source:
  type: guide
  id: hud-4000-1-ii-a-mortgagee-closing-requirements
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — a. Mortgagee
    Closing Requirements (01/24/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — a. Mortgagee
    Closing Requirements (01/24/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-a-mortgagee-closing-requirements-full
  canonical_id: hud-4000-1-ii-a-mortgagee-closing-requirements-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — a. Mortgagee
    Closing Requirements (01/24/2022)
  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 — a. Mortgagee
      Closing Requirements (01/24/2022)
    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: 'a. Mortgagee Closing Requirements (01/24/2022) i. Chain of Title
      The Mortgagee must obtain evidence of prior ownership when a Property was sold
      within 12 months of the case number assignment date. The Mortgagee must review
      the evidence of prior ownership to determine any undisclosed Identity-of-Interest
      transactions. ii. Title The Mortgagee must ensure that all objections to title
      have been cleared and any discrepancies have been resolved to ensure that the
      FHA-insured Mortgage is in first lien position. (A) Good and Marketable Title
      (1) Standard The Mortgagee must determine if there are any exceptions to good
      and marketable title not covered by the General Waiver. See General Mortgage
      Insurance Eligibility and 24 CFR § 203.389. The Mortgagee must review any exceptions
      discovered during the title search and decide whether such title exceptions
      affect the Property’s value and/or marketability. If the Mortgagee determines
      that any exception affects the Property’s value and/or marketability, the Mortgagee
      must request a waiver. (2) Required Documentation The Mortgagee must obtain
      Title Evidence demonstrating good and marketable title. (B) Requests for Title
      Exceptions Not Covered by the General Waiver The Mortgagee must submit a request
      for a waiver to FHA prior to endorsement when the Title Exception is not covered
      by the General Waiver. The request must include the case number, the specific
      guideline and the reason the Mortgagee is asking for the waiver. All requests
      must be submitted to the FHA Resource Center at answers@hud.gov and include
      the following subject line: Title Exception Not Covered by General Waiver. If
      FHA grants the requested waiver, the Mortgagee will receive a notification in
      writing. The Mortgagee must place the notice of approval in the mortgage file.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 6. Closing Handbook 4000.1 374 Last Revised: 11/26/2025
      If the waiver request is denied and good and marketable title is not obtained,
      the Mortgage is not eligible for FHA insurance. (C) Manufactured Housing Good
      and marketable title showing the Manufactured Home and land are classified as
      real estate at the time of closing is required. If there were two existing titles
      at the time the housing unit was purchased, the Mortgagee must ensure that all
      state or local requirements for proper purging of the title (chattel or equivalent
      debt instrument) have been met, and the subject Property is classified as real
      estate prior to endorsement. The Manufactured Home need not be taxed as Real
      Property. iii. Legal Restrictions on Conveyance (Free Assumability) The Mortgagee
      must determine if there are any legal restrictions on conveyance in accordance
      with 24 CFR § 203.41. iv. Closing in Compliance with Mortgage Approval The Mortgagee
      must instruct the settlement agent to close the Mortgage in the same manner
      in which it was underwritten and approved. The Mortgagee must ensure that the
      conditions listed on form HUD-92900-A, HUD Addendum to Uniform Residential Loan
      Application, and/or form HUD-92800.5B, Conditional Commitment Direct Endorsement
      Statement of Appraised Value, are satisfied. v. Closing in the Mortgagee’s Name
      A Mortgage may close in the name of the Mortgagee or the sponsoring Mortgagee,
      the principal or the authorized agent. TPOs that are not FHA-approved Mortgagees
      may not close in their own names or perform any functions in FHA Connection
      (FHAC). vi. Required Forms The Mortgagee must use the forms and/or language
      prescribed by FHA in the legal documents used for closing the Mortgage. vii.
      Certifications (A) Borrower Certification The Borrower must sign the certification
      on form HUD-92900-A for all transactions and the Settlement Certification for
      purchase transactions in accordance with the instructions provided on the form.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 6. Closing Handbook 4000.1 375 Last Revised: 11/26/2025
      (B) Seller Certification The seller must sign the certification on the Settlement
      Certification for purchase transactions. (C) Settlement Agent Certification
      The settlement agent must sign the certification on the Settlement Certification
      for purchase transactions. (D) Lender Certification The Mortgagee must sign
      the certifications on the form HUD-92900-A in accordance with the instructions
      provided on the form. viii. Projected Escrow The Mortgagee must establish the
      escrow account in accordance with the regulatory requirements in 24 CFR § 203.550
      and RESPA. (A) Monthly Escrow Obligations The Mortgagee must collect a monthly
      amount from the Borrower that will enable it to pay all escrow obligations in
      accordance with 24 CFR § 203.23. The escrow account must be sufficient to meet
      the following obligations when they become due: • hazard insurance premiums;
      • real estate taxes; • Mortgage Insurance Premiums (MIP); • special assessments;
      • flood insurance premiums if applicable; • Ground Rents if applicable; • servicing,
      maintenance, repair and replacement of water purification equipment; and • any
      item that would create liens on the Property positioned ahead of the FHA- insured
      Mortgage, other than condominium or Homeowners’ Association (HOA) fees. (B)
      Repair Completion Escrow Requirements The Mortgagee may establish a repair escrow
      for incomplete construction, or for alterations and repairs that cannot be completed
      prior to loan closing, provided the housing is habitable and safe for occupancy
      at the time of loan closing. Repair escrow funds must be sufficient to cover
      the cost of the repairs or improvements. The cost for Borrower labor may not
      be included in the repair escrow account. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      A. Title II Insured Housing Programs Forward Mortgages 6. Closing Handbook 4000.1
      376 Last Revised: 11/26/2025 The Mortgagee must execute form HUD-92300, Mortgagee’s
      Assurance of Completion, to indicate that the repair escrow has been established.
      The Mortgagee must certify on form HUD-92051, Compliance Inspection Report,
      that the incomplete construction, alterations and repairs have been satisfactorily
      completed. Effective for case numbers assigned on or after October 31, 2016,
      after the repair escrow account is closed, the Mortgagee must complete the Escrow
      Closeout Certification screen in FHAC within 30 Days after the escrow account
      is closed. ix. Temporary Interest Rate Buydown Escrow Requirements The Mortgagee
      must establish an escrow for temporary interest rate buydowns. The escrow agreement
      must not: • permit reversion of undistributed escrow funds to the provider if
      the Property is sold or the Mortgage is prepaid in full; nor • allow unexpended
      escrow funds to be provided to the Borrower in cash, unless the borrower funds
      were used to establish the escrow account. Payments must be made by the escrow
      agent to the Mortgagee or servicing agent. If escrow payments are not received
      for any reason, the Borrower is responsible for making the total payment as
      described in the mortgage Note. x. Closing Costs and Fees The Mortgagee must
      ensure that all fees charged to the Borrower comply with all applicable federal,
      state, and local laws and disclosure requirements. The Mortgagee is not permitted
      to use closing costs to help the Borrower meet the Minimum Required Investment
      (MRI). (A) Collecting Customary and Reasonable Fees The Mortgagee may charge
      the Borrower reasonable and customary fees that do not exceed the actual cost
      of the service provided. The Mortgagee must ensure that the aggregate charges
      do not violate FHA’s Tiered Pricing rules. (B) Other Fees and Charges The Mortgagee
      or sponsored TPO may charge the Borrower Discount Points, and lock-in and rate
      lock fees consistent with FHA and CFPB requirements. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward Mortgages
      6. Closing Handbook 4000.1 377 Last Revised: 11/26/2025 (1) Origination Fees
      The Mortgagee may charge an origination fee in accordance with RESPA. (2) Discount
      Points The Mortgagee may charge the Borrower Discount Points. (3) Lock-in and
      Rate Lock Fees The Mortgagee may charge the Borrower lock-in and rate lock fees
      only if the Mortgagee provides a lock-in or commitment agreement guaranteeing
      the interest rate and/or Discount Points for a period of not less than 15 Days
      prior to the anticipated closing. (C) Qualified Mortgage The Mortgagee must
      ensure the points and fees charged are in compliance with FHA’s Qualified Mortgage
      Rule. (D) Tiered Pricing The Mortgagee must ensure that the aggregate fees and
      charges do not violate the following Tiered Pricing rule. (1) Definitions for
      Tiered Pricing Area refers to a Metropolitan Statistical Area (MSA) as established
      by the Office of Management and Budget. Mortgage Charge refers to the interest
      rate, Discount Points, origination fee, and any other amount charged to the
      Borrower for an insured Mortgage. Mortgage Charge Rate refers to the total amount
      of Mortgage Charges for a Mortgage expressed as a percentage of the initial
      principal of the Mortgage. Tiered Pricing refers to any variance in Mortgage
      Charge Rates of more than two percentage points from the Mortgagee’s reasonable
      and customary rate for insured Mortgages for dwellings located within the area.
      (2) Required Documentation The Mortgagee must document that any variation in
      the Mortgage Charge Rate is based on actual variations in fees or costs to the
      Mortgagee to make the Mortgage. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      A. Title II Insured Housing Programs Forward Mortgages 6. Closing Handbook 4000.1
      378 Last Revised: 11/26/2025 (3) Standard The Mortgagee may not make a Mortgage
      with a Mortgage Charge Rate that varies more than two percentage points from
      the Mortgagee’s reasonable and customary rate for insured Mortgages for dwellings
      located within the area. To determine whether a Mortgage exceeds the two percentage
      point variation limit, the Mortgagee must compare Mortgage Charge Rates for
      Mortgages of the same type, from the same area, and made on the same day or
      during some other reasonably limited period. See Section 203(u) of the National
      Housing Act (12 U.S.C. § 1709(u)), 24 CFR § 202.12. xi. Disbursement Date Disbursement
      Date refers to the date the proceeds of the Mortgage are made available to the
      Borrower. The Disbursement Date must occur before the expiration of the FHA-issued
      Firm Commitment or Direct Endorsement approval and credit documents. xii. Per
      Diem Interest and Interest Credits The Mortgagee may collect per diem interest
      from the Disbursement Date to the date amortization begins. Alternatively, the
      Mortgagee may begin amortization up to 7 Days prior to the Disbursement Date
      and provide a per diem interest credit. Any per diem interest credit may not
      be used to meet the Borrower’s MRI. Per diem interest must be computed using
      a factor of 1/365th of the annual rate. xiii. Signatures The Mortgagees must
      ensure that the Mortgage, Note, and all closing documents are signed by all
      required parties in accordance with the Borrower Eligibility. The Mortgagee
      must ensure that the signatures block on the Mortgage follows the Fannie Mae/Freddie
      Mac format, with the following exceptions: witness signatures are only required
      if witnesses are required by state law, and the Borrower’s Social Security Number
      (SSN) may be omitted. (A) Use of Power of Attorney at Closing A Borrower may
      designate an attorney-in-fact to use a Power of Attorney (POA) to sign documents
      on their behalf at closing, including page 4 of the final form HUD- II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward
      Mortgages 6. Closing Handbook 4000.1 379 Last Revised: 11/26/2025 92900-A and
      the final Fannie Mae Form 1003/Freddie Mac Form 65, Uniform Residential Loan
      Application (URLA). Unless required by applicable state law, or as stated in
      the Exception below, or they are the Borrower’s Family Member, none of the following
      persons connected to the transaction may sign the security instrument or Note
      as the attorney-in-fact under a POA: • Mortgagee, or any employee or Affiliate;
      • loan originator, or employer or employee; • title insurance company providing
      the title insurance policy, the title agent closing the Mortgage, or any of
      their Affiliates; or • any real estate agent or any person affiliated with such
      real estate agent. Exception Closing documents may be signed by an attorney-in-fact
      who is connected to the transaction if the POA expressly authorizes the attorney-in-fact
      to execute the required documents on behalf of a Borrower, only if the Borrower,
      to the satisfaction of the attorney-in-fact in a recorded interactive session
      conducted via the internet has: • confirmed their identity; and • reaffirmed,
      after an opportunity to review the required mortgage documents, their agreement
      to the terms and conditions of the required mortgage documents evidencing such
      transaction and to the execution of such required Mortgage by such attorney-in-fact.
      The Mortgagee must obtain copies of the signed initial URLA and initial form
      HUD 92900-A signed by the Borrower or POA in accordance with Signature Requirements
      for All Application Forms. (B) Electronic Signatures See Policy on Use of Electronic
      Signatures.'
  judgment: false
