When is the Anti-churning Disclosure required?

For HECM loans that are closed-end lines of credit, an Anti-Churning Disclosure form must be issued concurrently with issuance of the Good Faith Estimate (GFE) form which is required to be provided under the Real Estate Settlement Procedures Act (RESPA), and HUD's RESPA regulations at 24 C.F.R. 3500.7.

In the case of HECM loans that are open-end lines of credit, the Anti-Churning Disclosure must be provided concurrently with such other disclosure forms that can be provided in lieu of the GFE under HUD's RESPA regulations at 24 C.F.R. 3500.7(f), i.e., disclosures required under the Truth in Lending Act (TILA) and Regulation Z. The mortgagee is responsible for determining whether a particular HECM loan is an open-end or closed-end line of credit, and whether the RESPA or TILA and Regulation Z disclosure requirements are applicable to the transaction.

This official HUD form HUD-92901 'Home Equity Conversion Mortgage (HECM) Anti-Churning Disclosure' is attached to Mortgagee Letter 04-18. The Anti-Churning Disclosure form must be signed by the borrower(s) and included in the HECM Endorsement binder.

The purpose of this form is to ensure that the borrower(s) is not being induced to refinance an existing HECM without benefit to the borrower(s) and/or solely for the benefit of the Mortgagee. To ensure that the HECM refinance will benefit the borrower, the Mortgagee shall provide to the mortgagor(s) its best estimate of:

1) The total cost of the refinancing to the mortgagor; and

2) The increase in the mortgagor's principal limit as measured by the estimated initial principal limit on the mortgage to be insured less the current principal limit on the HECM that is being refinanced.

In addition, to ensure that the mortgagor is provided with information to assist in understanding the amount of new funding that will be available after closing costs and other fees associated with refinancing the existing HECM, the mortgagee shall provide a best estimate of funds available to the borrower minus any closing costs and other fees.

Mortgagee Letters  2004-18, 2009-21



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-02583