Are there other property or disclosure requirements that must be satisfied in a HECM purchase?

Lenders are required to ensure the property meets the following property requirements:
1. Will serve as the principal residence of the HECM mortgagor
2. In the case of a newly built home, construction is complete and a certificate of occupancy or its equivalent has been issued
3. Any construction loan financing for the property is satisfied and the HECM liens will be in first and second lien positions and, at the time of closing, no other liens against the property exist

Lenders originating HECM for purchase transactions are responsible for determining whether a particular HECM loan is open or closed-end credit.

Lenders must comply with all applicable regulatory disclosure requirements for HECM loans.

Mortgage Letter 09-11 is available at:

Federal Register 24 CFR ยง206.39 available 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-01326