FHA Single Family Housing Policy Handbook 4000.1, II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT > B. Title II Insured Housing Programs Reverse Mortgages > 1. Origination/Counseling Requirements — b. Restrictions on Processing of Applications Before Completion of HECM Counseling
HUD effective date: 04/29/2024 · section II.B.1 · Handbook 4000.1
FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Restrictions on Processing of Applications Before Completion of HECM Counseling (04/29/2024).
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Verbatim provisions from FHA Single Family Housing Policy Handbook 4000.1, II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT > B. Title II Insured Housing Programs Reverse Mortgages > 1. Origination/Counseling Requirements — b. Restrictions on Processing of Applications Before Completion of HECM Counseling — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Restrictions on Processing of Applications Before Completion of HECM Counseling (04/29/2024)
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; • 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.
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