FHA Single Family Housing Policy Handbook 4000.1, Part II — a. Applications and Disclosures (03/19/2025)

FHA Single Family Housing Policy Handbook 4000.1, Part II — a. Applications and Disclosures (03/19/2025)

a. Applications and Disclosures (03/19/2025) The Mortgagee must obtain a completed Fannie Mae Form 1009, Residential Loan Application for Reverse Mortgages (RLARM), from the Borrower and must capture additional required information using Parts IV, V, and VI of Fannie Mae Form 1003/Freddie Mac Form 65, Uniform Residential Loan Application (URLA), or an alternative form that captures the same information. In addition, the Mortgagee must provide all required federal II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 543 Last Revised: 11/26/2025 and state disclosures to begin the origination process. Regardless of the form used, Mortgagees must ensure that the Borrower certifies to the accuracy and completeness of the financial information. The Mortgagee is responsible for using the most recent version of all forms as of the date of completion of the form. i. Contents of the HECM Application Package The Mortgagee must maintain all information and documentation that is relevant to its approval decision in the HECM file. All information and documentation that is required in this Handbook 4000.1, and any incidental information or documentation related to those requirements, is relevant to the Mortgagee’s approval decision. If after obtaining all documentation required below, the Mortgagee has reason to believe it needs additional support for the approval decision, the Mortgagee must obtain additional explanation and documentation, consistent with information in the HECM file, to clarify or supplement the information and documentation submitted by the Borrower. (A) General Requirements (1) Maximum Age of HECM Documents (a) General Document Age Documents used in the origination and financial assessment of a HECM may not be more than 120 Days old at the Disbursement Date, except for appraisals, which are subject to separate validity period requirements. Documents whose validity for financial assessment purposes is not affected by the passage of time, such as divorce decrees or Tax Returns, may be more than 120 Days old at the Disbursement Date. For purposes of counting Days for periods provided in this Handbook 4000.1, day one is the Day after the effective or issue date of the document, whichever is later. (b) Appraisal Validity (i) Initial Appraisal Validity The initial appraisal validity period is180 Days from the effective date of the appraisal report. See Ordering Appraisals. (ii) Appraisal Update Where the initial appraisal report will be more than 180 Days at Disbursement Date, an appraisal update may be performed to extend the appraisal validity period. See Ordering an Update to an Appraisal. Where II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 544 Last Revised: 11/26/2025 the initial appraisal is updated, the updated appraisal is valid for one year after the effective date of the initial appraisal report that is being updated. (2) Handling of Documents Mortgagees must not accept or use documents relating to the employment, income, assets, or credit of Borrowers that have been handled by or transmitted from or through unknown parties or Interested Parties. Mortgagees may not accept or use any Third Party Verifications (TPV) that have been handled by or transmitted from or through unknown parties, Interested Parties, or the Borrower. Exception for Mortgagees and TPOs The Mortgagee and TPO are permitted to handle documents relating to the employment, income, assets, credit, or occupancy of Borrowers. (a) Information Sent to the Mortgagee Electronically The Mortgagee must authenticate all documents received electronically by examining the source identifiers (e.g., the fax banner header or the sender’s email address) or contacting the source of the document by telephone to verify the document’s validity. The Mortgagee must document the name and telephone number of the individual with whom the Mortgagee verified the validity of the document. (b) Information Obtained via Internet The Mortgagee must authenticate documents obtained from an internet website and examine portions of printouts downloaded from the internet. Documentation obtained through the internet must contain the same information as would be found in an original hard copy of the document. (c) Confidentiality Policy for Credit Information Mortgagees must not divulge sources of credit information, except as required by a contract or by law. All personnel with access to credit information must ensure that the use and disclosure of information from a credit report complies with: • the Fair Housing Act, 42 U.S.C. §§ 3601–3619; • the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681a‒1681x; • the Right to Privacy Act, 5 U.S.C. § 552a; • the Right to Financial Privacy Act, 12 U.S.C. §§ 3401‒3423; and • the Equal Credit Opportunity Act (ECOA), 15 U.S.C. §§ 1691a‒1691f. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 545 Last Revised: 11/26/2025 (3) Signature Requirements for All Application Forms (a) Borrowers with Legal Competency All Borrowers must sign and date the initial and final RLARM. All Borrowers must sign and date pages one and two of the initial form HUD-92900-A, HUD Addendum to Uniform Residential Loan Application, and sign and date the complete final form HUD-92900-A. The Mortgagee may accept the RLARM and closing documents executed by a person holding a durable POA specifically designed to survive incapacity and avoid the need for court proceedings, provided the attorney-in-fact has specific authority to obligate the Borrower and has received HECM counseling by a Participating Agency. (b) Borrowers Lacking Legal Competency The Borrower may not sign and date the initial and final RLARM. The Borrower may not sign and date pages one and two of the initial form HUD- 92900-A nor sign and date the complete final form HUD-92900-A. The Mortgagee may accept any application form executed by: • a court-appointed conservator or guardian with documented authority to obligate the Borrower; or • a person holding a durable POA specifically designed to survive incapacity and avoid the need for court proceedings, provided the attorney-in-fact has specific authority to obligate the Borrower and has received HECM counseling by a Participating Agency. Refer to Use of Power of Attorney at Closing for further guidance. Refer to Use of Court-Appointed Conservator or Guardian for further guidance. Prohibition on Documents Signed in Blank Mortgagees are not permitted to require signatories to sign documents in blank, incomplete documents, or blank sheets of paper. (4) Policy on Use of Electronic Signatures (a) Definition An Electronic Signature refers to any electronic sound, symbol, or process attached to or logically associated with a contract or record and executed or adopted by a person with the intent to sign the contract or record. FHA does II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 546 Last Revised: 11/26/2025 not accept an electronic signature that is solely voice or audio. Digital signatures are a subset of electronic signatures. (b) Use of Electronic Signatures An electronic signature conducted in accordance with the Electronic Signature Performance Standards (Performance Standards) is accepted on FHA documents requiring signatures to be included in the case binder for mortgage insurance, unless otherwise prohibited by law. Electronic signatures meeting the Performance Standards are treated as equivalent to handwritten signatures. (c) Electronic Signature Performance Standards The Performance Standards are the set of guidelines that govern FHA acceptance of an electronic signature. The use of electronic signatures is voluntary. However, Mortgagees choosing to use electronic signatures must fully comply with the Performance Standards. (i) The Electronic Signatures in Global and National Commerce Act (ESIGN Act) Compliance and Technology A Mortgagee’s electronic signature technology must comply with all requirements of the ESIGN Act, including those relating to disclosures, consent, signature, presentation, delivery, and retention, and with any state law applicable to the transaction. (ii) Third Party Documents Third Party Documents are those documents that are originated and signed outside of the control of the Mortgagee, such as the sales contract. FHA will accept electronic signatures on Third Party Documents included in the case binder for mortgage insurance endorsement in accordance with the ESIGN Act and the Uniform Electronic Transactions Act (UETA). An indication of the electronic signature and date must be clearly visible when viewed electronically and in a paper copy of the electronically signed document. (iii)Authorized Documents Authorized Documents refer to the documents on which FHA accepts electronic signatures provided that the Mortgagee complies with the Performance Standards: • Mortgage Insurance Endorsement Documents: Electronic signatures will be accepted on all documents requiring signatures included in the HECM case binder for mortgage insurance except II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 547 Last Revised: 11/26/2025 the Note. FHA will not accept electronic signatures on HECM Notes. • Servicing and Loss Mitigation Documentation: Electronic signatures will be accepted on any documents associated with servicing or loss mitigation services for HECMs. • FHA Insurance Claim Documentation: Electronic signatures will be accepted on any documents associated with the filing of a claim for FHA insurance benefits, including form HUD-27011, Single Family Application for Insurance Benefits. • HUD Real Estate Owned (REO) Documents: Electronic signatures will be accepted on the HUD REO Sales Contract and related addenda. (iv) Associating an Electronic Signature with the Authorized Document The Mortgagee must ensure that the process for electronically signing authorized documents provides for the document to be presented to the signatory before an electronic signature is obtained. The Mortgagee must ensure that the electronic signature is attached to, or logically associated with, the document that has been electronically signed. (v) Intent to Sign The Mortgagee must be able to prove that the signer certified that the document is true, accurate, and correct at the time signed. Electronic signatures are only valid under the ESIGN Act if they are “executed or adopted by a person with the intent to sign the record.” Establishing intent includes: • identifying the purpose for the Borrower signing the electronic record; • being reasonably certain that the Borrower knows which electronic record is being signed; and • providing notice to the Borrower that their electronic signature is about to be applied to, or associated with, the electronic record. Intent to use an electronic signature may be established by, but is not limited to: • an online dialog box or alert advising the Borrower that continuing the process will result in an electronic signature; • an online dialog box or alert indicating that an electronic signature has just been created and giving the Borrower an opportunity to confirm or cancel the signature; or • a click-through agreement advising the Borrower that continuing the process will result in an electronic signature. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 548 Last Revised: 11/26/2025 (vi) Single Use of Signature Mortgagees must require a separate action by the signer, evidencing intent to sign, in each location where a signature or initials are to be applied. This provision does not apply to documents signed by Mortgagee employees or Mortgagee contractors provided the Mortgagee obtains the consent of the individual for the use of their electronic signature. The Mortgagee must document the employee’s or contractor’s consent. (vii) Authentication Definition Authentication refers to the process used to confirm a signer’s identity as a party in a transaction. Standard for Authentication Before a Mortgagee submits the case for endorsement, the Mortgagee must confirm the identity of the signer by authenticating data provided by the signer with information maintained by an independent source. Independent sources include, but are not limited to: • national commercial credit bureaus; • commercially available data sources or services; • state motor vehicle agencies; or • government databases. The Mortgagee must verify a signer’s name and date of birth, and either their Social Security Number (SSN) or driver’s license number. (viii) Attribution Definition Attribution is the process of associating the identity of a signer with their signature. Standard for Attribution The Mortgagee must maintain evidence sufficient to establish that the electronic signature may be attributed to the individual purported to have signed. The Mortgagee must use one of the following methods, or combinations of methods, to establish attribution: II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 549 Last Revised: 11/26/2025 • selection by or assignment to the individual of a Personal Identification Number (PIN), password, or other shared secret, that the individual uses as part of the signature process; • delivery of a credential to the individual by a trusted third party, used either to sign electronically or to prevent undetected alteration after the electronic signature using another method; • knowledge base authentication using “out of band/wallet” information; • measurement of some unique biometric attribute of the individual and creation of a computer file that represents the measurement, together with procedures to protect against disclosure of the associated computer file to unauthorized parties; or • public key cryptography. (ix) Credential Loss Management Mortgagees must have a system in place to ensure the security of all issued credentials. One or a combination of the following loss management controls is acceptable: • maintaining the uniqueness of each combined identification code and password, such that no two individuals have the same combination of identification code and password; • ensuring that identification code and password issuances are periodically checked, recalled, or revised; • following loss management procedures to electronically deauthorize lost, stolen, missing, or otherwise compromised identification code or password information, and to issue temporary or permanent replacements using suitable, rigorous controls; • using transaction safeguards to prevent unauthorized use of passwords or identification codes; or • detecting and reporting any attempts at unauthorized use of the password or identification code to the system security unit. (d) Required Documentation and Integrity of Records Mortgagees must ensure that they employ industry-standard encryption to protect the signer’s signature and the integrity of the documents to which it is affixed. Mortgagees must ensure that their systems will detect and record any tampering with the electronically signed documents. FHA will not accept documents that show evidence of tampering. If changes to the document are made, the electronic process must be designed to provide an “audit trail” showing all alterations, the date and time they were made, and identify who made them. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 550 Last Revised: 11/26/2025 The Mortgagee’s system must be designed so that the signed document is designated as the Authoritative Copy. The Authoritative Copy of an electronically signed document refers to the electronic record that is designated by the Mortgagee or Holder as the controlling reference copy. (B) HECM Application and Initial Supporting Documentation (1) RLARM and HUD Addendum to the Uniform Residential Loan Application Unless otherwise noted, RLARM and HUD Addendum to Uniform Residential Loan Application (form HUD-92900-A) refer to both initial and final applications. The Mortgagee must obtain the Borrower’s initial complete, signed RLARM and pages one and two of form HUD-92900-A before underwriting the HECM application. The loan originator identified on the RLARM must be the actual licensed loan originator regardless of whether the loan originator is employed by a sponsored TPO or the Mortgagee. The RLARM must contain the loan originator’s name, Nationwide Mortgage Licensing System and Registry (NMLS) identification number, telephone number, and signature. (2) HECM Application Name Requirements (a) Standard All HECM applications must be executed in the legal names of all applicants. All HECM applications must be executed in the name of one or more individuals. (b) Required Documentation The Mortgagee must include a statement that it has verified the Borrower’s and Eligible NBS’s identity using valid government-issued photo identification prior to closing of the HECM or the Mortgagee may choose to include a copy of such photo identification as documentation. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 551 Last Revised: 11/26/2025 (C) Borrower, Eligible Non-Borrowing Spouse, and Other Non-Borrowing Household Member Authorizations (1) Authorization to Verify Information (a) Definition Other Non-Borrowing Household Member refers to a person who occupies the Property to be secured with the HECM who is not the spouse of the Borrower and who is also not a Borrower. (b) Standard The Mortgagee must obtain the Borrower’s authorization to verify the information needed to process the HECM application. The Mortgagee must obtain an Eligible NBS’s and Other Non-Borrowing Household Member’s consent and authorization to verify their SSN with the Social Security Administration (SSA) when it is necessary to process the HECM application using their income as a Compensating Factor or in reducing family size when determining if the Borrower meets the applicable standard for Residual Income. (c) Required Documentation For each individual, Borrower, Eligible NBS, and Other Non-Borrowing Household Member, authorization may be accomplished through a blanket authorization form. (2) Form HUD-92900-A Part II: Borrower and Non-Borrowing Spouse Consent for Social Security Administration to Verify Social Security Number The Mortgagee must obtain the Borrower’s and NBS’s signatures on Part II of form HUD-92900-A to verify the Borrower’s and NBS’s SSNs with the SSA. Mortgagees may attach an addendum the NBS in lieu of form HUD-92900-A which includes the required language in Part II of form HUD-92900-A. (3) Tax Verification Form or Equivalent The Mortgagee must obtain the Borrower’s signature on the appropriate Internal Revenue Service (IRS) form to obtain Tax Returns directly from the IRS for all credit-qualifying Mortgages at the time the final RLARM is executed. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 552 Last Revised: 11/26/2025 (D) Borrower’s and Eligible Non-Borrowing Spouse’s Authorization for Use of Information Protected under the Privacy Act (1) Standard The Mortgagee must obtain the Borrower’s and Eligible NBS’s consent for use of the Borrower’s information for any purpose relating to the origination, servicing, loss mitigation, and disposition of the HECM or Property securing the HECM and relating to any insurance claim and ultimate resolution of such claims by the Mortgagee and FHA. (2) Required Documentation The Mortgagee must obtain a signed statement from the Borrower and Eligible NBS that clearly expresses their consent for the use of the Borrower’s and Eligible NBS’s information. ii. Disclosures and Legal Compliance The Mortgagee must provide or ensure the Borrower is provided the following disclosures. (A) HECM Required Disclosures (1) Standard The Mortgagee must provide Borrowers with a HECM Program Description disclosure describing all products, options, and features of the HECM program that FHA will insure, regardless of the products they offer. The Mortgagee must provide a disclosure that is written in clear, consistent, and concise language. The Mortgagee must not mislead or otherwise cause a Borrower to believe that the HECM product contains any features or limitations that are inconsistent with FHA’s requirements. Mortgagees are prohibited from seeking any agreement from the Borrower that is inconsistent with the ability of the Borrower to exercise their rights to the fullest extent permitted by law. The Mortgagee’s HECM Program Description disclosure must explain: For all HECMs: • the HECM is not assumable; • the HECM is a non-recourse loan; • the Property must be the Principal Residence: • the Borrower will be required to provide a written annual occupancy certification; and II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 553 Last Revised: 11/26/2025 • the Borrower is responsible for notifying the Mortgagee of absences from the Property in excess of two months to avoid determinations that the Borrower’s Principal Residence has changed; • FHA insures fixed rate HECMs, as well as annual and monthly adjustable rate HECMs; • the amount of funds made available to the Borrower is based on the age of the youngest Borrower or Eligible NBS; • principal limit growth for all payment plan options; • the Principal Limit may increase monthly but there are restrictions for disbursing those funds during the First 12-Month Disbursement Period; • the Initial Mortgage Insurance Premium (IMIP) payment methods and the formula used to calculate the IMIP amount; • the costs of obtaining the HECM: • provide the Borrower with a Good Faith Estimate (GFE), giving the Borrower an estimate of closing costs and explaining which charges are required to obtain the HECM and which charges are not required to obtain the HECM, including the disclosure of third-party fees; and • inquire whether the HECM proceeds will be used to pay any cost associated with estate planners and inform the Borrower that such services are unnecessary to obtain a HECM and are ineligible for payment from HECM proceeds; • the Borrower may incur the cost of a second appraisal, if required by the collateral risk assessment, which is used to determine whether additional support for the collateral value is required; • the Property must meet FHA’s Minimum Property Requirements (MPR) or Minimum Property Standards (MPS) and the provisions for completing required repairs either prior to or after closing; • insurance is required for all improvements on the Property that serves as collateral for the HECM, whether in existence at the time of origination or subsequently erected, against any hazards, casualties, and contingencies, including fire and flood, for which the Mortgagee requires insurance. Such insurance must be maintained in the amount and for the period of time that is necessary to protect the Mortgagee’s investment; • the Borrower and NBS, if any, will be required to disclose and certify their marital status at closing: • an NBS may be eligible for the deferral of the Due and Payable status upon the death of the last surviving Borrower if the NBS meets and continues to meet the Qualifying Attributes or the NBS continues to reside in the home as their Principal Residence despite the Borrower remaining in a health care facility for a period that exceeds 12 consecutive months; and • an NBS and Non-Borrowing Owners must sign the Mortgage as Borrowers evidencing their commitment of the Property as security for the Mortgage, and sign a certification consenting to their spouse or II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 554 Last Revised: 11/26/2025 other Borrower obtaining the HECM and acknowledging the terms and conditions of the Mortgage; • repayment and prepayment features; and • the Borrower’s rights, obligations, and remedies with respect to temporary absences from the home, late payments, and payment default by the Mortgagee and all conditions requiring satisfaction of the HECM. For fixed rate HECMs, Mortgagees must also explain: • the Borrower is limited to the single lump sum payment option, which provides a single Disbursement at closing with no opportunity for future Disbursements to or on behalf of the Borrower, except as allowed from a Set-Aside established at closing; and • Disbursement of HECM proceeds during the First 12-Month Disbursement Period is limited to the amount of the Borrower’s Advance, plus Disbursements from a Set-Aside that was established at closing. For adjustable rate HECMs: • the Borrower may choose from five, flexible payment options, allowing for future Disbursements, and the Borrower may change payment plans to one of the other available payment options at any time provided funds are available; • the frequency of annual and monthly adjustable rate changes; and • Disbursement of HECM proceeds during the First 12-Month Disbursement Period is subject to an Initial Disbursement Limit. (2) Required Documentation At initial application, the Mortgagee must obtain the HECM Program Description disclosure signed and dated by the Borrower. (B) Compliance with All Applicable Laws, Rules, and Requirements The Mortgagee is required to comply with all federal, state, and local laws, rules, and requirements applicable to the HECM transaction, including all applicable disclosure requirements and the requirements of the Consumer Financial Protection Bureau (CFPB), including those related to: • Truth in Lending Act (TILA); and • Real Estate Settlement Procedures Act (RESPA). (C) Nondiscrimination Policy The Mortgagee must fully comply with all applicable provisions of: • the Fair Housing Act, 42 U.S.C. §§ 3601–3619; • the Fair Credit Reporting Act, 15 U.S.C. §§ 1681‒1681x; and • the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691‒1691f. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 555 Last Revised: 11/26/2025 The Mortgagee must make all determinations with respect to the adequacy of the Borrower’s income in a uniform manner without regard to race, color, religion, sex, national origin, familial status, disability, marital status, source of income of the Borrower, or location of the Property. iii. Application Document Processing (A) Mortgagee Responsibilities The Mortgagee must use FHAC to order the FHA case number and perform any associated tasks. The Mortgagee must also use the Home Equity Reverse Mortgage Information Technology (HERMIT) to remit mortgage insurance premiums and to perform all loan servicing activities. For a Single-Unit Approval, the Mortgagee must follow the Single-Unit Approval case number assignment process. The Mortgagee may use nonemployees in connection with its origination of FHA-insured HECMs only as described below. The Mortgagee ultimately remains responsible for the quality of the HECM and for strict compliance with all applicable FHA requirements, regardless of the Mortgagee’s relationship to the person or Affiliate performing any particular service or task. (1) Sponsored Third-Party Originator The Mortgagee is responsible for dictating the specific application and processing tasks to be performed by the sponsored TPO. Only FHA-approved Mortgagees acting in the capacity of a sponsored TPO may have direct access to FHAC. (2) Other Contract Service Providers The Mortgagee may utilize Eligible Contractors to perform the following administrative and clerical functions: typing of mortgage documents, mailing out and collecting verification forms, ordering credit reports, and/or preparing for endorsement and shipping HECMs to investors. (3) Excluded Parties The Mortgagee may not contract with Affiliates or persons that are suspended, debarred, or otherwise excluded from participation in HUD programs, or under a Limited Denial of Participation (LDP) that excludes their participation in FHA programs. The Mortgagee must ensure that no sponsored TPO or contractor engages such an Affiliate or person to perform any function relating to the origination of a HECM. The Mortgagee must check the System for Award Management (SAM) and must follow appropriate procedures defined by that system to confirm eligibility for participation. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 556 Last Revised: 11/26/2025 (B) Initial Document Processing The Mortgagee begins processing the HECM by obtaining an initial RLARM and Part III of form HUD-92900-A. (1) Ordering Case Numbers The Mortgagee must use FHAC to order FHA case numbers. A case number can be obtained only when the Mortgagee has an active HECM application for the subject Borrower and Property. In order to obtain a case number, the Mortgagee must: • provide the subject Borrower’s name, SSN, and date of birth; • provide the property address; • certify that the Mortgagee has an active HECM application for the subject Borrower and Property; and • obtain a copy of the Certificate of HECM Counseling for each individual required to receive counseling. The Mortgagee is not required to input appraiser information at the time the case number is ordered. The Mortgagee must order a case number prior to the expiration of the Certificate of HECM Counseling for the last Borrower or legal representative who is required to receive counseling. The Mortgagee is not required to close on the HECM prior to the expiration of the Certificate of HECM Counseling. (a) Automated Data Processing Codes FHA Automated Data Processing (ADP) Codes are derived from the section of the National Housing Act under which the HECM is to be insured. The Mortgagee must select the correct ADP Code for each HECM in FHAC. (b) Case Numbers on Sponsored Originations The Mortgagee will not be able to order case numbers for sponsored originations unless the sponsored TPO has been registered in FHAC. (c) Certificate of HECM Counseling Identification Number The Mortgagee must enter the HECM counseling certificate identification number belonging to the last Borrower or legal representative counseled when there are multiple certificates. See Individuals Required to Receive HECM Counseling. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 557 Last Revised: 11/26/2025 (2) Holds Tracking If FHAC detects that a case number currently exists for the Property, a case number will not be assigned. The Mortgagee will receive notification that the case number assignment has been placed in Holds Tracking. The Mortgagee must review the Holds Tracking screen in FHAC to determine the necessary actions to obtain a case number. (3) Canceling and Reinstating Case Numbers (a) Canceling a Case Number The Mortgagee may request cancellation of a case number by submitting a request to FHAC. (b) Automatic Case Number Cancellations Case numbers without an appraisal logged into FHAC are automatically canceled after six months if one of the following actions is not performed as a last action: • form HUD-92900.4, Firm Commitment, issued by FHA; • insurance application received and subsequent updates; or • Notices of Return (NOR) or resubmissions. Cases with an appraisal logged are not subject to automatic cancellation for one year from the appraisal effective date. Updates to the Borrower’s name or property address, an appraisal update, or a transmission of the IMIP do not constitute Last Action Taken. (c) Reinstatement of Case Numbers The Mortgagee may request reinstatement of canceled case numbers by submitting a request to FHAC. Case numbers that were automatically canceled will be reinstated only if the Mortgagee provides evidence that the subject HECM closed prior to cancellation of the case number, such as a Settlement Statement or similar legal document. (4) Transferring Case Numbers (a) Requirements for the Transferring Mortgagee The original Mortgagee must assign the case number to the new Mortgagee using the Case Transfer function in FHAC immediately upon the Borrower’s request. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 558 Last Revised: 11/26/2025 The original Mortgagee may provide processing documents but is not required to do so. The original Mortgagee may not charge the Borrower for the transfer of any documents, but the original Mortgagee may negotiate a fee with the new Mortgagee for providing the processing documents. (b) Case Number Transfer Involving a Sponsored Third-Party Originator Where a case number is transferred to a new approved Mortgagee or sponsored TPO, the original Mortgagee, its authorized agent, or sponsored TPO that is also an FHA-approved Mortgagee must complete the appropriate sections in FHAC as described in the FHAC Guide – Case Processing Support Functions. (5) Preliminary Review of Borrower Eligibility Requirements Before any charges may be incurred by the prospective Borrower, the Mortgagee must preliminarily review whether: • the Borrower will be at least 62 years of age by closing; • the Borrower has any unresolved delinquent Federal Debt – see Delinquent Federal Tax Debt and Borrower Ineligibility Due to Delinquent Federal Non-Tax Debt; and • the Property securing the HECM will be the Borrower’s Principal Residence. If, after a review of these requirements, the Mortgagee finds that the Borrower is ineligible, the Mortgagee must notify the Borrower in writing of their ineligibility and cease processing of the application. The Mortgagee can charge the Borrower for any services performed after this determination. (6) Ordering Title Commitments The Mortgagee must order a title commitment to ensure the Property will be properly titled and the HECM secured in accordance with FHA requirements. (7) Ordering Appraisals The Mortgagee must order a new appraisal for each HECM case number assignment and may not reuse an appraisal that was performed under another active or endorsed case number, even if the prior appraisal is not yet more than 180 Days old. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 559 Last Revised: 11/26/2025 (a) Appraisal Integrity The Mortgagee is responsible for identifying any problems or potential problems with the integrity, accuracy, and thoroughness of an appraisal submitted to FHA for mortgage insurance purposes. Appraisers must comply with the Uniform Standards of Professional Appraisal Practice (USPAP), including the Competency Rule, when conducting appraisals of Properties intended as security for FHA-insured financing. In appraising any Property for the purpose of obtaining FHA mortgage insurance, the Appraiser must certify that they are capable of performing the appraisal because they have the necessary qualifications and access to all necessary data. The Mortgagee must ensure that FHA is listed on the appraisal report as an intended user of the appraisal. (b) Selection of a Qualified Appraiser The Mortgagee must order an appraisal from an Appraiser who is listed on the FHA Appraiser Roster and is qualified and knowledgeable in the specific market area in which the Property is located. The Mortgagee must evaluate the Appraiser’s education, training, and actual field experience to determine whether the Appraiser has sufficient qualifications to perform the appraisal before assignment. The Mortgagee may not discriminate on the basis of race, color, religion, sex, national origin, familial status, disability, or marital status in the selection of an Appraiser. (c) Use of Appraisal Management Company or Third-Party Contractors The Mortgagee may engage an Appraisal Management Company (AMC) to perform services related to the obtaining of an appraisal. The Mortgagee remains responsible for the acts of its AMC or third-party contractors. The Mortgagee may not pay the AMC and other third-party contractors fees in excess of what is customary and reasonable for such services in the market area where the Property being appraised is located. Any management fees must be for actual services related to the ordering, process, or review of an appraisal for FHA financing. (d) Appraiser Independence The Mortgagee must ensure it does not compromise the Appraiser’s independence. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 560 Last Revised: 11/26/2025 The Mortgagee, or any third party specifically authorized by the Mortgagee, is responsible for selecting, retaining, and providing for payment of all compensation to the Appraiser. The Mortgagee or authorized third party may not allow the Appraiser to be selected, retained, managed, or compensated by a mortgage broker or any member of a Mortgagee’s or authorized third party’s staff who is compensated on a commission basis tied to the successful completion of a HECM, or who is not independent of the Mortgagee’s HECM production staff or processes or the authorized third party’s staff or processes. The Mortgagee must ensure that it does not: • compensate the Appraiser at a rate that is not commensurate in the market area of the Property being appraised with the assignment type, complexity, and scope of work required for the appraisal services performed; • withhold or threaten to withhold timely payment or partial payment for an appraisal report; • prohibit the Appraiser from recording the fee paid for the performance of the appraisal in the appraisal report; • condition the ordering of an appraisal report or the payment of an appraisal fee, salary, or bonus on the opinion, conclusion, or valuation to be reached, or on a preliminary value estimate requested from an Appraiser; • provide to the Appraiser, appraisal company, AMC or any entity or person related to the Appraiser, appraisal company or AMC, stock or other financial or nonfinancial benefits; • order, obtain, use, or pay for a second or subsequent appraisal or AVM in connection with a HECM transaction unless: • required by FHA’s collateral risk assessment; • there is a reasonable basis to believe that the initial appraisal was flawed or tainted and such belief is clearly and appropriately noted in the HECM file; or • such appraisal or AVM was completed pursuant to written, preestablished bona fide pre- or post-Disbursement appraisal review or quality control process or underwriting guidelines and the Mortgagee adheres to a policy of selecting the most reliable appraisal, rather than the appraisal that states the highest value; • withhold or threaten to withhold future business from an Appraiser, or demote or terminate or threaten to demote or terminate an Appraiser in order to influence an Appraiser to arrive at a predetermined or desired value; • make expressed or implied promises of future business, promotions, or increased compensation for an Appraiser in order to influence an Appraiser to arrive at a predetermined or desired value; • allow the removal of an Appraiser from a list of qualified Appraisers or the addition of an Appraiser to an exclusionary list of qualified II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 561 Last Revised: 11/26/2025 Appraisers, used by any entity, without prompt written notice to such Appraiser. The notice must include written evidence of the Appraiser’s illegal conduct, violation of USPAP or state licensing standards, improper or unprofessional behavior, or other substantive reason for removal; • request that an Appraiser provide an estimated, predetermined, or desired valuation in an appraisal report prior to the completion of the appraisal report, or request that an Appraiser provide estimated values or comparable sales at any time prior to the Appraiser’s completion of an appraisal report; • provide to the Appraiser an anticipated, estimated, encouraged, or desired value for a subject Property or a proposed, or target amount to be loaned to the Borrower, except that a copy of the sales contract for purchase and any addendum must be provided; or • perform any other act or practice that impairs or attempts to impair an Appraiser’s independence, objectivity, or impartiality, or that violates any applicable law, regulation, or requirement. (e) Additional Requirements When Ordering an Appraisal The Mortgagee must provide to the selected Appraiser the FHA case number, land lease, surveys, and other legal documents contained in the HECM file necessary to analyze the Property. The Mortgagee must disclose all known information regarding any environmental hazard that is in or on the subject Property, or in the vicinity of the Property, whether obtained from the Borrower, the real estate broker, or any other party to the transaction. Where the Mortgagee determines that the Property is subject to a PACE obligation, it must notify the Appraiser that the PACE obligation will be paid off as a condition of loan approval. (8) Appraisal Effective Date (a) Standard The effective date of the appraisal cannot be before the FHA case number assignment date unless the Mortgagee certifies, via the certification field in the Appraisal Logging Screen in FHAC, that the appraisal was ordered for conventional financing, or other government-guaranteed loan purposes and was performed by an FHA Roster Appraiser, or the previous FHA case number was canceled. The Mortgagee must ensure that the appraisal was performed in accordance with FHA appraisal reporting instructions as detailed in this Handbook 4000.1 II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 562 Last Revised: 11/26/2025 and the Appraisal Report and Data Delivery Guide. The intended use of the appraisal must indicate that it is solely to assist FHA in assessing the risk of the Property securing the HECM. Additionally, FHA and the Mortgagee must be indicated as the intended users of the appraisal report. (b) Required Documentation The Mortgagee must retain documentation in the case binder substantiating conversion of the Mortgage to FHA. (9) Transferring Existing Appraisals In cases where the Borrower has switched Mortgagees, the first Mortgagee must, at the Borrower’s request, transfer the appraisal to the second Mortgagee within five business days. The Appraiser is not required to provide the appraisal to the new Mortgagee. The client name on the appraisal does not need to reflect the new Mortgagee. If the original Mortgagee has not been reimbursed for the cost of the appraisal, the Mortgagee is not required to transfer the appraisal until it is reimbursed. The second Mortgagee may not request the Appraiser to readdress the appraisal. If the second Mortgagee finds deficiencies in the appraisal, the Mortgagee must order a new appraisal. Where a Mortgagee uses an existing appraisal for a different Borrower, the Mortgagee must enter the new Borrower’s information in FHAC. The Mortgagee must collect an appraisal fee from the new Borrower and refund the fee to the original Borrower. If a Case Transfer is involved, the new Mortgagee must enter the Borrower’s information in FHAC. The new Mortgagee must collect an appraisal fee from the Borrower and send the fee to the original Mortgagee, who, in turn, must refund the fee to the original Borrower. (10) Ordering Second Appraisal (a) Collateral Risk Assessment (i) Definition Closing Date refers to the date on which the Borrower signs the Note. Collateral Risk Assessment refers to FHA’s automated process that is used to establish the appraised value of the property that will serve as collateral for the HECM. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 563 Last Revised: 11/26/2025 Electronic Appraisal Delivery (EAD) refers to a web-based platform where Mortgagees or their designated technology service providers electronically deliver FHA Single Family appraisal reports prior to endorsement. (ii) Standard If FHA’s collateral risk assessment determines a second appraisal is required, the Mortgagee must order the second appraisal from an Appraiser not associated with the same appraisal company as the first appraisal. The Mortgagee must allot adequate time prior to the planned Closing Date to allow for obtaining a second appraisal, if required. The cost of the second appraisal is eligible to be financed as part of the closing costs. (b) Ordering Second Appraisal The Mortgagee is prohibited from ordering an additional appraisal to achieve an increase in value for the Property and/or the elimination or reduction of deficiencies and/or repairs required. (i) Second Appraisal by Original Mortgagee A second appraisal may only be ordered if: • FHA’s collateral risk assessment determines a second appraisal is required. The cost of the second appraisal may be financed as part of the closing costs; or • the Direct Endorsement (DE) underwriter (underwriter) determines the first appraisal is materially deficient and the Appraiser is unable to resolve or uncooperative in resolving the deficiency. The Mortgagee must fully document the deficiency and status of the appraisal in the mortgage file. The Mortgagee must pay for the second appraisal. Material deficiencies on appraisals are those deficiencies that have a direct impact on value and marketability. Material deficiencies include, but are not limited to: • failure to report readily observable defects that impact the health and safety of the occupants and/or structural soundness of the house; • reliance upon outdated or dissimilar comparable sales when more recent and/or comparable sales were available as of the effective date of the appraisal; and • fraudulent statements or conclusions when the Appraiser had reason to know or should have known that such statements or II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 564 Last Revised: 11/26/2025 conclusions compromise the integrity, accuracy, and/or thoroughness of the appraisal submitted to the client. (ii) Second Appraisal by Second Mortgagee A second appraisal may only be ordered by the second Mortgagee under the following limited circumstances: • the first appraisal contains material deficiencies as determined by the underwriter for the second Mortgagee; • the Appraiser performing the first appraisal is prohibited from performing appraisals for the second Mortgagee; or • the first Mortgagee fails to provide a copy of the appraisal to the second Mortgagee in a timely manner, and the failure would cause a delay in closing and harm to the Borrower, including loss of interest rate lock, violation of sales contract deadline, occurrence of foreclosure proceedings, and imposition of late fees. (iii) Use of Second Appraisal For the first two cases outlined above, the Mortgagee must rely only on the second appraisal and ensure that copies of both appraisals are retained in the case binder. For the third case above, the first appraisal must be added to the case binder if it is received. (iv) Required Documentation The Mortgagee must document why a second appraisal was ordered and retain the explanation and all appraisal reports in the case binder. (11) Ordering an Update to an Appraisal The Mortgagee may only order an update if (1) it is a Mortgagee listed as an intended user of the original appraisal or (2) it has received permission from the original client and the Appraiser. The Appraiser incorporates the original appraisal report being updated by attachment rather than by reference per Advisory Opinion 3 of the USPAP. The Mortgagee may use an appraisal update only if: • it is performed by an FHA Appraiser who is currently in good standing on the FHA Appraiser Roster; • if a substitute Appraiser is used due to the lack of the original Appraiser availability, the substitute Appraiser must state they concur with the analysis and conclusions in the original appraisal report, and the Mortgagee must document in the case binder why the original Appraiser was not used; • the Property has not declined in value; II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 565 Last Revised: 11/26/2025 • the building improvements that contribute value to the Property can be observed from the street or a public way; • the Property meets Minimum Property Requirements (MPR) and Minimum Property Standards (MPS) based on the original appraisal conditions; • the appraisal update was performed by the Appraiser within one year from the effective date of the initial appraisal being updated; and • the appraisal update is performed before the Disbursement Date. (12) Appraisal Delivery – Electronic Appraisal Delivery (a) Definition The Electronic Appraisal Delivery (EAD) refers to a web-based platform where Mortgagees or their designated technology service providers electronically deliver FHA Single Family appraisal reports prior to endorsement. (b) Standard Mortgagees or their designated technology service providers must deliver appraisals through FHA’s EAD portal. (c) Required Documentation Appraisals submitted through FHA’s EAD portal are the appraisals required for endorsement.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part II — a. Applications and Disclosures (03/19/2025) · source URL · snapshot 8c03836f77f317e1