source:
  type: guide
  id: hud-4000-1-ii-a-mortgagee-closing-requirements-2
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — a. Mortgagee
    Closing Requirements (04/10/2025)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — a. Mortgagee
    Closing Requirements (04/10/2025).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-a-mortgagee-closing-requirements-2-full
  canonical_id: hud-4000-1-ii-a-mortgagee-closing-requirements-2-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — a. Mortgagee
    Closing Requirements (04/10/2025)
  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 (04/10/2025)
    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 (04/10/2025) The case binder
      must contain the required documents identified on the HECM Required Documents
      for Endorsement stacking order and include all documentation that has been relied
      upon in support of the Mortgagee’s decision to approve the HECM. i. Title The
      Mortgagee must ensure that all objections to title have been cleared and any
      discrepancies have been resolved to ensure that the HECM liens are the first
      and second (if applicable) lien(s) of record. (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 HECM 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 when the Title Exception is not covered by the General Waiver to the
      FHA Resource Center at answers@hud.gov prior to endorsement. The request must
      include the case number, the specific II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      B. Title II Insured Housing Programs Reverse Mortgages 6. Closing Handbook 4000.1
      693 Last Revised: 11/26/2025 guideline, and the reason the Mortgagee is asking
      for the waiver. If the waiver is granted, FHA will notify the Mortgagee in writing.
      The Mortgagee must place the notice of approval in the mortgage file. If the
      waiver request is denied and good and marketable title is not obtained, the
      HECM is not eligible for FHA insurance. (C) Evidence of Hazard Insurance Policy
      Mortgagees must verify evidence of a Hazard Insurance policy that is at least
      equal to the value of insurable property improvements. For condominiums, see
      the Condominiums – Insurance section. (D) Evidence of Title Insurance Policy
      or Commitment The Mortgagee must verify evidence of a title insurance policy
      at least equal to the MCA. The title insurance policy must show that: 1. the
      Borrower owns or, for purchase transactions, will own the Property: • in Fee
      Simple; or • on a Leasehold that is under a lease with a duration lasting until
      the later of: • a renewable lease for not less than 99 years; or • a lease with
      the actuarial life expectancy of the Mortgagor; and 2. the Mortgage will be
      a first lien of record when recorded. (E) 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.
      ii. Legal Restrictions on Conveyance (Free Assumability) The Mortgagee must
      determine that there are no legal restrictions on conveyance in accordance with
      24 CFR § 206.45(e). iii. Closing in Compliance with Mortgage Approval The Mortgagee
      must instruct the settlement agent to close the HECM in the same manner in which
      it was approved. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II
      Insured Housing Programs Reverse Mortgages 6. Closing Handbook 4000.1 694 Last
      Revised: 11/26/2025 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. iv. Principal Limit Calculation at Closing (A) Definition
      Float Down Option refers to the calculation of the Principal Limit at closing
      when the Expected Rate in effect on the date of closing is lower than the Expected
      Rate used when the lock-in agreement was signed by the Borrower. (B) Standard
      The Mortgagee must calculate the Principal Limit at closing if there is no lock-in
      agreement. In accordance with the lock-in agreement terms and conditions, if
      the lock-in agreement includes a float down option, the Mortgagee may recalculate
      the Principal Limit if the Expected Rate in effect on the date of closing has
      declined and is now lower than the Expected Rate used for the lock-in agreement.
      The Mortgagee is not permitted to charge a fee for recalculating the Principal
      Limit. The Mortgagee must verify the Principal Limit Factor is based on the
      age of the youngest Borrower or Eligible NBS, rounded up to the nearest whole
      year if the next birthday is less than 183 Days after closing. v. Establishing
      the Note Rate The Mortgagee must use indices in effect on the date of closing
      to calculate the first year accrual rate. For adjustable interest rate HECMs,
      the Mortgagee must use the same mortgagee’s margin that was used to calculate
      the Principal Limit amount for the initial Note rate and the periodic adjustments
      to the Note rate. For all interest rate options, the index value used to determine
      the initial Note rate and periodic adjustments must not be below zero. In the
      event the current index for an adjustable interest rate HECM falls below zero,
      the current index will be deemed to be zero for purposes of calculating the
      Borrower’s Note rate. (A) Constant Maturity Treasury Index The weekly averages
      of the one-month, one-year, and Constant Maturity Treasury (CMT) indices are
      published in the Federal Reserve Board Statistical Release H.15. The weekly
      averages of the 1-month and 1-year CMT are available in the “Treasury constant
      maturities” section of the H.15. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      B. Title II Insured Housing Programs Reverse Mortgages 6. Closing Handbook 4000.1
      695 Last Revised: 11/26/2025 Mortgagees closing a HECM on Monday must use the
      index from the Statistical Release issued the previous Monday (one week earlier).
      (B) Secured Overnight Financing Rate (SOFR) Index The Federal Reserve Bank of
      New York publishes the 30-day average SOFR index each business day on their
      website. The Mortgagee must use the rate published on the first business day
      of each week and which is in effect the next day after the index is published.
      The rate remains in effect until the subsequent index rate becomes effective
      the following week. The published 30-Day Average SOFR index figure shall be
      rounded to three digits to the right of the decimal point. Mortgagees closing
      a HECM on Monday must use the index issued the previous Monday (one week earlier).
      vi. Assignment Insurance Option (A) Definition Assignment Insurance Option refers
      to a Mortgagee’s right to assign the HECM to HUD when the outstanding balance
      is equal to or greater than 98 percent of the MCA, or when a request for a line
      of credit draw will cause the outstanding balance to equal or exceed 98 percent
      of the MCA. (B) Standard The Mortgagee must designate the assignment insurance
      option. vii. Closing in the Mortgagee’s Name A HECM 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 FHAC. viii. Required Forms The Mortgagee must
      use the forms and/or language prescribed by FHA in the legal documents used
      for closing the HECM. (A) Mortgage and Note The Mortgagee must complete a first
      Mortgage and first Note (fixed or adjustable rate) to secure any payments made
      by the Mortgagee to the Borrower. (B) Second Mortgage and Note For adjustable
      rate HECMs, the Mortgagee must complete a second Mortgage and second Note to
      secure any payments that may be made by HUD to the Borrower. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse
      Mortgages 6. Closing Handbook 4000.1 696 Last Revised: 11/26/2025 For fixed
      rate HECMs, a second Mortgage and Note are optional. (C) Condominium If the
      HECM to be insured is secured by a Condominium Unit, the appropriate mortgage
      rider must be used. The Mortgagee must obtain the certificate of insurance or
      complete copy of the insurance policy. (D) HECM Repair Rider The Mortgagee must
      verify the amount of the Repair Set-Aside is equal to 150 percent of the cost
      of the required repairs, plus the repair administration fee. The Mortgagee must
      obtain a Repair Rider, signed and dated by the Borrower, when the required repairs
      will be completed after closing. (E) Payment of Property Charges The Mortgagee
      must verify the loan agreement includes the Borrower’s designation for payment
      of Property Charges. ix. HECM Borrower, Non-Borrowing Spouse, and Non-Borrowing
      Owner Certifications (A) Standard The Mortgagee must obtain the Borrower’s and
      NBS’s signatures on form HUD- 92900-A. The Mortgagee must confirm whether all
      Borrowers are legally married and obtain the appropriate certification from
      each Borrower and any NBS. The required certifications, if applicable, are:
      • unmarried Borrower; • married Borrower with Eligible NBS; • married Borrower
      with Ineligible NBS; • Eligible NBS; or • Ineligible NBS. The Mortgagee must
      obtain certifications from the NBS and any Non-Borrowing Owner that show: •
      consent to the Borrower to obtain HECM financing; • acknowledgement of the terms
      and conditions of the Mortgage; and • acknowledgement that the Property will
      serve as collateral for the HECM as evidenced by the first and second HECM liens.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing
      Programs Reverse Mortgages 6. Closing Handbook 4000.1 697 Last Revised: 11/26/2025
      (B) Required Documentation At closing, Mortgagees must obtain all required certifications
      from each Borrower, NBS, and Non-Borrowing Owner. x. Designation of Alternate
      Individual (A) Definition The Home Equity Reverse Mortgage Information Technology
      (HERMIT) System refers to HUD’s HECM Servicing platform for collecting MIP,
      managing all servicing activities and paying insurance claims. See the HERMIT
      User Guide for detailed information regarding using the platform. (B) Standard
      Prior to or at closing, the Mortgagee must request that the Borrower designate
      an alternate individual for the purpose of communicating with the Mortgagee
      if the Mortgagee is unable to reach the Borrower for any reason, including death
      or incapacitation. The designation of the alternate individual is at the discretion
      of the Borrower. The Mortgagee must use the HERMIT System to enter contact information
      for the alternate individual, if provided. If the Mortgagee is unable to make
      contact or communicate with the Borrower for any reason, including death or
      incapacitation, the Mortgagee must communicate with the alternate individual,
      if one has been designated by the Borrower. xi. Principal Residence Verification
      The Mortgagee must ensure the Property is the Principal Residence of each Borrower
      and Eligible NBS. xii. Required Closing Certifications (A) Borrower Certification
      The Borrower must sign the certification to the Addendum to HUD-1. (B) Settlement
      Agent Certification The settlement agent must sign the certification to the
      Addendum to HUD-1. (C) Lender Certification The Mortgagee must sign the certifications
      on form HUD-92900-A in accordance with the instructions provided on the form.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing
      Programs Reverse Mortgages 6. Closing Handbook 4000.1 698 Last Revised: 11/26/2025
      xiii. Inspection and Repair Requirements for HECMs Pending Closing in Presidentially-Declared
      Major Disaster Areas (A) Standard All Properties with HECMs pending closing
      in areas under a Presidentially-Declared Major Disaster Area (PDMDA) designated
      for individual assistance must have an onsite damage inspection report that
      identifies and quantifies any dwelling damage, which includes interior and exterior
      photographs. The damage inspection report must be completed by an FHA Roster
      Appraiser even if the inspection shows no damage to the Property, and the report
      must be dated after the Incident Period (as defined by FEMA) or 14 Days from
      the Incident Period start date, whichever is earlier. The Appraiser may, at
      their discretion, perform a Remote Observation of the Property. If the effective
      date of the appraisal is on or after the date required above for an inspection,
      a separate damage inspection report is not necessary. FHA does not require the
      Appraiser to ensure utilities are on at the time of this inspection if they
      have not yet been restored for the area. Damage inspections may be completed
      by any FHA Roster Appraiser in good standing with geographic competence in the
      affected market. If the Mortgagee uses a different Appraiser than the Appraiser
      that did the original inspection of the Property, the Appraiser performing the
      damage inspection must be provided with a complete copy of the original appraisal.
      All damages must be repaired by licensed contractors or according to local jurisdictional
      requirements. All damages, regardless of amount, must be repaired and the Property
      restored to pre-loss condition with appropriate and applicable documentation.
      Based on the damage amount, repairs may be: • completed prior to closing; or
      • completed after closing provided that required repairs are included in a Repair
      Rider, if sufficient funds are available for a Repair Set-Aside, and repair
      costs do not exceed permissible thresholds. See Pending HECM Closing table.
      For HECM for Purchase transactions, see the Inspection and Repair Requirements
      for HECMs Pending Closing in Presidentially-Declared Major Disaster Areas section
      in the HECM for Purchase product sheet. (B) Required Documentation Mortgagees
      must include the damage inspection report in the case binder for all Properties.
      The following table shows additional required documentation based on the extent
      of damages. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured
      Housing Programs Reverse Mortgages 6. Closing Handbook 4000.1 699 Last Revised:
      11/26/2025 Pending HECM Closing If... Then... No damage exists, Close HECM and
      provide initial damage inspection report. Damages are below $5,000 and Property
      is habitable, Complete repairs prior to closing and provide initial damage inspection
      report; or Establish Repair Set-Aside prior to closing and provide initial damage
      inspection report and Repair Rider. See Required Repairs in the HECM for Purchase
      product sheet. Damages are $5,000 or above and the Property is habitable, Do
      not close the HECM. Repairs must be completed prior to closing. Provide initial
      and final damage inspection report. The Property is not habitable, Do not close
      the HECM. Repairs must be completed prior to closing. Provide initial and final
      damage inspection report. (C) Pre-closing Appraisal Validity in Disaster Areas
      For HECMs that are not closed prior to the Incident Period, as defined by FEMA,
      in PDMDAs where a damage inspection report reveals property damage, the appraisal
      validity period is extended from 180 Days to a maximum of one year from the
      effective date of the original appraisal. In no instance will an appraisal be
      acceptable for a mortgage closing that has an effective date beyond one year.
      HECMs with appraisals having effective dates in excess of one year require a
      new appraisal. xiv. Closing Costs and Fees (A) Standard 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 must ensure, after
      the initial payment of HECM proceeds, that there will be no outstanding or unpaid
      obligations incurred by the Borrower in connection with the HECM transaction,
      except in cases involving loan servicing charges and any Repair Set-Aside. (1)
      Mandatory Obligations (a) Definition Mandatory Obligations refer to fees and/or
      charges incurred in connection with the origination of the HECM that are requirements
      for loan approval and II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title
      II Insured Housing Programs Reverse Mortgages 6. Closing Handbook 4000.1 700
      Last Revised: 11/26/2025 which will be paid at closing or during the First 12-Month
      Disbursement Period. (b) Standard The Mortgagee must ensure the Borrower’s Mandatory
      Obligations are paid off. Mandatory Obligations are limited to: • IMIP; • loan
      origination fee; • HECM counseling fee; • reasonable and customary amounts,
      but not more than the amount actually paid by the Mortgagee for any of the following
      items: • recording fees and recording taxes or other charges incident to the
      recordation of the HECM; • credit report; • survey, if required by the Mortgagee
      or the Borrower; • title examination; • Mortgagee’s title insurance; • fees
      paid to an Appraiser for the appraisal of the Property; and • flood certification;
      • repair administration fee; • Repair Set-Asides; • delinquent Federal Debt;
      • amounts required to discharge any existing liens on the Property: • judgment
      liens recorded against the Property secured by the HECM; • customary fees and
      charges for warranties, inspections, surveys, and engineer certifications; •
      funds to pay contractors who performed repairs as a condition of closing, in
      accordance with standard FHA requirements for repairs required by the Appraiser;
      • property tax, Flood and Hazard Insurance payments required by the Mortgagee
      to be paid at closing; • for fixed rate HECMs: the total amount of Property
      Charges scheduled for payment during the First 12-Month Disbursement Period
      from a Fully Funded LESA. Mortgagees must use the actual insurance premium and
      actual tax amount; and • for adjustable rate HECMs: • the total amount of property
      charge payments scheduled for payment from the Borrower-authorized option as
      set forth in 24 CFR § 206.205 during the First 12-Month Disbursement Period;
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing
      Programs Reverse Mortgages 6. Closing Handbook 4000.1 701 Last Revised: 11/26/2025
      • the total amount of semiannual Disbursements scheduled to be made during the
      First 12-Month Disbursement Period to the Borrower from a Partially Funded LESA;
      and • the total amount of Property Charges scheduled for payment during the
      First 12-Month Disbursement Period from a Fully Funded LESA. Mortgagees must
      use the actual insurance premium and actual tax amount. (2) Seasoning Requirements
      for Existing Non-HECM Liens (a) Standard The Mortgagee must determine the age
      of the lien and, if necessary, the amount of funds provided to the Borrower.
      The Mortgagee may use HECM proceeds to pay off existing non-HECM liens if: •
      the liens have been in place for longer than 12 months prior to the date of
      the HECM closing; • the lien resulted in the Borrower receiving $500 or less
      in cash, whether at closing or through cumulative draws prior to the date of
      the HECM closing; or • the lien has been in place for 12 months or less prior
      to the date of the HECM closing, but funds were used exclusively for the purpose
      of making required repairs needed to satisfy MPR or MPS. For a Home Equity Line
      of Credit (HELOC) that does not meet the seasoning requirements above, the Mortgagee
      may pay off the Borrower’s HELOC using Borrower funds, the HECM proceeds, or
      a combination of HECM proceeds and Borrower funds, as long as the Initial Disbursement
      Limit or Borrower’s Advance remains at or under 60 percent of the Principal
      Limit. (b) Required Documentation To document the age of the lien, the Mortgagee
      must use the HUD-1, Closing Disclosure, or other documents, such as a title
      report, credit reports, or documents related to the transaction that contain
      the required information. To document the Borrower received $500 or less in
      cash, the Mortgagee must review the HUD-1 or equivalent document from the transaction
      that resulted in a lien that is to be paid off using HECM proceeds, the payoff
      statement, or documents related to the transaction. To document the use of funds
      from a lien in place for 12 months or less, where more than $500 was received
      by and/or disbursed to the Borrower, and such funds were utilized for home improvements,
      the Mortgagee must collect documentation, such as canceled checks, paid contractor
      invoices, or other documents evidencing actual use of loan funds. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse
      Mortgages 6. Closing Handbook 4000.1 702 Last Revised: 11/26/2025 For HELOCs,
      the Mortgagee must obtain the most recent HELOC statement or its equivalent.
      (3) Third-Party Fees The Mortgagee may charge the Borrower third-party fees
      incurred to originate the HECM. FHA may authorize or reject any other charge,
      or the amount of any charge, based on what is reasonable and customary in the
      area. (a) Appraisal Fee and Inspection Fee The Mortgagee may charge reasonable
      and customary amounts, but not more than the amount actually paid by the Mortgagee.
      The Borrower may finance the cost of a second appraisal required by the collateral
      risk assessment. (b) Credit Report The Mortgagee may charge the actual cost
      for a merged-in file report, which contains the information currently available
      from three consumer credit information repositories. (c) Deposit Verification
      Charge The Mortgagee may charge the actual charge imposed by the depository
      institution or TPV. (d) Document Preparation Fee The Mortgagee may charge a
      document preparation fee if this service is performed by a third party who is
      not controlled by the Mortgagee. The Mortgagee may not charge a fee if it performs
      this service itself. (e) Property Survey The Mortgagee may charge a property
      survey fee if a survey is required by the Mortgagee. A survey is not required
      by FHA. (f) Title Examination and Title Insurance Policy A title insurance policy
      at least equal to the MCA must be submitted in the closing package, and the
      Borrower may pay for these items. (g) Attorney’s Fees The Mortgagee may charge
      Attorney’s Fees only if the attorney is not an employee of the Mortgagee or
      is not an attorney who routinely receives referrals from a particular Mortgagee
      and issues the title insurance. If an attorney who is not an employee of the
      Mortgagee is routinely used on referral II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      B. Title II Insured Housing Programs Reverse Mortgages 6. Closing Handbook 4000.1
      703 Last Revised: 11/26/2025 from the Mortgagee to close loans and issue title
      insurance, the Borrower may only be charged a notary fee. (h) Settlement Fees
      The Mortgagee may charge settlement fees only if the closing agent is not an
      employee of the Mortgagee. A fee may be charged if the settlement agent is an
      independent company or a subsidiary of the Mortgagee that regularly closes loans
      for several different Mortgagees. (i) Sponsored Third-Party Originator The Mortgagee
      may pay fees for services performed by a sponsored TPO from the loan origination
      fee. (j) Tax Service Fee The Mortgagee may charge the Borrower a tax service
      fee to verify the Borrower’s property tax payment history from all taxing authorities
      and the annual amount of property taxes due. The maximum fee must be a reasonable
      and customary amount and may not exceed the actual amount paid by the Mortgagee.
      (k) Recording Fees and Taxes The Mortgagee may charge recording fees on the
      first and second Mortgages that are customary or required in the area, and recording
      taxes on the first Mortgage that are required. The second Mortgage is not subject
      to any state or local recording taxes, or stamp taxes, because the second Mortgage
      is a Mortgage to the federal government. (l) Tests or Treatments The Mortgagee
      may charge for tests or treatments required by FHA such as tests of water supplies,
      soil percolation tests for individual septic systems, or testing for or treating
      insect infestation. (m)Courier Fees Upon Borrower request, the Mortgagee may
      charge a courier fee for delivery of a mortgage Payoff to a lien holder and
      for closing documents to and from the settlement agent. If this arrangement
      will take place, a written agreement between the Borrower and the Mortgagee
      must be executed before closing. Online processing and delivery of a mortgage
      Payoff to a lien holder and for closing documents to and from the settlement
      agent are the sole responsibility of the Mortgagee and must be paid from the
      loan origination fee. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title
      II Insured Housing Programs Reverse Mortgages 6. Closing Handbook 4000.1 704
      Last Revised: 11/26/2025 (4) Property Assessed Clean Energy The PACE obligation
      must be paid off in full at closing. The Borrower may use HECM proceeds to satisfy
      the PACE obligation. For HECM for Purchase transactions, see the Property Assessed
      Clean Energy section of the product sheet. (5) Prohibition on Non-Mandatory
      Obligations Judgments that appear on the credit report or on public records
      that are not liens against the Property secured by the HECM are not Mandatory
      Obligations and may not be paid off at closing using HECM proceeds. Uniform
      Commercial Code liens placed against leased equipment or a leased energy system
      is not a Mandatory Obligation and may not be paid off at closing using HECM
      proceeds. (6) Collecting Customary and Reasonable Fees The Mortgagee may collect
      customary and reasonable amounts, but not more than the amount actually paid
      by the Mortgagee, for any of the following items: • recording fees and recording
      taxes, or other charges incident to the recordation of the insured Mortgage;
      • credit report; • survey, if required by the Mortgagee or the Borrower; • title
      examination; • Mortgagee’s title insurance; • fees paid to an Appraiser for
      the initial appraisal of the Property; • flood certifications; • third-party
      property tax verification fee; and • repair administration fee. If the Property
      requires repairs after closing in order to meet FHA requirements, the Mortgagee
      must collect the repair administration fee by adding it to the mortgage balance.
      (7) Loan Origination Fees (a) Definition Loan Origination Fee refers to charges
      and fees incurred in connection with the origination, processing, and closing
      of the HECM. (b) Loan Origination Fee Calculation The Mortgagee may charge an
      origination fee which is the greater of: • $2,500; or II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages
      6. Closing Handbook 4000.1 705 Last Revised: 11/26/2025 • 2 percent of the MCA
      of $200,000, plus 1 percent of any portion of the MCA that is greater than $200,000.
      The total amount of the loan origination fee may not exceed $6,000. Mortgagees
      may accept a lower origination fee. Mortgagees may pay fees for services performed
      by a sponsored TPO and these fees may be included as part of the loan origination
      fee. The loan origination fee may be fully financed with the Mortgage. (B) Required
      Documentation The Mortgagee must obtain the final HUD-1 Settlement Statement
      or similar legal document from the settlement agent. xv. Payment of Initial
      Mortgage Insurance Premium Payment of IMIP is processed automatically once the
      originating Mortgagee or servicing Mortgagee completes loan setup in HERMIT.
      Mortgagees may pay a portion or full amount of IMIP. For HECM for Purchase transactions,
      see the Initial Mortgage Insurance Premium Amount section of the product sheet.
      xvi. Annual Mortgage Insurance Premium The Mortgagee must remit the monthly
      MIP on the outstanding balance from the latter of the date of closing or the
      day after the expiration of the rescission period. xvii. Closing Date The Mortgagee
      must enter the Closing Date in block I on page 1 of the HUD-1. xviii. Disbursement
      Date (A) Definition The Disbursement Date refers to the date the proceeds of
      the HECM are made available to the Borrower. (B) Standard The Disbursement Date
      must occur before the expiration of the FHA-issued Firm Commitment or Direct
      Endorsement approval and credit documents. The Mortgagee must enter the Disbursement
      Date in block I on page 1 of the HUD-1. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      B. Title II Insured Housing Programs Reverse Mortgages 6. Closing Handbook 4000.1
      706 Last Revised: 11/26/2025 xix. Upload of Marriage Documentation in HERMIT
      for Eligible Non-Borrowing Spouse Once the originating Mortgagee or servicing
      Mortgagee completes loan setup in HERMIT, the Mortgagee must upload a copy of
      the Borrower and Eligible NBS’s marriage certificate, legal opinion certifying
      the validity of the marriage, or other evidence sufficient to establish the
      legal validity of the marriage in HERMIT. xx. Right of Rescission and Interest
      Accruals HECM proceeds may not be disbursed until after the expiration of the
      three-day rescission period under 12 CFR Part 1026, if applicable. The interest
      charged on the outstanding loan balance must begin to accrue from the Disbursement
      Date and must be added to the outstanding loan balance monthly. Mortgagees are
      prohibited from charging interest on funds held available for the Borrower during
      the three-day rescission period. xxi. Signatures The Mortgagee must ensure that
      the Mortgage, Note, and all closing documents are signed by all required parties
      in accordance with 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 SSN may be omitted. xxii. Use
      of Power of Attorney at Closing (A) Standard A Borrower, NBS, or Non-Borrowing
      Owner may designate an attorney-in-fact to use a POA (durable or otherwise)
      to sign documents on their behalf at closing. Unless required by applicable
      state law, or as stated in the Exception below, or they are a Family Member
      of the Borrower, NBS, or Non-Borrowing Owner, 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; • HECM
      originator or employer or employee; • title insurance company providing the
      title insurance policy, the title agent closing the HECM, or any of their Affiliates;
      or • any real estate agent or any person affiliated with such real estate agent.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing
      Programs Reverse Mortgages 6. Closing Handbook 4000.1 707 Last Revised: 11/26/2025
      (B) Exception Closing documents may be signed by an individual who is connected
      to the transaction provided they are listed as an attorney-in-fact in a POA
      expressly authorizing them to execute the required documents on behalf of a
      Borrower, NBS, or Non-Borrowing Owner. Acceptance of such an attorney-in-fact’s
      signature is further conditioned upon the attorney-in-fact obtaining, in a recorded
      interactive session conducted via the internet, a statement that the Borrower,
      NBS, or Non-Borrowing Owner 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.
      (C) Required Documentation The Mortgagee must obtain copies of the signed initial
      and final RLARM, loan agreement, Certificate of HECM Counseling, and Part IV
      of the initial form HUD- 92900-A signed by the Borrower or attorney-in-fact
      in accordance with Signature Requirements for All Application Forms. xxiii.
      Use of Court-Appointed Conservator or Guardian (A) Standard A court-appointed
      conservator or guardian may execute any necessary documents of any Borrower,
      NBS, or Non-Borrowing Owner lacking legal competency. (B) Required Documentation
      The Mortgagee must obtain a copy of the court order granting the conservator
      or guardian the authority to act for and/or obligate the Borrower, NBS, or Non-
      Borrowing Owner.'
  judgment: false
