FHA Single Family Housing Policy Handbook 4000.1, Part II — c. Property Charge Payment History Review Requirements (04/29/2024)

FHA Single Family Housing Policy Handbook 4000.1, Part II — c. Property Charge Payment History Review Requirements (04/29/2024)

c. Property Charge Payment History Review Requirements (04/29/2024) i. Definition Property Charges refer to obligations of the Borrower that include: • property taxes; • Hazard Insurance premiums; • applicable Flood Insurance premiums; • Ground Rents; • Condominium Fees; • Planned Unit Development (PUD) fees; • Homeowners’ Association (HOA) Fees; and • other special assessments that may be levied by municipalities or state law. ii. Standard The Mortgagee must determine if the Borrower has demonstrated the willingness to timely meet their financial obligations by analyzing the Borrower’s property charge payment history. The Mortgagee must analyze each applicable Property Charge for the preceding 24 months from the time of loan application, except for Hazard and Flood Insurance. The Mortgagee must take into consideration that some Borrowers seek a HECM due to financial difficulties, which may be reflected on the Borrower’s property II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 627 Last Revised: 11/26/2025 charge payment history. The Mortgagee must also consider to what extent the proceeds of the HECM could provide a solution to any such financial difficulties. Where the Borrower owns no other real estate and has changed their Principal Residence within the last 24 months, the Mortgagee must review the property charge payment history for the current Principal Residence and the most recent prior Principal Residence(s) for a combined 24 months. (A) Property Taxes The Borrower’s property tax payment history from all taxing authorities, including school, city, county, state, etc., must be verified for the preceding 24 months for all owned real estate. Verification may be in the form of written statements or online printouts from the taxing authority or through copies of bills and canceled checks or other equivalent proof of payment. Alternatively, the Mortgagee may obtain verification from a third-party vendor. Where the Mortgagee can document that property taxes were paid by the servicing Mortgagee through an escrow account, Mortgagees may rely upon monthly mortgage payment history reported on the credit report to establish property tax payment history. (1) Manufactured Homes Taxed as Personal Property The Mortgagee is not required to verify the Borrower’s personal property tax payment history for a Manufactured Home that is not taxed as real estate. (2) Waiver or Deferral of Property Taxes Where a taxing authority has permanently waived or otherwise permanently exempted the Borrower from payment of property taxes (i.e., taxes are not Due and Payable and do not accrue or result in a first lien against the Property), such taxes may be excluded from the expense analysis. Documentation for the waiver or exemption must be placed in the case binder. Where a Borrower is participating in a Real Estate Tax Deferral Program, such taxes may be excluded from the expense analysis. Documentation for the Real Estate Deferral Program that supports the exclusion of property tax expenses from the expense analysis must be placed in the case binder. (B) Hazard Insurance and Flood Insurance Mortgagees must determine whether the Property has Hazard Insurance and Flood Insurance, if applicable. The Mortgagee must review the insurance payment history to ensure continuous coverage for the preceding 12 months. Copies of bills and canceled checks or equivalent proof of payment may be utilized. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 628 Last Revised: 11/26/2025 (C) Ground Rent For all Properties subject to ground rents, Mortgagees must obtain from the lessor or its management agent a written statement documenting payments, or copies of bills and canceled checks for the preceding 24 months. (D) Condominium, PUD, and HOA Fees The Mortgagee must obtain verification of the Borrower’s Condominium, PUD, or HOA fee payment history for all owned real estate for the preceding 24 months from the entity levying the fee or its authorized agent. In lieu of direct verification, copies of bills and canceled checks or equivalent proof of payment may be utilized. (E) Other Special Assessments Mortgagees must obtain for all owned real estate from the party levying the assessment or its management agent a written statement documenting payments, or copies of bills and canceled checks, or equivalent proof of payment for the preceding 24 months. iii. Satisfactory Property Charge Payment History The Mortgagee may consider the Borrower to have a satisfactory property charge payment history where, at the time of loan application, all property taxes, HOA, condominium, and PUD fees for all owned real estate are current and there were no property charge delinquencies in the previous 24 months. If Hazard Insurance and Flood Insurance, if applicable, were not in place for the Borrower’s Principal Residence for the previous 12 months, the Borrower must obtain coverage and prepay for 12 months at or before mortgage closing. iv. Property Charge Payment History Requiring Further Analysis If a Borrower’s property charge payment history is not satisfactory, the Borrower’s property charge payment history requires additional analysis. The Mortgagee must determine whether late payments and/or the assessment of late fees or penalties were based on a disregard for financial obligations, an inability to manage debt, or Extenuating Circumstances. If the Mortgagee can document the late payments and/or the assessment of late fees or penalties were solely due to the servicing Mortgagee’s untimely payment from an escrow account, then the Mortgagee may consider the Borrower to have a satisfactory property charge payment history. As such, the late payment by the servicing Mortgagee is not considered an Extenuating Circumstance. Where the Borrower has not demonstrated the willingness to meet their financial obligations as stated in Satisfactory Property Charge Payment History and no II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 629 Last Revised: 11/26/2025 Extenuating Circumstances can be documented, the Mortgagee must, at a minimum, require a Fully Funded LESA. Where a Fully Funded LESA is required, the Mortgagee must still determine, through the financial assessment, that the HECM will provide the Borrower with a sustainable solution, permitting the satisfaction of financial obligations in a timely manner. See Final HECM Decision for additional information. v. Required Documentation The Mortgagee must document the property charge payment history analysis in the HECM file. Any explanation or documentation of late payments must be consistent with other information in the file.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part II — c. Property Charge Payment History Review Requirements (04/29/2024) · source URL · snapshot 8c03836f77f317e1