When HUD approval is required, must Mortgagees provide HECM borrowers with a Due and Payable Notice?

When HUD’s approval is required, the Mortgagee must provide the borrower(s) with a Due and Payable Notice stating that the borrower has 30 days to notify the Mortgagee of their intention to either:

  • satisfy the Home Equity Conversion Mortgage (HECM);
  • sell the property for at least 95% of the appraised value;
  • provide the Mortgagee with a Deed-in-Lieu of foreclosure; or
  • correct the matter which resulted in the mortgage becoming due and payable.  

The Due and Payable Notice must be sent to the borrower within 30 days of receiving HUD’s approval to call the HECM due and payable. Mortgagees may vary the actual structure of this Notice, but it must:
1. state that an obligation of the borrower has not been met;
2. state that failure of the borrower to comply with the terms of the HECM has resulted in the loan becoming due and payable;
3. provide notice of the availability of Housing Counseling; and
4. provide notice of any available loss mitigation options the Mortgagee may offer.
For more information see Mortgagee Letter 2015-10 available at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee
 Any questions may be directed to the FHA Resource Center at Toll-Free (800) CALLFHA (225-5342) or by email to answers@hud.gov.  Persons with hearing or speech impairments may reach this number by calling the Federal Information Relay Service at (800) 877-8339.

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-02452