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c. Required Documentation (01/31/2026)
The Mortgagee must submit a Declaration of Trust package to FHA for approval. The package must be submitted as an Ad hoc request through the Lender Electronic Assessment Portal (LEAP) and contain all required documents, demonstrate satisfaction of the Sale of a Beneficial Interest requirements, and include provisions designed to ensure that future transfers, assignments, and pledges of interests in Mortgages will continue to comply with FHA requirements.
i. Transmittal Letter
The Mortgagee must submit a transmittal letter that includes the following:
• all named parties in the Declaration of Trust and their FHA-approved Mortgagee status and number, if any;
• a description of:
o the Sale of Beneficial Interest;
o any assignments, transfers, or pledges of interests and any transfers of partial
interests in a Mortgage; and
o the relevant forward Mortgage or Home Equity Conversion Mortgage
(HECM) regulation for the Sale of a Beneficial Interest; and
• a list of provisions of the Declaration of Trust satisfying the Declaration of Trust requirements, identifying each provision’s section and page number.
ii. Declaration of Trust
The Mortgagee must submit the final, unexecuted version of the Declaration of Trust (e.g., a Trust Agreement) to FHA for review. If it is modeled after a Declaration of Trust approved for a prior Sale of a Beneficial Interest, the Mortgagee must submit a comparison showing all changes made.
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I. DOING BUSINESS WITH FHA A. FHA Lenders and Mortgagees (09/20/2021)
11. Sale of a Beneficial Interest in a Group of Mortgages
The Declaration of Trust must include provisions setting forth the FHA requirements for the following types of transfers.
(A) Sale of a Beneficial Interest
(1) FHA-Approved Mortgagee Requirements
The Declaration of Trust must identify the entity that will be the Purchasing Mortgage Holder.
The Purchasing Mortgage Holder must maintain its FHA approval status at all times.
If the Purchasing Mortgage Holder’s approval status is withdrawn or terminated, a new FHA-approved Mortgagee must acquire the Mortgages and maintain its FHA approval status at all times.
(2) Servicer Requirements
The Declaration of Trust must identify the FHA-approved Mortgagee with Title II program approval that will service the Mortgages.
The Servicer, subservicers, or successor servicers must maintain FHA servicing approval.
Servicers must service all Mortgages in accordance with FHA requirements and all applicable laws.
If the Servicer, subservicer, or successor servicer does not maintain its FHA servicing approval, another Mortgagee with FHA servicing approval must be substituted.
(3) Additional Requirements
In the event the Declaration of Trust entity is terminated, dissolved, or otherwise liquidated, any remaining Mortgages must be transferred to an FHA-approved Mortgagee.
Each beneficial interest holder agrees that it has no rights against FHA or HUD with respect to any contract of insurance for the Mortgages in the group and has only a beneficial interest in the group of Mortgages subject to the approved Declaration of Trust to the extent of its terms.
(B) Mortgage Sale
In a Mortgage Sale, Mortgages may be sold only to another FHA-approved Mortgagee.
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I. DOING BUSINESS WITH FHA A. FHA Lenders and Mortgagees (09/20/2021)
11. Sale of a Beneficial Interest in a Group of Mortgages
The Selling Mortgage Holder must notify HUD within 15 Days of the sale using the form required by FHA.
When a Mortgage is sold, the Purchasing Mortgage Holder will succeed to all the rights and become bound by all the obligations of the Mortgagee under the contract of insurance. The Selling Mortgage Holder will not be relieved of its obligation to remit and pay the FHA mortgage insurance premiums until FHA receives the required notice.
(C) Non-Mortgage Sale
(1) Assignment of Mortgages to Another FHA-Approved Mortgagee
For assignment of Mortgages to another FHA-approved Mortgagee that is not a Mortgage Sale:
• the Mortgagee remains the Mortgagee of record; and
• the Commissioner has no obligation to recognize or deal with the assignee Mortgagee.
(2) Assignment of Mortgages to an Entity Other Than an FHA-Approved
Mortgagee
For assignment of Mortgages to an entity other than an FHA-approved Mortgagee that is not a Mortgage Sale, in addition to the requirements for Assignment of Mortgages to Another FHA-Approved Mortgagee:
• the assignee must be a corporation, trust, or organization which certifies to the Mortgagee that it has:
o assets of $100,000 or more; and
o lawful authority to hold an interest in a Mortgage or a group of
Mortgages; and
• the Mortgagee must make the assignment with agreement that the Mortgagee must, within one year from the date of assignment or such additional time as approved by FHA:
o repurchase the Mortgage; or
o sell the Mortgage to an FHA-approved Mortgagee.
(3) Partial Transfer of Interest in a Mortgage
For partial transfer of interest in a Mortgage that is not a Mortgage Sale:
• the Mortgagee transferring the partial interest must remain the holder of record and retain a financial interest in the Mortgage;
• the partial interest holder must be:
o an FHA-approved Mortgagee; or
o a corporation, trust, or organization which certifies that it has:
▪ assets of $100,000 or more; and
▪ lawful authority to acquire a partial interest in a Mortgage; and
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I. DOING BUSINESS WITH FHA A. FHA Lenders and Mortgagees (09/20/2021)
11. Sale of a Beneficial Interest in a Group of Mortgages
• the partial interest must be documented in a participation agreement that complies with FHA requirements.
iii. Additional Declaration of Trust Documentation
The Mortgagee must submit the final version of the following Declaration of Trust documentation, if they are part of the transaction:
• Servicing Agreement;
• Subservicing Agreement;
• Custody Agreement;
• Nominee Agreement;
• Participation Agreement; and
• Definition Key: Standard / Key Terms.
FHA may request additional documentation referenced in the Declaration of Trust to complete its review.
If any required documents are amended after submission, prior to or after the sale date, the amendment must comply with all FHA requirements and the submission must be presented prior to execution.
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I. DOING BUSINESS WITH FHA B. Other Participants
1. FHA Appraiser Roster