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j. Allowable Fees and Charges (04/29/2024)
i. Definition
Allowable Fees and Charges refer to those costs associated with the servicing of the Mortgage that are permitted to be charged to the Borrower.
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III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages
1. Servicing of FHA-Insured HECMs
(A) Monthly Servicing Fee
(1) Definition
A Monthly Servicing Fee is a fixed monthly charge for servicing activities of the Mortgagee starting in the month of loan closing and continuing through the life of the loan, including any applicable Deferral Period.
The maximum allowable monthly servicing fee for a HECM with a monthly adjustable interest rate is $35.
The maximum allowable monthly servicing fee for a HECM with a fixed or annually adjustable interest rate is $30.
(2) Standard
If the Mortgagee chose to assess a monthly servicing fee at closing, the Mortgagee must withdraw the monthly servicing fee from the existing Servicing Fee Set-Aside and add the amount of the monthly servicing fee to the HECM balance.
(B) Additional Permissible Reasonable and Customary Fees and Charges
The Mortgagee may collect reasonable and customary fees and charges that are not already paid with funds from the monthly servicing fee after the HECM 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 HECM; and
• within the maximum amount allowed by HUD.
No attorney fees may be charged for the services of the Mortgagee’s attorney.
The Mortgagee may assess and add the following fees and charges to the outstanding principal balance:
• a maximum of $20 for changing a Borrower’s payment plan;
• charges and fees related to additional documents described in 24 CFR § 206.27(b)(10) and related title search costs;
• substitution of Hazard Insurance policy other than at the renewal of the policy;
• attorney or trustee fees associated with a foreclosure;
• property inspections and preservation expenses; and
• attorney fees and expenses when the Mortgagee is made a party to litigation by reason of the HECM.
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III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages
1. Servicing of FHA-Insured HECMs
(C) Requests for Approval for Other Fees or Charges
The Mortgagee may request approval from HUD for any fee, charge, or unusual service not specifically mentioned.
ii. 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;
• approval from HUD for any fees and charges requiring such approval; and
• documentation supporting the actual cost of any work performed or out-of-pocket expenses.