Are Private Savings Clubs an acceptable source of funds for a HECM borrower?

Private Savings Clubs refer to a non-traditional method of saving by making deposits into member-managed resource pools. The lender may consider private savings club funds that are distributed to and received by the borrower as an acceptable source of funds.

The lender must verify and document the establishment and duration of the club, and the borrower’s receipt of funds from the club. The lender must also determine that the received funds were reasonably accumulated, and not borrowed.

The lender must obtain the club’s account ledgers and receipts, and verification from the club treasurer that the club is still active.

If the borrower is obligated to continue making ongoing contributions under the pooled savings agreement, this obligation must be included in the expense analysis.

For additional information see Mortgagee Letter 2016-10 and the attached revised HECM Financial Assessment and Property Charge Guide, Section 3.74 at

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-01161