CHAPTER 1. GENERAL INFORMATION TABLE OF CONTENTS Page 1-1 LEGISLATIVE HISTORY... 1-1 1-2 PURPOSE OF THE PROGRAM... 1-1 1-3 CHARACTERISTICS OF THE MORTGAGE... 1-1 1-4 PRINCIPAL LIMIT... 1-2 1-5 PAYMENT PLAN... 1-3 1-6 CHANGING THE PAYMENT PLAN... 1-4 1-7 SHARED APPRECIATION... 1-4 1-8 INTEREST RATE... 1-5 1-9 COUNSELING... 1-5 1-10 MORTGAGE INSURANCE PREMIUM (MIP)... 1-5 1-11 INSURANCE OPTIONS... 1-6 1-12 SERVICING... 1-7 1-13 RECOVERY OF MORTGAGE PROCEEDS... 1-7 1-14 DIRECT ENDORSEMENT AND COINSURANCE... 1-8 1-15 CHUMS LENDER ACCESS SYSTEM (CLAS)... 1-8 1-16 BASIC PROGRAM OUTLINE... 1-9 CHAPTER 2. BORROWER COUNSELING 2-1 PURPOSE... 2-1 2-2 ELIGIBLE COUNSELING AGENCIES... 2-1 2-3 COUNSELING REFERRAL PROCEDURES... 2-2 2-4 BORROWERS LACKING LEGAL COMPETENCY... 2-2 2-5 REQUIREMENTS FOR HOUSING COUNSELING... 2-2 2-6 SOURCES OF INFORMATION FOR COUNSELING... 2-4 CHAPTER 3. PROPERTY ANALYSIS 3-1 PURPOSE... 3-1 3-2 ORDERING THE APPRAISAL AND OBTAINING A CASE NUMBER... 3-1 3-3 REQUIREMENTS FOR APPRAISALS... 3-2 3-4 ELIGIBLE PROPERTIES... 3-3 3-5 REQUIREMENTS FOR EXISTING HOUSING... 3-5 v CHAPTER 3. PROPERTY ANALYSIS (CONT.) 3-6 PROTECTIVE COVENANTS IN HOUSING COMMUNITIES FOR THE ELDERLY... 3-9
3-7 RECEIPT AND LOGGING OF APPRAISALS... 3-9 3-8 MAXIMUM CLAIM AMOUNT... 3-9 3-9 CONDITIONAL COMMITMENT... 3-10 3-10 CASE CANCELLATION... 3-10 CHAPTER 4. MORTGAGE CREDIT ANALYSIS 4-1 PURPOSE... 4-1 4-2 BASIC UNDERWRITING ISSUES... 4-1 4-3 MORTGAGE CREDIT ELIGIBILITY REQUIREMENTS... 4-3 4-4 TITLE EVIDENCE... 4-4 4-5 HOME EQUITY CONVERSION MORTGAGES FOR PROPERTY HELD IN TRUST... 4-5 4-6 POWER OF ATTORNEY AND CONSERVATORSHIP GUIDELINES... 4-7 4-7 REQUIRED MORTGAGE CREDIT DOCUMENTATION... 4-8 4-8 MORTGAGE CREDIT ANALYSIS... 4-12 4-9 FIRM COMMITMENT... 4-16 CHAPTER 5. CALCULATION OF PAYMENTS 5-1 PURPOSE... 5-1 5-2 PERFORMING THE CALCULATIONS... 5-1 5-3 PAYMENT PLANS... 5-1 5-4 CHANGING PAYMENT PLANS... 5-2 5-5 PRINCIPAL LIMIT... 5-2 5-6 DETERMINING THE BORROWER'S PRINCIPAL LIMIT... 5-3 5-7 DETERMINING THE NET PRINCIPAL LIMIT... 5-3 5-8 DETERMINING TERM OR TENURE MONTHLY PAYMENTS... 5-4 5-9 DETERMINING LINE OF CREDIT PAYMENTS... 5-6 5-10 COMBINING A LINE OF CREDIT WITH TENURE OR TERM PAYMENTS... 5-7 5-11 CHANGING A PAYMENT PLAN... 5-8 5-12 PARTIAL PREPAYMENTS... 5-9 5-13 CALCULATIONS FOR SHARED APPRECIATION MORTGAGES... 5-10 CHAPTER 6. CLOSING AND ENDORSEMENT 6-1 PURPOSE... 6-1 vi CHAPTER 6. CLOSING AND ENDORSEMENT (CONT.) 6-2 GENERAL INSTRUCTIONS... 6-1 6-3 FORMAT... 6-3 6-4 STATE LAWS... 6-3 6-5 HUD FIELD OFFICE AUTHORITY... 6-3 6-6 PREPARATION OF SECURITY INSTRUMENTS... 6-3 6-7 BORROWERS LACKING LEGAL COMPETENCY... 6-5 6-8 LOAN CLOSING DATE... 6-5 6-9 REQUIREMENTS FOR CLOSING... 6-7
6-10 POST-CLOSING RESPONSIBILITIES... 6-10 6-11 REQUIRED DOCUMENTS FOR ENDORSEMENT... 6-11 6-12 REVIEW OF THE CLOSING DOCUMENTS... 6-13 6-13 THIRD-PARTY FEES... 6-15 6-14 ENDORSEMENT... 6-17 6-15 NON-ENDORSEMENT... 6-17 6-16 POST-ENDORSEMENT RESPONSIBILITIES... 6-17 6-17 MAINTENANCE OF THE CASE BINDER... 6-18 CHAPTER 7. PAYMENT OF MORTGAGE INSURANCE PREMIUMS 7-1 PURPOSE... 7-1 7-2 PROCESSING REQUIREMENTS... 7-1 7-3 TYPES OF MORTGAGE INSURANCE PREMIUMS... 7-2 7-4 INITIAL MORTGAGE INSURANCE PREMIUM... 7-2 7-5 INFORMATION COLLECTION... 7-3 7-6 STATEMENT OF ACCOUNT... 7-4 7-7 MONTHLY MORTGAGE INSURANCE PREMIUM... 7-4 7-8 LATE CHARGES... 7-6 7-9 INTEREST CHARGES... 7-6 7-10 DELINQUENCY NOTICES... 7-7 7-11 APPEALING LATE CHARGES AND INTEREST... 7-7 7-12 ACCESS TO MORTGAGE INFORMATION... 7-7 7-13 REFUNDS... 7-7 7-14 TERMINATION OF INSURANCE CONTRACT... 7-8 CHAPTER 8. ASSIGNMENTS 8-1 PURPOSE... 8-1 8-2 ASSIGNMENT INSURANCE OPTION... 8-1 8-3 NOTICE TO FIELD OFFICE OF INTENT TO ASSIGN... 8-2 vii CHAPTER 8. ASSIGNMENTS (CONT.) 8-4 PAYMENTS BEFORE MORTGAGE IS VOLUNTARILY ASSIGNED... 8-3 8-5 DEMAND ASSIGNMENT OF THE MORTGAGE... 8-5 8-6 ASSIGNMENT CLAIMS... 8-7 CHAPTER 9. HUD SERVICING 9-1 PURPOSE... 9-1 9-2 BASIC SERVICING ISSUES... 9-1 9-3 USE OF AUTOMATED SYSTEMS... 9-1 9-4 MORTGAGES REQUIRING MONTHLY PAYMENTS... 9-2 9-5 MORTGAGES NOT REQUIRING MONTHLY PAYMENTS... 9-3 9-6 ESTABLISHING A SERVICING ACCOUNT... 9-4 9-7 BORROWER DEFAULTS... 9-6 9-8 DAMAGED PROPERTY... 9-6
APPENDICES: 9-9 PAYOFFS... 9-7 9-10 DUE AND PAYABLE MORTGAGES... 9-8 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.
HUD 92800 (3/6/87) Application for Property Appraisal 2502-0111 and Commitment Freddie Mac Form 70/ Uniform Residential Appraisal Report n/a Fannie Mae Form 1004 (URAR) (6/92) HUD 92051 (7/1/87) Compliance Inspection Report 2502-0189 HUD 92800.5B (2/1/91) Condition Commitment 2502-0494 Direct Endorsement Statement of Appraised Value HUD 92300 (2/5/91) Mortgagee's Assurance of Completion 2502-0189 Freddie Mac Form 65/ Uniform Residential Loan Application n/a Fannie Mae Form 1003 (URLA) (10/92) HUD 92900-A (12/1/91) Addendum to the Uniform Residential 2502-0059 Loan Application (URLA) HUD 92900.4 (8/24/92) n/a Firm Commitment HUD-1 (3/1/86) Settlement Statement 2502-0265 HUD 59100 (4/10/90) Mortgage Insurance Certificate n/a HUD 92080 (6/19/91) Mortgage Record Change 2502-0422 HUD 27050-A (12/1/90) Mortgage Insurance Termination 2502-0414 HUD 27011 (5/5/93) Single Family Application for 2502-0429 Insurance Benefits x