HUD Handbook 4000.1 Part II.A.6 — Closing (Forward Mortgages)

hud-4000-1-ii-a-6

HUD Handbook 4000.1 Part II.A.6 governs Mortgagee Closing Requirements for FHA Title II forward mortgages: chain-of-title evidence for recently-sold properties, title objection clearance to ensure first lien position, closing in compliance with the mortgage approval, use of FHA-prescribed forms, and projected escrow account establishment per 24 CFR §203.550 and RESPA. Fills HUD 4000.1 Part II.A.6 chapter gap.

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source:
  type: regulation
  id: hud-4000-1-ii-a-6
  authority: HUD Handbook 4000.1 Part II.A.6 — Closing (Forward Mortgages)
  description: |
    HUD Handbook 4000.1 Part II.A.6 governs Mortgagee Closing Requirements
    for FHA Title II forward mortgages: chain-of-title evidence for
    recently-sold properties, title objection clearance to ensure first
    lien position, closing in compliance with the mortgage approval,
    use of FHA-prescribed forms, and projected escrow account
    establishment per 24 CFR §203.550 and RESPA. Fills HUD 4000.1
    Part II.A.6 chapter gap.
obligations:
  - id: hud-4000-1-ii-a-6-chain-of-title-12-month-prior-ownership
    canonical_id: hud-4000-1-ii-a-6-chain-of-title-12-month-prior-ownership
    section: HUD Handbook 4000.1 II.A.6.a.i — Chain of Title evidence when property sold within 12 months
    description: |
      [LENDER] (Mortgagee) shall obtain evidence of prior ownership when a
      Property was sold within 12 months of the FHA case number assignment
      date. [LENDER] shall review the evidence of prior ownership to
      determine any undisclosed Identity-of-Interest transactions. This
      property-flip-detection control surfaces undisclosed seller-
      financing and identity-of-interest arrangements.
    type: do
    audit_question: For every FHA case where the subject Property was sold within 12 months of [LENDER]'s case number assignment, can [LENDER] evidence (a) collection of prior ownership documentation and (b) the chain-of-title review for undisclosed Identity-of-Interest transactions?
    program_review: Does the program account for the property-flip condition — obtaining prior-ownership evidence and reviewing the chain of title for undisclosed Identity-of-Interest transactions whenever the Property sold within 12 months of case-number assignment?
    file_review: Spot-check files where the Property sold within 12 months of case-number assignment; confirm prior-ownership documentation and the chain-of-title / identity-of-interest review.
    judgment: false
    feeds: []
    workflow_phase: loan_origination
    owner_role: underwriting_manager
    secondary_owner_role: closing_specialist
    cadence: per-fha-case-recent-sale
    consequence: Undetected flip / Identity-of-Interest transactions are core FHA QC defects; can void insurance and trigger indemnification.
    tags:
      - round-d
      - regulator-direct
      - fha
      - hud-4000-1
      - chain-of-title
      - identity-of-interest
      - closing
      - promoted
    primary_source:
      tier: 1
      authority: HUD Handbook 4000.1 II.A.6.a.i — Chain of Title
      source_class: hud-handbook-4000-1
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
      snapshot_id: 3bf33edadcf6461d
      fetched_at: '2026-05-25T14:10:11Z'
      content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
      paragraph_quote: |
        The Mortgagee must obtain evidence of prior ownership when a Property was sold within 12 months of the case number assignment date.
      drafter_attestation: |
        Copied verbatim from snapshot 3bf33edadcf6461d. II.A.6.a.i chain-
        of-title-12-month operative clause.
    promoted_at: '2026-05-25T18:45:54+00:00'
    promoted_from: hud-4000-1-ii-a-6-roundd-v1.yaml
  - id: hud-4000-1-ii-a-6-title-objections-cleared-first-lien
    canonical_id: hud-4000-1-ii-a-6-title-objections-cleared-first-lien
    section: HUD Handbook 4000.1 II.A.6.a.ii — Clear title objections; FHA-insured Mortgage in first lien position
    description: |
      [LENDER] (Mortgagee) shall ensure that all objections to title have
      been cleared and any discrepancies have been resolved to ensure
      that the FHA-insured Mortgage is in first lien position. Title-
      objection clearance and first-lien evidence are foundational FHA
      insurance-eligibility controls.
    type: do
    audit_question: For every FHA-insured Mortgage, can [LENDER] evidence (a) clearance of all title objections, (b) resolution of any discrepancies, and (c) documentation confirming FHA-insured Mortgage is in first lien position prior to closing?
    program_review: Do the P&Ps ensure all title objections are cleared and discrepancies resolved so the FHA-insured Mortgage is in first lien position before closing?
    file_review: Pull files; confirm title objections cleared, discrepancies resolved, and first-lien position documented prior to closing.
    judgment: false
    feeds: []
    workflow_phase: loan_origination
    owner_role: closing_specialist
    secondary_owner_role: underwriting_manager
    cadence: per-fha-case
    consequence: Uncleared title objections or second-lien position render the Mortgage ineligible for FHA insurance.
    tags:
      - round-d
      - regulator-direct
      - fha
      - hud-4000-1
      - title-objections
      - first-lien-position
      - closing
      - promoted
    primary_source:
      tier: 1
      authority: HUD Handbook 4000.1 II.A.6.a.ii — Title
      source_class: hud-handbook-4000-1
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
      snapshot_id: 3bf33edadcf6461d
      fetched_at: '2026-05-25T14:10:11Z'
      content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
      paragraph_quote: |
        The Mortgagee must ensure that all objections to title have been cleared and any discrepancies have been resolved to ensure that the FHA-insured Mortgage is in first lien position.
      drafter_attestation: |
        Copied verbatim from snapshot 3bf33edadcf6461d. II.A.6.a.ii title-
        objections-cleared / first-lien-position operative clause.
    promoted_at: '2026-05-25T18:45:55+00:00'
    promoted_from: hud-4000-1-ii-a-6-roundd-v1.yaml
  - id: hud-4000-1-ii-a-6-close-in-same-manner-as-approved
    canonical_id: hud-4000-1-ii-a-6-close-in-same-manner-as-approved
    section: HUD Handbook 4000.1 II.A.6.a.iv — Instruct settlement agent to close per underwriting approval
    description: |
      [LENDER] (Mortgagee) shall instruct the settlement agent to close
      the Mortgage in the same manner in which it was underwritten and
      approved. The settlement instructions must reproduce the
      conditions and structure on which underwriting eligibility was
      determined; any closing-time deviation requires re-underwriting.
    type: do
    audit_question: For every FHA closing, can [LENDER] produce the settlement-agent closing instructions and evidence that the closed Mortgage matches the underwritten-and-approved structure (terms, parties, conditions)?
    program_review: Do the P&Ps ensure the settlement agent is instructed to close the Mortgage in the same manner it was underwritten and approved, with any closing-time deviation triggering re-underwriting?
    file_review: Pull closed files; confirm the settlement instructions and that the closed terms/parties/conditions match the underwritten-and-approved structure.
    judgment: false
    feeds: []
    workflow_phase: loan_origination
    owner_role: closing_specialist
    secondary_owner_role: underwriting_manager
    cadence: per-fha-case
    consequence: Closing differing from approved terms is a known FHA QC defect; can void insurance.
    tags:
      - round-d
      - regulator-direct
      - fha
      - hud-4000-1
      - settlement-instructions
      - closing
      - promoted
    primary_source:
      tier: 1
      authority: HUD Handbook 4000.1 II.A.6.a.iv — Closing in Compliance with Mortgage Approval
      source_class: hud-handbook-4000-1
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
      snapshot_id: 3bf33edadcf6461d
      fetched_at: '2026-05-25T14:10:11Z'
      content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
      paragraph_quote: |
        The Mortgagee must instruct the settlement agent to close the Mortgage in the same manner in which it was underwritten and approved.
      drafter_attestation: |
        Copied verbatim from snapshot 3bf33edadcf6461d. II.A.6.a.iv close-
        in-same-manner-as-approved operative requirement.
    promoted_at: '2026-05-25T18:45:55+00:00'
    promoted_from: hud-4000-1-ii-a-6-roundd-v1.yaml
  - id: hud-4000-1-ii-a-6-use-fha-prescribed-forms
    canonical_id: hud-4000-1-ii-a-6-use-fha-prescribed-forms
    section: HUD Handbook 4000.1 II.A.6.a.vi — Use FHA-prescribed forms and language at closing
    description: |
      [LENDER] (Mortgagee) shall use the forms and/or language prescribed
      by FHA in the legal documents used for closing the Mortgage.
      Non-conforming legal-document language at closing creates
      enforceability risk and FHA insurance-eligibility risk.
    type: do
    audit_question: For every FHA closing, can [LENDER] evidence that closing legal documents use the forms and/or language prescribed by FHA (e.g., Model Note, Model Mortgage, HUD-92900-A, HUD-92800.5B as applicable)?
    program_review: Do the P&Ps ensure closing legal documents use the FHA-prescribed forms and/or language (Model Note, Model Mortgage, HUD-92900-A, HUD-92800.5B as applicable)?
    file_review: Pull closed files; confirm the closing legal documents use the FHA-prescribed forms/language.
    judgment: false
    feeds: []
    workflow_phase: loan_origination
    owner_role: closing_specialist
    secondary_owner_role: compliance_officer
    cadence: per-fha-case
    consequence: Non-FHA-prescribed closing forms / language create insurance-eligibility defects.
    tags:
      - round-d
      - regulator-direct
      - fha
      - hud-4000-1
      - prescribed-forms
      - closing
      - promoted
    primary_source:
      tier: 1
      authority: HUD Handbook 4000.1 II.A.6.a.vi — Required Forms
      source_class: hud-handbook-4000-1
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
      snapshot_id: 3bf33edadcf6461d
      fetched_at: '2026-05-25T14:10:11Z'
      content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
      paragraph_quote: |
        The Mortgagee must use the forms and/or language prescribed by FHA in the legal documents used for closing the Mortgage.
      drafter_attestation: |
        Copied verbatim from snapshot 3bf33edadcf6461d. II.A.6.a.vi
        prescribed-forms operative requirement.
    promoted_at: '2026-05-25T18:45:55+00:00'
    promoted_from: hud-4000-1-ii-a-6-roundd-v1.yaml
  - id: hud-4000-1-ii-a-6-establish-escrow-per-203-550-and-respa
    canonical_id: hud-4000-1-ii-a-6-establish-escrow-per-203-550-and-respa
    section: HUD Handbook 4000.1 II.A.6.a.viii — Establish escrow account per 24 CFR §203.550 and RESPA
    description: |
      [LENDER] (Mortgagee) shall establish the escrow account in
      accordance with the regulatory requirements in 24 CFR §203.550 and
      RESPA. The escrow account must collect a monthly amount sufficient
      to pay hazard insurance premiums, real estate taxes, Mortgage
      Insurance Premiums (MIP), special assessments, flood insurance
      premiums (if applicable), Ground Rents (if applicable), and other
      items that would create liens senior to the FHA-insured Mortgage.
    type: do
    audit_question: For every FHA-insured Mortgage, can [LENDER] evidence (a) establishment of the escrow account per 24 CFR §203.550 + RESPA at closing, and (b) the monthly escrow amount is sufficient to cover all required obligations as they become due?
    program_review: Do the P&Ps ensure the escrow account is established per 24 CFR §203.550 and RESPA, with a monthly amount sufficient to cover hazard, taxes, MIP, special assessments, flood, ground rents, and other senior-lien items?
    file_review: Pull closed files; confirm escrow establishment per §203.550/RESPA and that the monthly escrow is sufficient to cover all required items as they come due.
    judgment: false
    feeds: []
    workflow_phase: loan_origination
    owner_role: closing_specialist
    secondary_owner_role: chief_servicing_officer
    cadence: per-fha-case
    consequence: Improper escrow establishment is a RESPA + FHA QC dual-citation defect; FHA insurance and servicing-rep-and-warranty risk.
    tags:
      - round-d
      - regulator-direct
      - fha
      - hud-4000-1
      - escrow-establishment
      - respa
      - closing
      - promoted
    primary_source:
      tier: 1
      authority: HUD Handbook 4000.1 II.A.6.a.viii — Projected Escrow
      source_class: hud-handbook-4000-1
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
      snapshot_id: 3bf33edadcf6461d
      fetched_at: '2026-05-25T14:10:11Z'
      content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
      paragraph_quote: |
        The Mortgagee must establish the escrow account in accordance with the regulatory requirements in 24 CFR § 203.550 and RESPA.
      drafter_attestation: |
        Copied verbatim from snapshot 3bf33edadcf6461d. II.A.6.a.viii
        escrow-establishment 24 CFR §203.550 + RESPA operative clause.
    promoted_at: '2026-05-25T18:45:55+00:00'
    promoted_from: hud-4000-1-ii-a-6-roundd-v1.yaml
_promotion_history:
  - promoted_at: '2026-05-25T18:45:55+00:00'
    candidate_path: obligations\_remediation\round-d-investor-guides\hud-4000-1-ii-a-6-roundd-v1.yaml
    candidates_promoted: 5
    candidates_skipped_existing: 0

Verbatim regulatory text (5)

Verbatim provisions from HUD Handbook 4000.1 Part II.A.6 — Closing (Forward Mortgages) — 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.

HUD Handbook 4000.1 II.A.6.a.i — Chain of Title evidence when property sold within 12 months

The Mortgagee must obtain evidence of prior ownership when a Property was sold within 12 months of the case number assignment date.

Source: HUD Handbook 4000.1 II.A.6.a.i — Chain of Title · source URL · snapshot 3bf33edadcf6461d

HUD Handbook 4000.1 II.A.6.a.ii — Clear title objections; FHA-insured Mortgage in first lien position

The Mortgagee must ensure that all objections to title have been cleared and any discrepancies have been resolved to ensure that the FHA-insured Mortgage is in first lien position.

Source: HUD Handbook 4000.1 II.A.6.a.ii — Title · source URL · snapshot 3bf33edadcf6461d

HUD Handbook 4000.1 II.A.6.a.iv — Instruct settlement agent to close per underwriting approval

The Mortgagee must instruct the settlement agent to close the Mortgage in the same manner in which it was underwritten and approved.

Source: HUD Handbook 4000.1 II.A.6.a.iv — Closing in Compliance with Mortgage Approval · source URL · snapshot 3bf33edadcf6461d

HUD Handbook 4000.1 II.A.6.a.vi — Use FHA-prescribed forms and language at closing

The Mortgagee must use the forms and/or language prescribed by FHA in the legal documents used for closing the Mortgage.

Source: HUD Handbook 4000.1 II.A.6.a.vi — Required Forms · source URL · snapshot 3bf33edadcf6461d

HUD Handbook 4000.1 II.A.6.a.viii — Establish escrow account per 24 CFR §203.550 and RESPA

The Mortgagee must establish the escrow account in accordance with the regulatory requirements in 24 CFR § 203.550 and RESPA.

Source: HUD Handbook 4000.1 II.A.6.a.viii — Projected Escrow · source URL · snapshot 3bf33edadcf6461d