OMB Approval No 2502-0524
U.S. Department of Housing
Privacy Act Notice: The United States Department of Housing and Urban Development, Federal Housing Administration, is authorized
to solicit the information requested in the form by virtue of Title 12, United States Code, Section 1701 et seq., and regulations
promulgated thereunder at Title 12, Code of Federal Regulations. While no assurance of confidentiality is pledged to respondents, HUD
generally discloses this data only in response to a Freedom of Information Act request.
In accordance with Section 255 of the National Housing Act, lenders must provide homeowners seeking to refinance a
HECM with information on the total cost of the new mortgage, based on the projected total future loan balance. The
lender must disclose all fees and charges associated with the refinance of the HECM, provide the borrower with the new
maximum mortgage limit, and estimate the new funding that will be available to the borrower.
This disclosure is designed to prevent “churning,” an irresponsible lending practice whereby lenders engage in multiple
refinancing to generate additional profit from loan fees and charges. The “churned” mortgages are not made in the
interest of the borrower and provide no financial benefit to the borrower.
To ensure that lenders do not encourage HECM borrowers who would not benefit from refinancing their existing HECM
mortgage to pursue this type of transaction, the Federal Housing Administration (FHA) requires that lenders provide
HECM borrowers with their best estimate of:
Mortgagee to input: $ amount of the
1. The total cost of the refinancing to the mortgagor.
total of the upfront MIP plus other closing
cost plus servicing set-aside.
2. The increase in the mortgagor’s principal limit, as
Mortgagee to input: $ amount of new
measured by the estimated initial principal limit on the
principal limit minus the $ amount of the
mortgage to be insured less the current principal limit
existing HECM principal limit.
on the HECM that is being refinanced.
In addition the mortgagee shall provide their best estimate of funds available to the borrower minus any closing costs or
other fees. It is the dollar amount of the new principal limit minus total dollar amount from block #1 above minus payoff
amount for the HECM that is to be refinanced. $_________________________________ .
Any FHA approved lenders found to be engaged in mortgage “churning” will be subject to administrative action by the
Mortgagee Review Board in accordance with 24 CFR Part 25.
FHA Case Number: ___________________________
Subject Property Address: ____________________________________________________
Lender’s Signature: _______________________________ Date: ____________________
I, the borrower, have been provided with the lender’s best estimate of the total cost of refinancing my HECM
mortgage and the new principal limit. I understand the amount of new funding that will be available to me after I
have paid closing costs and other fees to obtain this new loan.
Borrower Name(s): (print or type)______________________________________________
Borrower Name(s): (print or type)______________________________________________
Borrower’s Signature: ________________________________ Date: _____________
Borrower’s Signature: ________________________________ Date: _____________
