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f. Payment Administration (04/29/2024)
i. Receipt of Payments
(A) Definition
Payments are any funds remitted to the Mortgagee to reduce the balance owed under the HECM.
(B) Standard
The Mortgagee must either use a Trust Clearing Account or special custodial account to hold all payments on the insured Mortgage.
The Mortgagee’s Trust Clearing Account may be used for collections received on all types of Mortgages. If a Trust Clearing Account is not used, the Mortgagee must immediately transfer payments into a special custodial account.
ii. Application of Payments
Mortgagees must apply Borrower payments in the following order:
• to MIPs due, if any;
• to servicing fees, if any;
• to interest on the Mortgage; and
• to the principal of the Mortgage.
iii. Trustee’s Fees for Satisfactions
If specifically provided for in the security instrument, the Mortgagee may charge the Borrower the amount of the trustee’s fee, plus any reasonable and customary fees for payment, or for the execution of a satisfaction, release, or trustee’s deed when the debt is paid in full.
iv. Recording Fees for Satisfactions
The Mortgagee may charge the Borrower a reasonable and customary fee for recording satisfactions in states where recordation is not the responsibility of the Mortgagee.
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III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages
1. Servicing of FHA-Insured HECMs