REV-1 TABLE OF CONTENTS. Page CHAPTER 1. GENERAL INFORMATION

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1 CHAPTER 1. GENERAL INFORMATION TABLE OF CONTENTS Page 1-1 LEGISLATIVE HISTORY PURPOSE OF THE PROGRAM CHARACTERISTICS OF THE MORTGAGE PRINCIPAL LIMIT PAYMENT PLAN CHANGING THE PAYMENT PLAN SHARED APPRECIATION INTEREST RATE COUNSELING MORTGAGE INSURANCE PREMIUM (MIP) INSURANCE OPTIONS SERVICING RECOVERY OF MORTGAGE PROCEEDS DIRECT ENDORSEMENT AND COINSURANCE CHUMS LENDER ACCESS SYSTEM (CLAS) BASIC PROGRAM OUTLINE CHAPTER 2. BORROWER COUNSELING 2-1 PURPOSE ELIGIBLE COUNSELING AGENCIES COUNSELING REFERRAL PROCEDURES BORROWERS LACKING LEGAL COMPETENCY REQUIREMENTS FOR HOUSING COUNSELING SOURCES OF INFORMATION FOR COUNSELING CHAPTER 3. PROPERTY ANALYSIS 3-1 PURPOSE ORDERING THE APPRAISAL AND OBTAINING A CASE NUMBER REQUIREMENTS FOR APPRAISALS ELIGIBLE PROPERTIES REQUIREMENTS FOR EXISTING HOUSING v CHAPTER 3. PROPERTY ANALYSIS (CONT.) 3-6 PROTECTIVE COVENANTS IN HOUSING COMMUNITIES FOR THE ELDERLY

2 3-7 RECEIPT AND LOGGING OF APPRAISALS MAXIMUM CLAIM AMOUNT CONDITIONAL COMMITMENT CASE CANCELLATION CHAPTER 4. MORTGAGE CREDIT ANALYSIS 4-1 PURPOSE BASIC UNDERWRITING ISSUES MORTGAGE CREDIT ELIGIBILITY REQUIREMENTS TITLE EVIDENCE HOME EQUITY CONVERSION MORTGAGES FOR PROPERTY HELD IN TRUST POWER OF ATTORNEY AND CONSERVATORSHIP GUIDELINES REQUIRED MORTGAGE CREDIT DOCUMENTATION MORTGAGE CREDIT ANALYSIS FIRM COMMITMENT CHAPTER 5. CALCULATION OF PAYMENTS 5-1 PURPOSE PERFORMING THE CALCULATIONS PAYMENT PLANS CHANGING PAYMENT PLANS PRINCIPAL LIMIT DETERMINING THE BORROWER'S PRINCIPAL LIMIT DETERMINING THE NET PRINCIPAL LIMIT DETERMINING TERM OR TENURE MONTHLY PAYMENTS DETERMINING LINE OF CREDIT PAYMENTS COMBINING A LINE OF CREDIT WITH TENURE OR TERM PAYMENTS CHANGING A PAYMENT PLAN PARTIAL PREPAYMENTS CALCULATIONS FOR SHARED APPRECIATION MORTGAGES CHAPTER 6. CLOSING AND ENDORSEMENT 6-1 PURPOSE vi CHAPTER 6. CLOSING AND ENDORSEMENT (CONT.) 6-2 GENERAL INSTRUCTIONS FORMAT STATE LAWS HUD FIELD OFFICE AUTHORITY PREPARATION OF SECURITY INSTRUMENTS BORROWERS LACKING LEGAL COMPETENCY LOAN CLOSING DATE REQUIREMENTS FOR CLOSING

3 6-10 POST-CLOSING RESPONSIBILITIES REQUIRED DOCUMENTS FOR ENDORSEMENT REVIEW OF THE CLOSING DOCUMENTS THIRD-PARTY FEES ENDORSEMENT NON-ENDORSEMENT POST-ENDORSEMENT RESPONSIBILITIES MAINTENANCE OF THE CASE BINDER CHAPTER 7. PAYMENT OF MORTGAGE INSURANCE PREMIUMS 7-1 PURPOSE PROCESSING REQUIREMENTS TYPES OF MORTGAGE INSURANCE PREMIUMS INITIAL MORTGAGE INSURANCE PREMIUM INFORMATION COLLECTION STATEMENT OF ACCOUNT MONTHLY MORTGAGE INSURANCE PREMIUM LATE CHARGES INTEREST CHARGES DELINQUENCY NOTICES APPEALING LATE CHARGES AND INTEREST ACCESS TO MORTGAGE INFORMATION REFUNDS TERMINATION OF INSURANCE CONTRACT CHAPTER 8. ASSIGNMENTS 8-1 PURPOSE ASSIGNMENT INSURANCE OPTION NOTICE TO FIELD OFFICE OF INTENT TO ASSIGN vii CHAPTER 8. ASSIGNMENTS (CONT.) 8-4 PAYMENTS BEFORE MORTGAGE IS VOLUNTARILY ASSIGNED DEMAND ASSIGNMENT OF THE MORTGAGE ASSIGNMENT CLAIMS CHAPTER 9. HUD SERVICING 9-1 PURPOSE BASIC SERVICING ISSUES USE OF AUTOMATED SYSTEMS MORTGAGES REQUIRING MONTHLY PAYMENTS MORTGAGES NOT REQUIRING MONTHLY PAYMENTS ESTABLISHING A SERVICING ACCOUNT BORROWER DEFAULTS DAMAGED PROPERTY

4 APPENDICES: 9-9 PAYOFFS DUE AND PAYABLE MORTGAGES Appendix 1 Mortgage Appendix 2 Note (Fixed Rate) Appendix 3 Adjustable Rate Note Appendix 4 Second Mortgage Appendix 5 Second Note (Fixed Rate) Appendix 6 Adjustable Rate Second Note Appendix 7 Loan Agreement Appendix 8 Repair Rider Appendix 9 Condominium Rider Appendix 10 PUD Rider Appendix 11 Shared Appreciation Rider Appendix 12 Shared Appreciation Allonge Appendix 13 HECM Payment Plan Appendix 14 Notice to the Borrower Appendix 15 URLA and Addendum Instructions Appendix 16 Counseling Certificate Appendix 17 Periodic Disclosure (Suggested Form) Notice of Change in Interest Rate on Adjustable Rate HECM viii APPENDICES (CONT.): Appendix 18 CHUMS Input Worksheet Worksheet Appendix 19 Shared Appreciation Worksheet Appendix 20 Principal Limit and Shared Premium Factor Tables Appendix 21 Payment Calculation Keystrokes Appendix 22 Payment Calculation Formulas Appendix 23 Instruction for Establishing a PAD Account and MIP Equipment Requirements ix FORMS REFERENCED IN THIS HANDBOOK: Current edition date is noted in parentheses following form number. Forms are listed in order of appearance in Handbook. OMB Approval No.

5 HUD (3/6/87) Application for Property Appraisal and Commitment Freddie Mac Form 70/ Uniform Residential Appraisal Report n/a Fannie Mae Form 1004 (URAR) (6/92) HUD (7/1/87) Compliance Inspection Report HUD B (2/1/91) Condition Commitment Direct Endorsement Statement of Appraised Value HUD (2/5/91) Mortgagee's Assurance of Completion Freddie Mac Form 65/ Uniform Residential Loan Application n/a Fannie Mae Form 1003 (URLA) (10/92) HUD A (12/1/91) Addendum to the Uniform Residential Loan Application (URLA) HUD (8/24/92) n/a Firm Commitment HUD-1 (3/1/86) Settlement Statement HUD (4/10/90) Mortgage Insurance Certificate n/a HUD (6/19/91) Mortgage Record Change HUD A (12/1/90) Mortgage Insurance Termination HUD (5/5/93) Single Family Application for Insurance Benefits x