FHA Single Family Housing Policy Handbook 4000.1, Part III — j. Post-endorsement Mortgage Amendments (12/30/2025)

FHA Single Family Housing Policy Handbook 4000.1, Part III — j. Post-endorsement Mortgage Amendments (12/30/2025)

j. Post-endorsement Mortgage Amendments (12/30/2025) i. Definition A Post-endorsement Mortgage Amendment is a change to the mortgage instruments, the nature of the obligation, or the security after the Mortgage has been insured. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1172 Last Revised: 11/26/2025 ii. Modifying a Performing Mortgage (A) Modification without HUD Approval The Mortgagee may modify a performing Mortgage without HUD approval when: • the modification is only for a reduction of the interest rate; • the mortgage term is decreased and the Principal and Interest (P&I) will be increased $100 or less per month; or • the mortgage term is decreased and the Mortgage is more than three years old. (B) Modification Requiring HUD Approval The Mortgagee must request and receive approval from HUD prior to modifying a performing Mortgage when the mortgage term is decreased and: • the P&I will increase over $100 per month; or • the Mortgage is three years old or less. The Mortgagee may modify the Mortgage to decrease the mortgage term by increasing the Mortgage Payment so long as all of the following conditions are met: • The Mortgagee has received HUD approval. • The Mortgage is current and the Borrower’s payment history is satisfactory to the Mortgagee. • The Mortgagee has determined that the higher Mortgage Payment is within the Borrowers’ ability to pay under the underwriting standards in Origination through Post-closing/Endorsement. • The modification agreement contains a clause permitting reversion to original mortgage terms if reversion can salvage a Delinquent account and prevent foreclosure. • The modification agreement contains a certification by the Borrowers stating that they are aware of the positive and negative aspects of the modification and that they have voluntarily agreed to the increased payments. (C) Principal Amount of Modified Performing Mortgage The new principal amount of the modified Mortgage is the total unpaid amount due and payable under the original Mortgage. The Mortgagee may not include the following in the new principal amount: • any revision of periodic MIP payments; and • any legal or administrative costs attributable to the modification (these costs may be collected separately from the Borrower). (D) Recordation of Lien The Mortgagee must perform the legal steps required to accomplish the modification and must ensure that the Mortgage remains a valid first lien against the Property. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1173 Last Revised: 11/26/2025 (E) Fee for Modification of Performing Mortgage The Mortgagee may charge the Borrower a reasonable and customary fee for processing and recording a modification of a performing Mortgage when not modified under HUD’s Loss Mitigation Program. The Mortgagee may not file an incentive claim for modifying a performing Mortgage. (F) Reporting to HUD The Mortgagee must report mortgage characteristics for all modifications through FHAC or FHA Catalyst. (G) Required Documentation When modifying a performing Mortgage, the Mortgagee must retain the following in their Servicing Files: • a mortgage modification document, in the form of: o an amended original Note, with all changes initialed by all parties; or o a modification agreement executed by all parties; • documentation evidencing that criteria for modifying the Mortgage with or without HUD approval, as appropriate, were met; • documentation showing calculations of the modified principal amount and the new monthly payment amount; and • proof that any unpaid escrow added to the new principal amount was credited to the Borrower’s escrow account. iii. Partial Releases, Easements, or Modification of Security (A) Partial Releases from Condemnation Not Requiring HUD Approval (1) Standard The Mortgagee may execute a partial release of security without HUD approval if the partial release results from condemnation and all of the following conditions are met: • the portion of the Property being conveyed does not exceed 10 percent of the area of the mortgaged Property; • there is no damage to existing Structures or other improvements; • there is no unrepaired damage to sewer, water, or paving; • the Mortgagee has applied all of the payment received as compensation for the taking of the Property to reduce the unpaid principal balance of the Mortgage; and • the government action requiring conveyance occurs after insurance of the Mortgage. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1174 Last Revised: 11/26/2025 (2) Required Documentation (a) Claim File If the Mortgagee files a claim for mortgage insurance benefits, the Mortgagee must submit a certification that the requirements for partial releases of security as a result of condemnation have been met and retain a copy of the certification in the Claim File. (b) Reporting to HUD The Mortgagee must notify the Appropriate Homeownership Center (HOC) of the release by letter within 30 Days of the Mortgagee’s signing of the release. (B) Partial Releases, Easements, or Modification of Security Requiring HUD Approval (1) Definition Partial Release or Modification of Security is the conveyance, assignment, transfer, pledge, or encumbrance of any part of the mortgaged Property or any interest in the mortgaged Property other than a Partial Release from Condemnation Not Requiring HUD Approval or other title exceptions covered under the general waiver. The partial release or modification of security may be a: • partial release; • condemnation; • order of taking; • subordination or consent to Easement; • lot line dispute/adjustment/land exchange; • subdivision consent; • aviation easement; or • consent to change in covenants and restrictions. (2) Request Process The Mortgagee must obtain HUD approval for any partial release or modification of security. The Mortgagee must send the following to HUD for the Property: • a request containing the following information: o whether or not the Mortgage is in good standing; o the amount of the outstanding principal balance; o the due date of the last unpaid installment; o if the Mortgage is Delinquent, the number of Delinquent payments; o a list of unpaid special assessments, if any, and the total amount payable; o a complete legal description of the Property to be released or modified; III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1175 Last Revised: 11/26/2025 o the Borrower’s reasons for requesting that the Mortgagee make the partial release or modification of security, including how the land to be released or modified will be used; o the monetary consideration, if any, to be received by the Borrower; o the amount of a prepayment, if any, to the mortgage principal; o any restrictions to be imposed on the land to be released or modified; and o the case number of the mortgaged Property; • a survey or sketch of the Property showing: o the dimensions of the portion to be released or modified; o the location of existing and proposed improvements; and o the relation of the Property to surrounding properties; • plans and specifications, including Cost Estimates of any alterations proposed for the remaining Property after the release or modification; and • a valid FHA appraisal that reflects: o the value before the partial release or modification of security; and o the value of the remaining Property after the partial release or modification of security. (3) HUD Review HUD will process the request for the partial release or modification of security and notify the Mortgagee of the approval or denial in writing. (4) Required Documentation The Mortgagee must retain a copy of HUD’s approval or denial in the Servicing File. (C) Fees The Mortgagee may charge the Borrower reasonable and customary fees, up to the amounts listed in Appendix 3.0, involved in processing Partial Releases from Condemnation Not Requiring HUD Approval or a Partial Release, Easements, or Modification of Security Requiring HUD Approval. iv. Change of Location of Dwelling or Improvements (A) Relocation Requiring HUD Approval (1) Request to HUD Except in the emergency situations described in Emergency Relocation Not Requiring HUD Approval, the Mortgagee must obtain HUD approval prior to relocation. The Mortgagee must submit the following to the FHA Resource Center at answers@hud.gov: • the Mortgagee’s request for a change in improvement location; and III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1176 Last Revised: 11/26/2025 • supporting documentation, including architectural exhibits, a copy of the permit, and a description of materials. HUD will analyze the request and notify the Mortgagee of the approval or denial of the request. (2) Relocation Requirements The Mortgagee must ensure that relocations are performed as follows: • the Mortgagee obtains a valid first lien on the new lot; • the lien of the insured Mortgage has been extended to cover the new lot and the old lot has or has not been released from the lien, as appropriate; • all damages to the Structure before, during, or after the relocation are repaired without cost to HUD; and • the new lot is in an area known to be reasonably free from natural hazards or, if in an SFHA, the community participates in the National Flood Insurance Program (NFIP) and the Property will be insured against floods. (3) Required Documentation The Mortgagee must retain a copy of HUD’s approval or denial in the Servicing File. After the move has been completed and the appropriate substitute documents have been recorded, the Mortgagee must forward to HUD any documentation regarding the changes in the nature of the lien and retain copies in the Servicing File. (B) Emergency Relocation Not Requiring HUD Approval (1) Permanent Relocation (a) Standard The Mortgagee may consent to the relocation of existing improvements in emergency situations, where immediate action must be taken to preserve the safety of the occupants and/or the undamaged condition of the existing improvements, without HUD approval. (b) Notification to HUD of Completed Permanent Relocation The Mortgagee must notify HUD within 30 Days of the completed permanent relocation and submit a supplementary case binder containing supporting documentation for the change in improvement location. The Mortgagee must include the following in its notification of the completion of the permanent relocation: • the FHA case number of the mortgaged Property; III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1177 Last Revised: 11/26/2025 • the address and legal description of the lot of the improvement’s previous location and the address and legal description of the new permanent location; • a statement that HUD regulatory requirements have been met; • a statement that the original Note is in full force and effect; and • the outstanding balance of the insured Mortgage, and, if Delinquent, the number of payments, the dollar amount of the delinquency, and an explanation of how the delinquency is expected to be cured. (c) Required Documentation The Mortgagee must retain in the Servicing File a copy of its notification of the completion of the permanent relocation. (2) Temporary Relocation (a) Standard When a temporary move becomes necessary, the Mortgagee may consult HUD before the move, for written assurance that the mortgage insurance will not be affected adversely during the move. All damages to the Structure before, during, or after the relocation have been or will be repaired without cost to HUD. (b) Notification to HUD of Completed Temporary Relocation Within 30 Days of the completion of the temporary relocation, the Mortgagee must submit written notification to HUD, advising that the temporary relocation has been completed. This notification must include the following: • the FHA case number of the mortgaged Property; • the address and legal description of the lot of the improvement’s previous location and the address and legal description of the new temporary lot; and • a statement that: o the move to the temporary lot has been accomplished; and o any damage caused by the temporary move has been or will be repaired at no cost to HUD. (c) Required Documentation The Mortgagee must retain in the Servicing File a copy of the notification to HUD of completed temporary relocation. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 1. Servicing of FHA-Insured Mortgages Handbook 4000.1 1178 Last Revised: 11/26/2025 v. Adding Borrowers to a Mortgage Any Borrower added to a Mortgage must have a valid SSN or EIN or meet the eligibility requirement exception regarding social security numbers.

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