Can a delinquent Federal non-tax debt be paid off at closing using HECM proceeds?

Yes, a Federal non-tax debt may be paid off at closing using HECM proceeds.

For additional information see Mortgagee Letters 2014-21 and 2016-10 and the attached revised HECM Financial Assessment and Property Charge Guide available at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee

HUD Policy Determination

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-03774