FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Asset Requirements (08/19/2024)

FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Asset Requirements (08/19/2024)

g. Asset Requirements (08/19/2024) i. General Asset Requirements When calculating sources of funds available to meet closing requirements, the Mortgagee may only consider assets derived from acceptable sources in accordance with the requirements outlined below. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 674 Last Revised: 11/26/2025 The Mortgagee must document all funds that are used to calculate borrower funds that are required to close a HECM, including those to pay: • Mandatory Obligations; • costs outside of closing; • other required cash from the Borrower to close the transaction; or • additional funds the Borrower brings to closing to reduce Mandatory Obligations. (A) Determining the Amount Needed for Closing The amount of cash needed by the Borrower to close an FHA-insured HECM is the difference between Mandatory Obligations and the Principal Limit. (B) Mortgagee Responsibility for Estimating Closing Cost Requirements The Mortgagee must determine the total amount of cash that the Borrower must provide at HECM closing. (1) Loan Origination Fees and Other Closing Costs The Mortgagee may charge a reasonable loan origination fee. The Mortgagee may charge and collect from Borrowers those customary and reasonable closing costs and prepaid items necessary to close the HECM. Charges may not exceed the actual costs. (2) Initial Mortgage Insurance Premium Amounts Any IMIP amounts paid in cash are added to the total cash closing requirements. (3) Real Estate Agent Fees If a Borrower is represented by a real estate agent and must pay any fee directly to the agent, that expense must be included in the total of the Borrower’s closing requirements. (4) Types of Prepaid Items Prepaid items may include flood and hazard insurance premiums, MIPs, and real estate taxes. They must comply with the requirements of the CFPB. ii. Acceptable Sources of Funds The Mortgagee must verify liquid assets from acceptable sources used to calculate availability of funds required to close. Mortgagees may not count the same asset twice (i.e., as a source of imputed income to support Residual Income and as a source of cash to close). II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 675 Last Revised: 11/26/2025 (A) Checking and Savings Accounts (1) Definition Checking and Savings Accounts refer to funds from Borrower-held accounts in a financial institution that allows for withdrawals and deposits. (2) Standard The Mortgagee must verify and document the existence of and amounts in the Borrower’s checking and savings accounts. The Mortgagee must verify and document the source of deposits for recently opened accounts and recent individual deposits of more than 1 percent of the MCA. (3) Required Documentation If the Borrower does not hold the deposit account solely, all non-Borrower parties on the account must provide a written statement that the Borrower has full access and use of the funds. (a) Traditional Documentation The Mortgagee must obtain: • a written Verification of Deposit (VOD) and the Borrower’s most recent statement for each account; or • direct verification by a TPV vendor of the Borrower’s account covering activity for a minimum of the most recent available month for a minimum of one month, subject to the following requirements: • the Borrower has authorized the Mortgagee to use a TPV vendor to verify assets; and • the date of the data contained in the completed verification is current within 30 days of the date of the verification. (b) Alternative Documentation If a VOD is not obtained, a statement showing the previous month’s ending balance for the most recent month is required. If the previous month’s balance is not shown, the Mortgagee must obtain statement(s) for the most recent two months. (B) Cash on Hand (1) Definition Cash on Hand refers to cash held by the Borrower outside of a financial institution. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 676 Last Revised: 11/26/2025 (2) Standard The Mortgagee must verify that the Borrower’s Cash on Hand is deposited in a financial institution or held by the escrow/title company. (3) Required Documentation The Mortgagee must verify and document the Borrower’s Cash on Hand by obtaining an explanation from the Borrower describing how the funds were accumulated and the amount of time it took to accumulate the funds. The Mortgagee must also determine the reasonableness of the accumulation based on the time period during which the funds were saved and the Borrower’s: • income stream; • spending habits; • documented expenses; and • history of using financial institutions. (C) Retirement Accounts (1) Definition Retirement Accounts refer to assets accumulated by the Borrower for the purpose of retirement. (2) Standard The Mortgagee may include the value of assets from the Borrower’s retirement accounts, which includes IRAs, thrift savings plans, 401(k) plans, and Keogh accounts. If the Borrower has an existing loan, the Mortgagee must deduct the outstanding loan balance from the value of the retirement accounts. (3) Required Documentation The Mortgagee must obtain the most recent monthly or quarterly statement to verify and document the existence and amounts in the Borrower’s retirement accounts, the Borrower’s eligibility for withdrawals, and the terms and conditions for withdrawal from any retirement account. If any portion of the asset is required for funds to close, evidence of liquidation is required. (D) Stocks and Bonds (1) Definition Stocks and Bonds are investment assets accumulated by the Borrower. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 677 Last Revised: 11/26/2025 (2) Standard The Mortgagee must determine the value of the stocks and bonds from the most recent monthly or quarterly statement. If the stocks and bonds are not held in a brokerage account, the Mortgagee must determine the current value of the stocks and bonds through TPV. Government- issued savings bonds are valued at the original purchase price unless the Mortgagee verifies and documents that the bonds are eligible for redemption when cash to close is calculated. (3) Required Documentation The Mortgagee must verify and document the existence of the Borrower’s stocks and bonds by obtaining brokerage statement(s) for each account for the most recent two months. Evidence of liquidation is not required. For stocks and bonds not held in a brokerage account, the Mortgagee must obtain a copy of each stock or bond certificate. (E) Private Savings Clubs (1) Definition Private Savings Club refers to a non-traditional method of saving by making deposits into a member-managed resource pool. (2) Standard The Mortgagee may consider Private Savings Club funds that are distributed to and received by the Borrower as an acceptable source of funds. The Mortgagee must verify and document the establishment and duration of the club, and the Borrower’s receipt of funds from the club. The Mortgagee must also determine that the received funds were reasonably accumulated, and not borrowed. (3) Required Documentation The Mortgagee must obtain the club’s account ledgers and receipts, and a verification from the club treasurer that the club is still active. (F) Gifts (1) Definition Gifts refer to the contributions of cash with no expectation of repayment. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 678 Last Revised: 11/26/2025 (2) Standards for Gifts (a) Acceptable Sources of Gifts Funds Gifts may be provided by: • the Borrower’s Family Member; • the Borrower’s employer or labor union; • a close friend with a clearly defined and documented interest in the Borrower; • a charitable organization; or • a governmental agency or that has a program providing homeownership assistance to: • low- or moderate-income families; or • first-time homebuyers. (b) Donor’s Source of Funds Cash on Hand is not an acceptable source of donor gift funds. (3) Required Documentation The Mortgagee must obtain a gift letter signed and dated by the donor and Borrower that includes the following: • the donor’s name, address, and telephone number; • the donor’s relationship to the Borrower; • the dollar amount of the Gift; and • a statement that no repayment is required. Documenting the Transfer of Gifts The Mortgagee must verify and document the transfer of Gifts from the donor to the Borrower in accordance with the requirements below. • For Gifts that will be verified prior to settlement, the Mortgagee must obtain one of the following: • the donor’s bank statement showing the withdrawal and evidence of the deposit into the Borrower’s account; • a copy of the donor’s canceled check and evidence of deposit into the Borrower’s account; • a copy of the donor’s withdrawal receipt and evidence of deposit into the Borrower’s account; or • evidence of the electronic transfer of funds from the donor’s account to the Borrower’s account. • For Gifts that will be verified at settlement, the Mortgagee must obtain one of the following evidencing payment to the settlement agent: • evidence of electronic transfer of funds from the donor’s account; II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 679 Last Revised: 11/26/2025 • bank certified check; • cashier’s check; or • other official bank check . • For Gifts of land, the Mortgagee must obtain: • proof of ownership by the donor; and • evidence of the transfer of title to the Borrower. Regardless of when gift funds are made available to a Borrower or settlement agent, the Mortgagee must be able to make a reasonable determination that the gift funds were not provided by an unacceptable source. (G) Sale of Real Property (1) Definition The Sale of Real Property refers to the sale of Property currently owned by the Borrower. (2) Standard Net proceeds from the Sale of Real Property may be used as a source of acceptable funds. (3) Required Documentation The Mortgagee must verify and document the actual sale and the Net Sale Proceeds by obtaining a fully executed Closing Disclosure or similar legal document. The Mortgagee must also verify and document that it is an Arm’s Length Transaction, and that the Borrower is entitled to the Net Sale Proceeds. (H) Sale of Personal Property (1) Definition Personal Property refers to tangible property, other than Real Property, such as cars, recreational vehicles, stamps, coins, or other collectibles. (2) Standard The Mortgagee must use the lesser of the estimated value or actual sales price when determining the sufficiency of assets to close. (3) Required Documentation Borrowers may sell Personal Property to obtain cash for closing. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 680 Last Revised: 11/26/2025 The Mortgagee must obtain a satisfactory estimate of the value of the item, a copy of the bill of sale, evidence of receipt, and deposit of proceeds. A value estimate may take the form of a published value estimate issued by organizations such as automobile dealers, philatelic or numismatic associations, or a separate written appraisal by a qualified Appraiser with no financial interest in the mortgage transaction. (I) Disaster Relief Grants (1) Definition Disaster Relief Grants refer to grants from a Governmental Entity that provide immediate housing assistance to individuals displaced due to a natural disaster. (2) Required Documentation The Mortgagee must verify and document the Borrower’s receipt of the grant and terms of use. (J) Employer Assistance (1) Definition Employer Assistance refers to benefits provided by an employer to relocate the Borrower or assist in the Borrower’s housing purchase, including closing costs, MIP, or any portion of the monetary investment. Employer Assistance does not include benefits provided by an employer through secondary financing. A salary advance cannot be considered as assets to close. (2) Standard (a) Relocation Guaranteed Purchase The Mortgagee may allow the net proceeds (the relocation guaranteed purchase price minus the outstanding liens and expenses) to be used as cash to close. (b) Employer Assistance Plans The amount received under Employer Assistance Plans may be used as cash to close. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT B. Title II Insured Housing Programs Reverse Mortgages 5. Performing the Financial Assessment of the Borrower Handbook 4000.1 681 Last Revised: 11/26/2025 (3) Required Documentation (a) Relocation Guaranteed Purchase If the Borrower is being transferred by their company under a guaranteed sales plan, the Mortgagee must obtain an executed buyout agreement signed by all parties and a receipt of funds indicating that the employer or relocation service takes responsibility for the outstanding mortgage debt. The Mortgagee must verify and document the agreement guaranteeing employer purchase of the Borrower’s previous residence and the net proceeds from sale. (b) Employer Assistance Plans The Mortgagee must verify and document the Borrower’s receipt of assistance. If the employer provides this benefit after settlement, the Mortgagee must verify and document that the Borrower has sufficient cash for closing.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Asset Requirements (08/19/2024) · source URL · snapshot 8c03836f77f317e1