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: https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee
Federal Register 24 CFR §206.39 available at: https://www.govinfo.gov/content/pkg/FR-2017-01-19/pdf/2017-01044.pdf