source:
  type: guide
  id: hud-4000-1-ii-b-mortgage-and-note-2
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Mortgage
    and Note (04/29/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Mortgage
    and Note (04/29/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-b-mortgage-and-note-2-full
  canonical_id: hud-4000-1-ii-b-mortgage-and-note-2-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Mortgage
    and Note (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. Mortgage
      and Note (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. Mortgage and Note (04/29/2024) i. Definitions Mortgage refers
      to any form of security instrument that is commonly used in a jurisdiction in
      connection with a loan secured by a one- to four-family residential Property
      and the land on which it is situated, such as a deed of trust or security deed
      or land contract. Note refers to any form of credit instrument commonly used
      in a jurisdiction to evidence a Mortgage. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      B. Title II Insured Housing Programs Reverse Mortgages 6. Closing Handbook 4000.1
      708 Last Revised: 11/26/2025 ii. Standard The Mortgagee must develop or obtain
      a separate Mortgage and Note that conforms generally to the Freddie Mac and
      Fannie Mae forms in both form and content, but that includes the specific modification
      required by FHA set forth in the applicable Model Note and Mortgage. The Mortgagee
      must ensure that the Mortgage and Note comply with all applicable federal, state,
      and local requirements for creating a recordable and enforceable Mortgage, and
      an enforceable Note. All Borrowers obligated on the Note must be on the title
      to the Property. The HECM must be executed by all parties necessary to make
      the lien valid and enforceable under state law. Mortgagees originating a HECM
      in escrow closing states must arrange to have the Borrower sign the Note while
      the same interest rates are in effect as when the mortgage documents are drawn.
      (A) Maximum Mortgage Amount FHA policy does not require a maximum mortgage amount
      to be stated in the Mortgage. Where state law requires the Mortgage to reflect
      a maximum mortgage amount, the Mortgagee must use an amount that is at least
      equal to 150 percent of the MCA. When a maximum mortgage amount is stated in
      the Mortgage, the Mortgagee is not secured for payments to the Borrower beyond
      the stated amount. Where state law does not require the Mortgage to reflect
      a maximum mortgage amount, the Mortgagee may use an amount that is at least
      equal to 150 percent of the MCA. (B) Rounding Interest Rates The Mortgagee may
      round the Expected Rate or the initial Adjustable Rate Mortgage (ARM) Note rate
      to the nearest one-eighth of one percentage point. The Mortgagee may round both
      rates, only one rate, or none of the rates. The Mortgagee must maintain the
      same rounding throughout the life of the HECM. (C) Commingling of Index Types
      Commingling of index types between the Expected Rate and Note rate is only allowed
      for annual adjustable rate HECMs.'
  judgment: false
