FHA Single Family Housing Policy Handbook 4000.1, II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT > B. Title II Insured Housing Programs Reverse Mortgages > 8. Programs and Products - HECM For Purchase (11/10/2026) — a. HECM For Purchase

(B) Construction and Inspection Requirements for New Construction HECM Properties Mortgagees must ensure New Construction HECM Properties are inspected to ensure compliance with FHA’s MPS and MPR. The construction status at the time of appraisal will determine the inspections that must be completed. (1) Site Built Housing

(a) Proposed Construction For Properties in the Proposed Construction status at time of appraisal, the Mortgagee must obtain one of the following prior to closing and provide the applicable documentation in the case binder: • copies of the building permit (or equivalent) and CO (or equivalent); or • three inspections (footing, framing, and final) performed by the local authority with jurisdiction over the Property or an ICC certified RCI or CI (for Modular Housing, footing and final only); or • in the absence of such ICC certified RCI or CI, the Mortgagee may obtain three inspections (footing, framing, and final) performed by a disinterested third party, who is a registered architect, a structural engineer, or a qualified trades person or contractor, and has met the licensing and bonding requirements of the state in which the Property is located.

(b) Under Construction For Properties in the Under Construction status at time of appraisal, the Mortgagee must obtain one of the following prior to closing and provide the applicable documentation in the case binder: • copies of the building permit (or equivalent) and CO (or equivalent); or • a final inspection issued by the local authority with jurisdiction over the Property or by an ICC certified RCI or CI; or • in the absence of such ICC certified RCI or CI, the Mortgagee may obtain a final inspection performed by a disinterested third party, who is a registered architect, a structural engineer, or a qualified trades person or contractor, and has met the licensing and bonding requirements of the state in which the Property is located.

(c) Existing Less than One Year For Properties in the Existing Less than One Year status at time of appraisal, the Mortgagee must obtain one of the following prior to closing and provide the applicable documentation in the case binder: • a copy of the CO (or equivalent); or • a final inspection issued by the local authority with jurisdiction over the Property or by an ICC certified RCI or CI; or • in the absence of such ICC certified RCI or CI, the Mortgagee may obtain a final inspection performed by a disinterested third-party, who is a registered architect, a structural engineer, or a qualified trades person or contractor, and has met the licensing and bonding requirements of the State in which the property is located. (2) Manufactured Housing (a) Proposed Construction For Properties in the Proposed Construction status at time of appraisal, the Mortgagee must obtain one of the following prior to closing and provide the applicable documentation in the case binder: • copies of the building permit (or equivalent) and CO (or equivalent); or • two inspections (initial and final) performed by the local authority with jurisdiction over the Property or an ICC certified RCI or CI; or • in the absence of a local authority with building code jurisdiction or ICC certified RCI or CI, the Mortgagee may obtain two inspections (initial and final) performed by a disinterested third party, who is a registered architect, a structural engineer, or a qualified trades person or contractor, and has met the licensing and bonding requirements of the state in which the Property is located. (b) Under Construction For Properties in the Under Construction status at time of appraisal, the Mortgagee must obtain one of the following prior to closing and provide the applicable documentation in the case binder: • copies of the building permit (or equivalent) and CO (or equivalent); or • a final inspection performed by the local authority with jurisdiction over the Property or an ICC certified RCI or CI; or • in the absence of a local authority with building code jurisdiction or ICC certified RCI or CI, the Mortgagee may obtain a final inspection performed by a disinterested third party, who is a registered architect, a structural engineer, or a qualified trades person or contractor, and has met the licensing and bonding requirements of the state in which the Property is located. (c) Existing Less than One Year For Properties in the Existing Less than One Year status at time of appraisal, the Mortgagee must obtain one of the following prior to closing and provide the applicable documentation in the case binder: • a copy of the CO (or equivalent); or • a final inspection performed by the local authority with jurisdiction over the Property or an ICC certified RCI or CI; or • in the absence of a local authority with building code jurisdiction or ICC certified RCI or CI, the Mortgagee may obtain a final inspection performed by a disinterested third-party, who is a registered architect, a structural engineer, or a qualified trades person or contractor, and has met the licensing and bonding requirements of the State in which the property is located. (3) Units in Condominium Project or Legal Phase (Existing Less Than One Year) The Mortgagee must obtain a CO or its equivalent. (4) Required Documentation for New Construction Properties The Mortgagee must obtain and include the following documents in the case binder: • form HUD-92541, Builder’s Certification of Plans, Specifications, and Site; • form HUD-92544, Warranty of Completion of Construction; • a copy of the CO (or equivalent), if applicable; • required inspections, as applicable: • inspections performed by an ICC certified RCI or CI or a third-party, who is a registered architect, a structural engineer, or a qualified trades person or contractor must be reported on form HUD-92051, Compliance Inspection Report, or on an appropriate state-sanctioned inspection form; and • when a third party, who is a registered architect, a structural engineer, or a qualified tradesperson or contractor, is relied upon for required inspections due to the absence of an ICC certified RCI or CI, a certification from such inspector that they are licensed and bonded under applicable state and local laws to perform the type of inspection completed must be included; • a Wood Infestation Report, unless the Property is located in a county listed as not required on HUD’s “Termite Treatment Exception Areas” list: • form HUD-NPMA-99-A, Subterranean Termite Protection Builder’s Guarantee, is required for all New Construction. If the building is constructed with steel, masonry, or concrete building components with only minor interior wood trim and roof sheathing, no treatment is needed. The Mortgagee must ensure that the builder notes on the form that the construction is masonry, steel, or concrete. • form HUD-NPMA-99-B, New Construction Subterranean Termite Service Record, is required when the New Construction Property is treated with one of the following: Termite Bait System, Field Applied Wood Treatment, soil chemical termiticide, or Physical Barrier System is installed, as reflected on form HUD-NPMA-99-A. The Mortgagee must reject the use of post construction soil treatment when the termiticide is applied only around the perimeter of the foundation; and • local Health Authority well water analysis and/or septic report, where required by the local jurisdictional authority.

(E) Mortgagee Review of Appraisal (1) Site Considerations

(a) Environmental The Mortgagee must require corrective work to mitigate any condition that arises during construction that may affect the health and safety of the occupants, the Property’s ability to serve as collateral, or the structural soundness of the improvements.

(b) Operating Oil or Gas Wells If a New Construction dwelling is located within 75 feet of an operating oil or gas well, the Mortgagee must reject the Property unless mitigation measures are completed.

(c) Slush Pits If a Property is Proposed Construction near an active or abandoned Slush Pit, the Appraiser must require a survey to locate the pit. The Mortgagee is to assess any impact on the subject Property.

(d) Special Airport Hazards If a New Construction Property is located within Runway Clear Zones (also known as Runway Protection Zones) at civil airports or within Clear Zones at military airfields, the Mortgagee must reject the Property for insurance. Properties located in Accident Potential Zone 1 (APZ 1) at military airfields may be eligible for FHA mortgage insurance provided that the Mortgagee determines that the Property complies with Department of Defense guidelines.

(e) Flood Hazard Areas If any portion of the dwelling and related Structures or equipment essential to the Property Value is located in a Special Flood Hazard Area (SFHA), the Mortgagee must reject the Property, unless the Mortgagee: • obtains a Federal Emergency Management Agency (FEMA)-issued final Letter of Map Amendment (LOMA) or final Letter of Map Revision (LOMR) that removes the Property from the SFHA; or • obtains a FEMA National Flood Insurance Program (NFIP) Elevation Certificate (FEMA Form FF-206-FY-22-152) that documents that the lowest floor of the residential building, including the basement, and all related Structures or equipment essential to the Property Value are built at or above the 100-year flood elevation in compliance with the NFIP criteria; and • ensures that the Elevation Certificate is completed based on finished construction. The Mortgagee must include the LOMA, LOMR, or FEMA NFIP Elevation Certificate (FEMA Form FF-206-FY-22-152) with the case when it is submitted for endorsement. The Mortgagee must ensure that Flood Insurance is obtained when a FEMA NFIP Elevation Certificate (FEMA Form FF-206-FY-22-152) documents that the Property remains located within an SFHA.

(f) Individual Water Supply Systems (Wells) The Mortgagee must ensure that new wells are drilled and are no less than 20 feet deep and cased. Casing should be steel or other casing material that is durable, leak-proof, and acceptable to either the local health authority or the trade or profession licensed to drill and repair wells in the local jurisdiction. A well located within the foundation walls of New Construction is not acceptable except in arctic or subarctic regions. (i) Requirements for Well Water Testing A well water test is required for all newly constructed Properties. All testing must be performed by a disinterested third party. This includes the collection and transport of the water sample collected at the water supply source. The sample must be collected and tested by the local health authority, a commercial testing laboratory, a licensed sanitary engineer, or other party that is acceptable to the local health authority. At no time will the Borrower/owner or other Interested Party collect and/or transport the sample. The following tables provide the minimum distance required between wells and sources of pollution: Water Well Location Minimum Property Standards for New Construction 24 CFR § 200.926d(f)(3)(iv)* 1 Property line/10 feet 2 Septic tank/50 feet 3 Absorption field/100 feet 4 Seepage pit or cesspool/100 feet 5 Sewer lines with permanent water-tight joints/10 feet 6 Other sewer lines/50 feet 7 Chemically poisoned soil/25 feet (reduced to 15 feet where ground surface is protected by impervious strata of clay, hardpan, or rock) 8 Dry well/50 feet 9 Other – refer to local health authority minimums * distance requirements of local authority prevail if greater than stated above The following provides the minimum standards for Individual Water Supply Systems (wells): Individual Water System Minimum Property Standards for New Construction 24 CFR § 200.926d(f)(1) and (2) 1 Lead-free piping 2 If no local chemical and bacteriological water standards, state standards apply 3 Connection of public water whenever feasible 4 Wells must deliver water flow of five gallons per minute over at least a four-hour period (ii) Required Documentation The Mortgagee must obtain a valid water test from the local health authority or a lab qualified to conduct water testing in the jurisdictional state or locality. When a well test is required, the report may not be more than 180 Days old from the Disbursement Date.

(g) Shared Well (i) Definition Shared Well refers to a well that services two to four homes where there is a binding Shared Well Agreement between the property owners that meets FHA requirements. (ii) Standard A Shared Well is permitted if the requirements in Shared Wells are met.

(H) Restrictions on Property Flipping Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit with an artificially inflated value. (1) Definition Property Flipping refers to the purchase and subsequent resale of a Property in a short period of time. Seller’s Date of Acquisition refers to the date the seller acquired legal ownership of that Property. Resale Date refers to the date all parties have executed the sales contract that will result in the FHA-insured HECM for the resale of the Property. (2) Standard

(a) Time Restriction on Transfers of Title The eligibility of a Property for a HECM insured by FHA is determined by the time that has elapsed between the date the seller has acquired title to the Property and the resale date.

(b) Restriction on Resales Occurring 90 Days or Fewer after Acquisition A Property that is being resold 90 Days or fewer following the seller’s date of acquisition is not eligible for an FHA-insured HECM.

(c) Exceptions to Time Restrictions on Resale Exceptions to the 90-Day resale restriction are: • Properties acquired by an employer or relocation agency in connection with the relocation of an employee; • resales by HUD under its REO program; • sales by other U.S. government agencies of Single Family Properties pursuant to programs operated by these agencies; • sales of Properties by nonprofits approved to purchase HUD-owned Single Family Properties at a discount with resale restrictions; • sales of Properties that are acquired by the seller by inheritance; • sales of Properties by state and federally chartered financial institutions and Government-Sponsored Enterprises (GSEs); • sales of Properties by local and state government agencies; and • sales of Properties within Presidentially-Declared Major Disaster Areas (PDMDA), only upon issuance of a notice of an exception from HUD. The restrictions listed above and those in 24 CFR § 206.52(b) do not apply to a builder selling a newly built house or building a house for a Borrower planning to use FHA-insured financing. (3) Required Documentation The Mortgagee must obtain a 12-month chain of title documenting compliance with time restrictions on resales.

(A) Standard The Mortgagee must not originate an insured HECM for the purchase of a Property if any provision of the sales contract violates FHA requirements. The Mortgagee must ensure that (1) all purchasers listed on the sales contract are Borrowers, and (2) only those Borrowers may sign the sales contract. The Mortgagee may also list a Non-Borrowing Spouse (NBS) on the sales contract, but the NBS is not required to sign the sales contract. An addendum or modification may be used to remove or correct any provisions of the sales contract that do not conform to these requirements.

(1) Amendatory Clause If the Borrower does not receive form HUD-92800.5B before signing the sales contract, the sales contract must include or be amended before closing to include an amendatory clause that contains the following language: “It is expressly agreed that notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money deposits or otherwise, unless the purchaser has been given, in accordance with HUD/FHA or VA requirements, a written statement by the Federal Housing Commissioner, Department of Veterans Affairs, or a Direct Endorsement lender setting forth the appraised value of the property of not less than $___________*. The purchaser shall have the privilege and option of proceeding with consummation of the contract without regard to the amount of the appraised valuation. The appraised valuation is arrived at to determine the maximum mortgage the Department of Housing and Urban Development will insure. HUD does not warrant the value or condition of the property. The purchaser should satisfy himself/herself that the price and condition of the property are acceptable.” Mortgagees must ensure the actual dollar amount of the sales price stated in the contract has been inserted in the amendatory clause. Increases to the sales price require a revised amendatory clause. An amendatory clause is not required in connection with: • HUD Real Estate Owned (REO) sales; or • sales in which the seller is: • Fannie Mae; • Freddie Mac; • U.S. Department of Veterans Affairs (VA); • United States Department of Agriculture (USDA) Rural Housing Services; • other federal, state, and local government agencies; • a Mortgagee disposing of REO assets; or • a seller at a foreclosure sale.

(2) Real Estate Certification The Borrower, seller, and real estate agent or broker involved in the sales transaction must certify, to the best of their knowledge and belief, that (1) the terms and conditions of the sales contract are true and (2) any other agreement entered into by any parties in connection with the real estate transaction is part of, or attached to, the sales agreement. A separate certification is not needed if the sales contract contains a statement that (1) there are no other agreements between parties and the terms constitute the entire agreement between the parties, and (2) all parties are signatories to the sales contract submitted at the time the financial assessment is performed.

(3) Property Assessed Clean Energy Where the subject Property is encumbered with a Property Assessed Clean Energy (PACE) obligation, the sales contract must include a clause specifying that the PACE obligation will be satisfied by the seller at, or prior to, closing.

(A) Credit History Requirements (1) Types of Credit History If a traditional credit report is available, the Mortgagee must use a traditional credit report. If a traditional credit report is not available, the Mortgagee must develop the Borrower’s credit history using the requirements for non-traditional and insufficient credit.

(a) Non-Traditional Credit Requirements For Borrowers without a credit score, the Mortgagee must either obtain a Non-Traditional Mortgage Credit Report (NTMCR) from a credit reporting company or independently develop the Borrower’s credit history using the requirements outlined below.

(b) Non-Traditional Mortgage Credit Report (i) Definition A Non-Traditional Mortgage Credit Report (NTMCR) is designed to access the credit history of a Borrower who does not have the types of trade references that appear on a traditional credit report and is used either as: • a substitute for a Tri-Merged Credit Report (TRMCR) or a Residential Mortgage Credit Report (RMCR); or • a supplement to a traditional credit report that has an insufficient number of trade items reported to generate a credit score. (ii) Standard Mortgagees may use an NTMCR developed by a credit reporting agency that verifies the following information for all non-traditional credit references: • the existence of the credit providers; • that the credit was actually extended to the Borrower; and • the creditor has a published address or telephone number. The NTMCR must not include subjective statements such as “satisfactory” or “acceptable,” must be formatted in a similar fashion to traditional references, and provide: • creditor’s name; • date of opening; • high credit; • current status of the account; • 12-month history of the account; • required monthly payment; • unpaid balance; and • payment history in the delinquency categories (for example, 0x30 and 0x60). (iii)Independent Verification of Non-Traditional Credit The Mortgagee may independently verify the Borrower’s credit references by documenting the existence of the credit provider and that the provider extended credit to the Borrower. To verify the existence of each credit provider, the Mortgagee must review public records from the state, county, or city or other documents providing a similar level of objective information. To verify credit information, the Mortgagee must: • use a published address or telephone number for the credit provider and not rely solely on information provided by the Borrower; and • obtain the most recent 12 months of canceled checks, or equivalent proof of payment, demonstrating the timing of payment to the credit provider. To verify the Borrower’s rental payment history, the Mortgagee must obtain a rental reference from the appropriate rental management company, provided the Borrower is not renting from a Family Member, demonstrating the timing of payment of the most recent 12 months in lieu of 12 months of canceled checks or equivalent proof of payment. (iv) Sufficiency of Credit References To be sufficient to establish the Borrower’s credit, the credit history must include three credit references. The Borrower’s credit history must include at least one of the following: • rental housing payments (subject to independent verification if the Borrower is a renter); • telephone service; or • utility company reference (if not included in the rental housing payment), including: • gas; • electricity; • water; • television service; or • internet service. If the Mortgagee cannot obtain all three credit references from the list above, the Mortgagee may use the following sources of unreported recurring debt to obtain the remaining one or two credit references needed: • insurance premiums not payroll deducted (for example, medical, auto, life, or renter’s insurance); • payment to child care providers made to businesses that provide such services; • school tuition; • retail store credit cards (for example, from department, furniture, appliance stores, or specialty stores); • rent-to-own (for example, furniture, appliances); • payment of that part of medical bills not covered by insurance; • a documented 12-month history of savings evidenced by regular deposits resulting in an increased balance to the account that: • were made at least quarterly; • were not payroll deducted; and • caused no Insufficient Funds (NSF) checks; • an automobile lease; • a personal loan from an individual with repayment terms in writing and supported by canceled checks to document the payments; or • a documented 12-month history of payment by the Borrower on an account for which the Borrower is an authorized user. (2) Bankruptcy (a) Chapter 7 A Chapter 7 bankruptcy (liquidation) does not disqualify a Borrower from consideration for a HECM for Purchase if, at the time of case number assignment, at least two years have elapsed since the date of the bankruptcy discharge. During the most recent two years, the Borrower must have: • reestablished good credit; or • chosen not to incur new credit obligations. An elapsed period of less than two years, but not less than 12 months, may be acceptable, if the Borrower: • can show that the bankruptcy was caused by Extenuating Circumstances beyond the Borrower’s control; and • has since exhibited a documented ability to manage their financial affairs in a responsible manner. (b) Chapter 13 A Chapter 13 bankruptcy does not disqualify a Borrower from consideration for a HECM for Purchase, if at the time of case number assignment, the bankruptcy has been discharged or at least 12 months of the payout period under the bankruptcy has elapsed. If the bankruptcy has not been discharged, the Mortgagee must determine that, during the most recent 12 months, the Borrower’s payment performance has been satisfactory, all required payments have been made on time, and the Borrower has received written permission from the bankruptcy court to enter into the mortgage transaction. The Mortgagee must include the payment amount in the court-approved payment plan in the Borrower’s expenses when calculating Residual Income.

(c) Required Documentation If the credit report does not verify the discharge date or additional documentation is necessary to determine if any liabilities were discharged in the bankruptcy, the Mortgagee must obtain the bankruptcy and discharge documents. The Mortgagee must also document that the Borrower’s current situation indicates that the events that led to the bankruptcy are not likely to recur.

(C) Asset Requirements – Acceptable Sources of Funds (1) Earnest Money Deposit The Mortgagee must verify and document the deposit amount and source of funds if the amount of the earnest money deposit exceeds 1 percent of the sales price or is excessive based on the Borrower’s history of accumulating savings, by obtaining: • a copy of the Borrower’s canceled check; • certification from the deposit-holder acknowledging receipt of funds; • a Verification of Deposit (VOD) or bank statement showing that the average balance was sufficient to cover the amount of the earnest money deposit at the time of the deposit; or • direct verification by a Third Party Verification (TPV) vendor, subject to the following requirements: • the Borrower has authorized the Mortgagee to verify assets; • the date of the completed verification conforms with FHA requirements in Maximum Age of HECM Documents; and • the information shows that the average balance was sufficient to cover the amount of the earnest money deposit at the time of the deposit. If the source of the earnest money deposit was a Gift, the Mortgagee must verify that the Gift is in compliance with Standards for Gifts. (2) Monetary Investment

(a) Definition Monetary Investment refers to the amount Borrowers must provide to satisfy the difference between the Principal Limit and the sale price for the Property, plus any HECM-related fees that are not financed into the HECM, minus the amount of the earnest deposit.

(b) Source Requirements for the Borrower’s Monetary Investment (i) Acceptable Monetary Investment Funding Sources To satisfy the required monetary investment, Borrowers may use: • Cash on Hand; • cash from the sale or liquidation of the Borrower’s assets; • HECM proceeds; • Interested Party Contributions; and • other Acceptable Sources of Funds. A Family Member entitled to the commission may also provide it as a Gift, in compliance with standard gift requirements. A Borrower who also serves as the licensed real estate agent on a HECM for Purchase transaction may use the real estate commission to satisfy the required monetary investment. The Borrower may choose to provide a larger investment amount in order to retain a portion of the available HECM proceeds for future draws. (ii) Unacceptable Monetary Investment Funding Sources The Borrower may not use the following funding sources to satisfy the required monetary investment: • Sweat Equity; • Trade Equity; • rent credit; or • Premium Pricing. (iii)Required Documentation The Mortgagee must document that the Borrower’s monetary investment is from an acceptable monetary investment funding source and there will be no outstanding or unpaid obligations incurred by the Borrower in connection with the HECM for Purchase transaction. The Mortgagee must verify and document that the Borrower, or Family Member giving the commission as a Gift, is a licensed real estate agent, and is entitled to a Real Estate Commission from the Sale of the Subject Property being purchased. (3) Interested Party Contributions (a) Definitions Interested Parties refer to sellers, real estate agents, builders, developers, Mortgagees, Third-Party Originators (TPO), or other parties with an interest in the transaction. Interested Party Contribution refers to a payment by an Interested Party or combination of parties, toward the Borrower’s loan origination fees, other closing costs including any items Paid Outside Closing (POC), and prepaid items. (b) Standard Interested Parties, excluding Mortgagees and TPOs, may contribute up to 6 percent of the sales price toward the following items: • loan origination fees; • other closing costs; • prepaid items; and • payment of the IMIP. No other items may be paid for by an Interested Party. Mortgagees and TPOs are prohibited from making any Interested Party Contributions. Exceptions Fees required to be paid by a seller under state or local law or customarily paid by a seller in the subject property locality, including real estate agent commissions or fees, and the purchase of the Home Warranty policy by the seller are already permitted under 24 CFR § 206.44(c)(1) and will be excluded from the six percent interested party contribution limit. Mortgagees may pay for services performed by a sponsored TPO if allowed under the Loan Origination Fee Calculation requirements. The satisfaction of a PACE lien or obligation against the Property by the property owner is not considered an Interested Party Contribution.

(c) Required Documentation The Mortgagee must accurately document the total amount of Interested Party Contributions on the HUD-1 Settlement Statement, and reflected on the sales contract or applicable legally binding document. When a legally binding document other than the sales contract is used to document the Interested Party Contributions, the Mortgagee must provide a copy of this document to the assigned Appraiser.

(D) Closing Costs and Fees

(1) Mandatory Obligations The Mortgagee may use HECM proceeds to satisfy the Borrower’s Mandatory Obligations. Mandatory Obligations include: • IMIP; • loan origination fee; • HECM counseling fee; • reasonable and customary amounts, but not more than the amount actually paid by the Mortgagee for any of the following items: • recording fees and recording taxes or other charges incident to the recordation of the insured HECM; • credit report; • survey, if required by the Mortgagee or the Borrower; • title examination; • Mortgagee’s title insurance; and • fees paid to an Appraiser for the initial appraisal of the Property; • delinquent Federal Debt; • fees and charges for real estate sales contracts, warranties, inspections, surveys, and engineer certifications; • the total amount of property tax and Flood and Hazard Insurance charges scheduled for payment during the First 12-Month Disbursement Period from a Fully Funded LESA. Mortgagees must use the actual insurance premium and actual tax amount; • property tax and Flood and Hazard Insurance payments required by the Mortgagee to be paid at closing; • the amount of the principal that is advanced toward the purchase price of the subject Property; • other charges as authorized by the Secretary; and • for adjustable rate HECMs: • the total amount of property charge payments scheduled for payment through the optional Borrower authorized option during the First 12- Month Disbursement Period; and • the total amount of semiannual Disbursements scheduled to be made during the First 12-Month Disbursement Period to the Borrower from a Partially Funded LESA.

(2) Property Assessed Clean Energy The PACE obligation must be paid off in full by the seller prior to or at closing.

(3) Discount Points and Interest Rate Buydowns The Mortgagee may not charge Discount Points. Temporary and permanent interest rate buydowns are not permitted.

(4) Interested Party Contributions on the HUD-1 Settlement Statement The Mortgagee may apply permissible Interested Party Contributions toward the Borrower’s closing costs and other fees required to obtain a HECM. The Mortgagee must identify the total Interested Party Contributions on the front page of the HUD-1 Settlement Statement or similar legal document or in an addendum, and on Exhibit 2 – Schedule of Closing Costs. The Mortgagee must identify each item and fee paid by an Interested Party Contribution.