelling; • will support the original mortgage amounts; and • will
      meet FHA’s MPS. The Mortgagee must submit a substitution of collateral request
      to HUD for review and approval via HERMIT with a cover letter that includes:
      • Borrower’s name; • property address; • FHA case number of Borrower; • MCA;
      • unpaid principal balance; • detailed reason for request; and • Mortgagee’s
      reason for the recommendation to accept the Borrower’s request. The Mortgagee
      must also submit the following documentation, which may vary based on the nature
      and degree of the damage: • the origination appraisal; III. SERVICING AND LOSS
      MITIGATION B. Title II Insured Housing Programs Reverse Mortgages 1. Servicing
      of FHA-Insured HECMs Handbook 4000.1 1469 Last Revised: 11/26/2025 • an appraisal
      of the site with proposed improvements subject to completion per plans and specifications;
      • verification the Borrower has sufficient construction funds to complete the
      project; • the Hazard Insurance Claim Report and insurance payment information;
      • a scheduled completion date for the entire project; • an elevation survey,
      if required by local regulations; and • evidence of compliance with any state
      or local building requirements. The Mortgagee may, without the prior consent
      of the Commissioner, accept an addition to, or substitution of, the security
      for the purpose of removing the dwelling to a new lot under the following conditions:
      • the dwelling has survived an earthquake or other disaster with little damage,
      but continued location on the Property might be hazardous; • the Mortgagee obtains
      a good first lien on the Property to which the dwelling is removed or the existing
      lot upon which the dwelling is rebuilt; • all damages to the structure are repaired
      or all rebuilding of the structure is completed without cost to FHA; • the Property
      to which the dwelling is removed or rebuilt is in an area known to be reasonably
      free from natural hazards or, if in a flood zone, the Borrower will insure or
      reinsure under the NFIP; and • immediately following the emergency removal,
      the Mortgagee notifies FHA through the HERMIT System of the reasons for removal.
      The Mortgagee must monitor the progress of the project and ensure it is completed
      by the scheduled date. (3) HUD Review HUD will process the request for substitution
      of collateral and notify the Mortgagee of the approval or rejection by email.
      In addition, HUD will upload all related documentation received in HERMIT. HUD’s
      appraisal review may have recommendations that must be met prior to the approval
      of the substitution of collateral. These recommendations, which will be stated
      in HUD’s response to the request, may include: • that the old structure is demolished
      and/or removed from the site; and • a final inspection of the completed project
      be provided. (C) Consent of Lienholder (1) Definition Consent of Lienholder
      refers to the approval of all lienholders to allow for an Easement on the Property
      that does not diminish the appraised value of the land secured by the HECM.
      If land is taken, the owner should be compensated and a partial release should
      be done. Easements may be for: III. SERVICING AND LOSS MITIGATION B. Title II
      Insured Housing Programs Reverse Mortgages 1. Servicing of FHA-Insured HECMs
      Handbook 4000.1 1470 Last Revised: 11/26/2025 • aviation or avigation; • oil
      and gas leases; • driveways; • subdivision consent; • consent to change in covenants
      and restrictions; or • municipalities to allow for drainage or access where
      no actual land is taken. (2) Request Process The Mortgagee must submit a request
      in HERMIT using the consent of lienholder timeline, providing the following
      documentation: • a cover letter that includes: • Borrower’s name; • property
      address; • FHA case number of Borrower; • MCA; • unpaid principal balance; and
      • detailed reason for request; • a copy of the origination appraisal; • a copy
      of the oil and gas lease contract, proposed easement, or other written agreement;
      • copies of the recorded first and any applicable second HECM security instrument
      which includes the legal description; • survey or plot plan showing proposed
      Easement, if applicable; and • documents for which approval and signature is
      requested for first and any applicable second HECMs. (3) HUD Review HUD will
      process the request for the consent of lienholder and notify the Mortgagee of
      the approval or rejection in HERMIT. If the request is approved, HUD will execute
      the consent of lienholder document, upload a copy into HERMIT, and mail the
      original to the Mortgagee for recording. (D) Subordination Agreement (1) Definition
      Subordination Agreement refers to an action necessary to correct the recordation
      order when the second HECM has been inadvertently recorded before the first.
      Recording a Subordination Agreement for the second HECM must result in the Mortgagee’s
      HECM lien being a first mortgage lien. III. SERVICING AND LOSS MITIGATION B.
      Title II Insured Housing Programs Reverse Mortgages 1. Servicing of FHA-Insured
      HECMs Handbook 4000.1 1471 Last Revised: 11/26/2025 (2) Request Process The
      Mortgagee must submit a request for a Subordination Agreement in HERMIT using
      the Subordination timeline, providing the following documentation: • copies
      of the recorded first and second HECM; and • a prepared Subordination Agreement
      for HUD’s execution. (3) HUD Review HUD will process the subordination request
      and notify the Mortgagee of the approval or rejection in HERMIT. If the request
      is approved, HUD will execute the Subordination Agreement, upload a copy into
      HERMIT, and mail the original to the Mortgagee for recording.'
  judgment: false
