FHA Single Family Housing Policy Handbook 4000.1, Part II — f. Closing (05/08/2025)

FHA Single Family Housing Policy Handbook 4000.1, Part II — f. Closing (05/08/2025)

f. Closing (05/08/2025) Before disbursing the proceeds of a Manufactured Home Loan, the Lender must confirm that the case binder is complete and that the following documents, if applicable to the Loan, have been obtained for retention in the case binder. i. Lender Closing Requirements The case binder must contain all documentation that has been relied upon in support of the Lender’s decision to approve the Loan. ii. Title Insurance At its option, the Lender may obtain title insurance for Property treated as real estate. iii. Closing in the Lender’s Name A Loan may close in the name of the Lender or the sponsoring Lender, the principal or the authorized agent. TPOs that are not FHA-approved Lenders may not close in their own names or perform any functions in FHA Connection (FHAC). iv. Required Forms The Lender must use forms and/or language in compliance with federal and state laws. HUD does not provide forms for Title I Notes or security instruments. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1117 Last Revised: 11/26/2025 v. Certifications The individual selling the Manufactured Home must sign the certification on form HUD- 92900-TI. The Borrower and the Dealer must sign the certification on form HUD-56002-MH. vi. Monthly Escrow Obligations The Lender may collect a monthly amount from the Borrower that will enable them to pay their escrow obligations, as permitted by law. Payments into an escrow account may be collected only for the current year. The escrow account may be used to meet the following obligations when they become due: • hazard insurance premiums; • real estate taxes; • loan insurance premiums; • flood insurance premiums if applicable; • Ground Rents if applicable; • any item that would create liens on the Property positioned ahead of the FHA- insured Loan; and • any other assessments as permitted by local law. vii. Eligible Fees and Charges The Lender must ensure that all fees charged to the Borrower comply with all applicable federal, state, and local laws and disclosure requirements. Funds for closing costs may not be applied toward the minimum downpayment requirement. The Dealer may advance the funds for the fees and charges and be reimbursed by the Lender from the loan proceeds. Alternatively, a Lender may pay these fees and charges and deduct them from the loan proceeds paid to the Dealer. In either case, there must be full disclosure to the Borrower. The Lender may charge the Borrower reasonable and customary fees that do not exceed the actual cost of the service provided. The origination fee may be paid to the Lender or a sponsored TPO. Referral fees or similar charges are not allowed to be paid or collected by any party involved in the transaction, to include the manufacturer, Dealer, contractor, supplier, real estate broker, loan broker or any other party involved in the transaction. A Lender may not allow the Dealer, or any party, other than the Borrower, to pay any Discount Points or other financing charges in connection with the loan transaction. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1118 Last Revised: 11/26/2025 viii. Fees and Charges that May be Collected and Financed (A) Standard The fees and charges listed below that are incurred in connection with a Manufactured Home Loan may be included in the loan amount. Their inclusion must not increase the total principal loan balance beyond the maximum loan limit permitted. The fees and charges that may be collected are limited to the following and amounts where indicated: • UFIP; • origination fees, not to exceed 2 percent of the Base Loan Amount, before adding UFIP; • a fee for the services of a qualified third-party closing agent to act on behalf of a Lender in closing a Direct Loan transaction; • state and local sales taxes paid by the Borrower; • premiums paid by the Borrower for hazard insurance for the first year of the loan term, including premiums for Flood Insurance where applicable; • credit report costs; • the appraisal fee if required by FHA; • fees for determining whether the Property is in an SFHA; • a lender inspection fee up to $125; • reasonable and customary state or local government-imposed inspection fees, as required during the site placement of a Manufactured Home, but no more than $500 may be financed into the Loan; • recording fees, recording taxes, filing fees, and documentary stamp taxes; and • such other items as may be specified by HUD. The collection of Discount Points may not be financed and is not permitted unless the loan documents that the Discount Point(s) resulted in is a decrease to the interest rate. (B) Required Documentation The case binder must identify the fees and charges collected and financed into the Loan. The Lender must include the invoice(s) for the inspection fee, together with documentation supporting the government requirement for the inspection in the loan package for both any pre-endorsement review that may be required and any insurance claim submission. ix. Fees and Charges that May be Collected, but May Not be Financed (A) Standard The following fees and charges, incurred by a Lender in connection with a Manufactured Home Loan, may be collected from a Borrower, but may not be II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1119 Last Revised: 11/26/2025 included in the loan amount or otherwise financed or advanced by a Dealer, a manufacturer, or any other party to the loan transaction. Discount Points may be paid by the Borrower, but only if the Lender can demonstrate a clear relationship between the Discount Points being charged and a compensating decrease in the interest rate on the Loan. The fees and charges that may be collected and not financed are limited to the following and amounts where indicated: • a fee for the services of a qualified Closing Agent to act on behalf of the Lender in closing a Dealer Loan transaction; • premiums for credit life insurance or credit disability insurance; • other fees necessary to establish the validity of a lien; • title insurance costs for Manufactured Home Lot Loans or Combination Loans; • survey costs for Manufactured Home Lot Loans or Combination Loans; • escrows: • payments into an insurance escrow account for the current year for all Title I Manufactured Homes; and • tax escrows for the current year, only for Manufactured Home Lot Loans and Combination Loans; • a lender inspection fee greater than $125 may be charged but not financed so long as the Lender can document that the fee is reasonable and customary; • a site placement inspection fee conducted by a state or local government that is reasonable or customary, but no more than $500 may be financed into the Loan; • costs for the following are permitted to be charged only for Manufactured Home Lot Loans, and Combination Loans, where applicable: o title insurance; o survey; and o payments into a tax escrow account for the current year; and • such other items as may be specified by HUD. (B) Required Documentation The case binder must identify the fees and charges collected and not financed into the Loan. The Lender must include the invoice(s) for the inspection fee, together with documentation supporting the government requirement for the inspection in the loan package for both any pre-endorsement review that may be required and any insurance claim submission. x. Disbursement Date Disbursement Date refers to the date the proceeds of the Loan are made available to the Borrower. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1120 Last Revised: 11/26/2025 The Disbursement Date must occur before the expiration of the credit documents. xi. Disbursement of Loan Proceeds (A) Standard (1) Dealer Loan The Lender must disburse the loan proceeds: • solely to the Dealer or to the Borrower; or • jointly to the Borrower and the Dealer or other parties to the transaction, including the property seller(s) or the financial institution that holds an existing loan that will be paid off with the new Loan. The Lender must verify that loan proceeds are disbursed in the proper amount. (2) Direct Loan The Lender must disburse the loan proceeds solely to the Borrower or jointly to the Borrower and other parties to the transaction. The Lender must verify that loan proceeds are disbursed in the proper amount. (B) Required Documentation The Lender must obtain and include in the case binder the final Settlement Statement or other legal documentation detailing the transaction including fees, charges, and Disbursement. xii. Per Diem Interest and Interest Credit The Lender may collect per diem interest from the Disbursement Date to the date amortization begins. Per diem interest must be computed using a factor of 1/365th of the annual rate. xiii. Signatures The Lender must ensure that the Loan, Note, and all closing documents are signed by all required parties in accordance with the Borrower Eligibility. (A) Use of Power of Attorney at Closing A Borrower may designate an attorney-in-fact to use a POA to sign documents on their behalf at closing, including the Disclosure Notice to Borrower. Unless required by applicable state law, as stated 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: II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1121 Last Revised: 11/26/2025 • the Lender, or any employee or Affiliate; • the loan originator, or employer or employee; • the title insurance company providing the title insurance policy, the title agent closing the Loan, 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 loan documents, their agreement to the terms and conditions of the required loan documents evidencing such transaction and to the execution of such required Loan by such attorney-in-fact. The Lender must obtain a copy of the URLA (Fannie Mae Form 1003/Freddie Mac Form 65) and form HUD-92900-TI 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. xiv. Note (A) Definition Note refers to any form of credit instrument commonly used in a jurisdiction to evidence a Loan. (B) Standard (1) Form The Lender must ensure that the Note complies with all applicable state and local requirements for creating a recordable and enforceable Loan, and an enforceable Note. HUD does not provide Note forms or prescribe a particular Note format. The Lender must ensure that the Note and all other documents evidencing the loan transaction are in compliance with applicable federal, state, and local laws. The Note must: • state the principal amount of the Loan and the annual rate of interest; • bear the signature of each Borrower and of any co-maker or Co-signer; and II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1122 Last Revised: 11/26/2025 • be valid and enforceable against the Borrower and any co-maker or Co- signer. (2) Interest Rate The interest rate is negotiated between the Lender and the Borrower. The interest rate must be fixed for the full term of the Loan and must be stated in the Note or retail sales installment contract. Interest on the Loan must accrue from the date of the Loan, and be calculated on a simple interest basis. Adjustable Rate Mortgage products are not permitted for FHA Title I Manufactured Home Loans. (3) Temporary Interest Rate Buydown Requirements Temporary interest rate buydowns are not permitted. (4) Signature The Borrower and any co-maker or Co-signer must execute the Note for the full amount of the loan obligation. Although the Borrower(s) may sign the Note on an earlier date, the date of the Loan must be the date that the loan proceeds are disbursed by the Loan. Such date should be entered on the Note when Disbursement occurs. (5) Payments on the Loan The Note must provide for equal installment payments that are due monthly. The first scheduled Loan Payment must be due no later than two months from the date of the Loan. The Note may provide for the first and/or final payments to vary in amount but not to exceed 1.5 times the regular installment. (6) Default Provision The Note must contain a provision for acceleration of maturity, at the option of the holder, upon a monetary Default by the Borrower. (7) Late Charges The Note may provide for a Late Charge unless specifically precluded by state law. The Late Charge may be imposed only for a payment which is in arrears for the greater of 15 Days or the number of Days required by applicable state law. Late Charges must be billed to the Borrower or reflected in the payment coupon. Evidence of Late Charges paid by the Borrower must be in the case binder if an insurance claim is made. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1123 Last Revised: 11/26/2025 (a) Amount of Late Charge The Late Charge must not exceed the lesser of 4 percent for each installment of P&I, or the maximum amount permitted by applicable state law. (b) Method of Payment Payment of any Late Charge cannot be deducted from the monthly payment of P&I. Late payment fees must be calculated and shown as an additional charge to the Borrower. (c) Daily Interest in Lieu of Late Charges In lieu of Late Charges, the Note may provide for interest to accrue on installments in arrears, continuing daily, based on the interest rate in the Note. (8) Prepayment Provision Borrowers cannot be charged a prepayment penalty on any FHA Title I Manufactured Home Loan product. (9) Recourse from Dealer The Dealer and Title I Lender may agree to require partial or full recourse of a provision in the loan documents against the Dealer, to reduce or eliminate the Lender’s loss in the event of foreclosure or repossession. Recourse provisions in the loan documents may provide for: • a Default occurring within a period of not more than three years from the date of the Loan; • reimbursement from the Dealer for: o a fixed percentage of the unpaid amount of the loan obligation, after deducting the proceeds from the sale of the Property; and o any amounts received or retained by the Lender after the date of Default; or • a maximum liability to the Dealer of 100 percent of the unpaid amount of the loan obligation prior to such deductions. xv. Security Instrument (A) Definition Security Instrument refers to any legal instrument that is commonly used in a jurisdiction in connection with a Loan secured by a Manufactured Home and/or Real Property. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1124 Last Revised: 11/26/2025 (B) Standard A Manufactured Home Loan must be secured by a recorded lien on the home (or lot or home and lot, as appropriate), its furnishings, equipment, accessories, and appurtenances. The lien must be a first lien, superior to any other lien on that Property, and evidenced by a properly recorded financing statement, a properly recorded security instrument executed by the Borrower and any other owner of the Property, or another acceptable instrument, such as a certificate of title issued by the state and containing a recitation of the Lender’s lien interest in the Manufactured Home. The Lender must ensure that the description of the Manufactured Home as cited in the security instrument is accurate and that the security instrument creates a valid and enforceable lien on the Manufactured Home in the jurisdiction in which the Property is located. The security instrument must be recorded and perfected in the manner specified by applicable state law in the state where the Property is located. For a Combination Loan, the Lender may take a security interest in the Manufactured Home as Personal Property and concurrently place a real property lien on the land. FHA permits Manufactured Homes to be split from the land and secured separately. xvi. Post-Disbursement Unit Inspection (A) Inspection Requirements for Dealer-Originated Sales Dealer-originated sales of Manufactured Homes require the Lender, or an agent of the Lender who is not a Dealer, to conduct an inspection of the Manufactured Home after it has been delivered and installed at the home site. This inspection must be completed within 60 Days after the Disbursement Date. The inspection is to verify and document the following: • The terms and conditions of the sales contract have been met. • The Manufactured Home and any itemized options and appurtenances included in the purchase price of the home or financed with the loan proceeds have been delivered and installed. • The Manufactured Home has been properly installed on the home site without any apparent structural damage or other serious defects resulting from the transportation or installation of the unit, and all plumbing, mechanical and electrical systems are fully operational. (B) Inspection Requirements for Direct Loans and Non-Dealer-Originated Sales Direct Loans and non-dealer-originated sales of Manufactured Homes require the Lender, or an agent of the Lender who is not a Manufactured Home Dealer, to conduct an inspection of the Manufactured Home after it has been delivered and installed at the home site. This inspection must be completed within 60 Days after the Disbursement Date. The inspection is to verify and document the following: II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1125 Last Revised: 11/26/2025 • The terms and conditions of the sales contract have been met. • The Manufactured Home and any itemized options and appurtenances included in the purchase price of the home or financed with the loan proceeds have been delivered and installed. • Form HUD-56002-MH executed by the Borrower(s) and the Dealer is signed by the Borrower. • The Manufactured Home has been properly installed on the home site without any apparent structural damage or other serious defects resulting from the transportation or installation of the unit, and all plumbing, mechanical and electrical systems are fully operational.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part II — f. Closing (05/08/2025) · source URL · snapshot 8c03836f77f317e1