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g. Servicing Fees and Charges (04/29/2024)
i. Definitions
Allowable Fees and Charges are those costs associated with the servicing of the Mortgage that are permitted to be charged to the Borrower.
Prohibited Fees and Charges are those costs associated with the servicing of the Mortgage that may not be charged to the Borrower.
ii. Standard
(A) Allowable Fees and Charges
The Mortgagee may collect certain reasonable and customary fees and charges from the Borrower after the Mortgage is insured and as authorized by HUD below. All fees must be:
• reasonable and customary for the local jurisdiction;
• based on actual cost of the work performed or actual out-of-pocket expenses and not a percentage of either the face amount or the unpaid principal balance of the Mortgage; and
• within the maximum amount allowed by HUD.
(B) Request for Approval for Other Fees or Charges
The Mortgagee may request approval from HUD through HERMIT for any fee, charge, or unusual service not specifically mentioned in this Handbook 4000.1.
(C) Prohibited Fees and Charges
The Mortgagee must not charge the Borrower for the following services:
• costs of telephone calls, personal visits with the Borrower, certified mail, or other activities that are normally considered a part of a prudent Mortgagee’s servicing activity;
• Mortgagee’s use of an independent contractor such as a tax service to furnish tax data and information necessary to pay property taxes or make the payments on behalf of the Mortgagee;
• preparing and providing evidence of Payoff, Reconveyance, or termination of the Mortgage, except for a trustee’s fee if the deed of trust provides for payment of such a fee for execution of a satisfactory, release, or trustee’s deed when the deed of trust is paid in full;
• providing information essential to the Payoff;
• recording the Payoff of the Mortgage in states where recordation is the responsibility of the Mortgagee; or
• fees for services performed by attorneys or trustees who are salaried members of the Mortgagee’s staff.
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III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages
1. Servicing of FHA-Insured HECMs
iii. Required Documentation
The Mortgagee must include in the Servicing File:
• documentation of the amount of any fees and charges paid or payable by the Borrower; and
• documentation supporting the actual costs of any work performed or out-of- pocket expenses.