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Closing Compliance Checks

This guide explains the compliance verification process before closing a reverse mortgage loan in ReversePilot.

Overview

Pre-closing compliance checks ensure:

  • All regulatory requirements are met
  • Required documents are in place
  • Disclosures are accurate and timely
  • Borrower eligibility is confirmed
  • Property eligibility is verified
  • All conditions are satisfied

Pre-Closing Compliance Checklist

Borrower Eligibility

Age Verification

  • [ ] Borrower age verified (minimum 62 for HECM)
  • [ ] Age documentation on file
  • [ ] Joint borrowers' ages verified
  • [ ] Age used in calculations is correct

Property Occupancy

  • [ ] Property is primary residence
  • [ ] Occupancy verified
  • [ ] No rental or investment use
  • [ ] Occupancy affidavit obtained

Counseling (HECM)

  • [ ] HECM counseling completed
  • [ ] Counseling certificate on file
  • [ ] Counseling date is within required timeframe
  • [ ] Counselor is HUD-approved

Property Eligibility

Property Type

  • [ ] Property type is eligible
  • [ ] Single-family, condominium, or approved type
  • [ ] Property use is acceptable
  • [ ] No ineligible property types

Property Condition

  • [ ] Property condition acceptable
  • [ ] No major repairs required
  • [ ] Repairs completed (if required)
  • [ ] Property meets program standards

Property Value

  • [ ] Appraised value is current
  • [ ] Appraisal is within validity period
  • [ ] Value supports loan amount
  • [ ] No value issues

Documentation Compliance

Required Documents

  • [ ] All required documents collected
  • [ ] Documents are current and valid
  • [ ] Documents are properly executed
  • [ ] Documents are stored in system

Disclosure Documents

  • [ ] Initial disclosures sent
  • [ ] TIL (Truth in Lending) disclosure
  • [ ] GFE (Good Faith Estimate) or Loan Estimate
  • [ ] HECM-specific disclosures (if applicable)
  • [ ] Disclosure timing requirements met

Closing Documents

  • [ ] Closing documents prepared
  • [ ] Documents are accurate
  • [ ] All parties identified
  • [ ] Signatures required identified

Financial Compliance

Principal Limit

  • [ ] Principal limit calculated correctly
  • [ ] Expected rate is current
  • [ ] PLF table is correct
  • [ ] Age used is accurate

Set-Asides

  • [ ] Initial MIP set-aside (if applicable)
  • [ ] Servicing fee set-aside
  • [ ] Property charge set-aside (if required)
  • [ ] Set-aside amounts are correct

Fees

  • [ ] All fees are disclosed
  • [ ] Fees comply with regulations
  • [ ] Fee amounts are accurate
  • [ ] Fees are reasonable

Regulatory Compliance

HMDA Reporting

  • [ ] HMDA data is complete
  • [ ] Demographic information collected
  • [ ] Data is accurate
  • [ ] Ready for HMDA reporting

Licensing

  • [ ] Loan officer is licensed
  • [ ] License is current
  • [ ] License covers property state
  • [ ] License information is accurate

State Requirements

  • [ ] State-specific requirements met
  • [ ] State disclosures provided
  • [ ] State regulations followed
  • [ ] State licensing verified

HECM-Specific Compliance

FHA Requirements

  • [ ] FHA case number assigned
  • [ ] FHA requirements met
  • [ ] FHA documentation complete
  • [ ] FHA compliance verified

Financial Assessment

  • [ ] Financial assessment completed (if required)
  • [ ] Residual income calculated
  • [ ] Property charge set-aside determined
  • [ ] Assessment documentation on file

MIP

  • [ ] Initial MIP calculated
  • [ ] MIP set-aside determined
  • [ ] MIP disclosure provided
  • [ ] MIP compliance verified

Compliance Verification Process

Step 1: Review Application

  1. Navigate to loan application
  2. Review all sections
  3. Verify completeness
  4. Check for compliance issues

Step 2: Verify Documents

  1. Check document checklist
  2. Verify all required documents
  3. Review document dates
  4. Ensure documents are current

Step 3: Verify Calculations

  1. Review principal limit calculation
  2. Verify set-asides
  3. Check fee calculations
  4. Confirm available proceeds

Step 4: Verify Disclosures

  1. Check disclosure dates
  2. Verify disclosure accuracy
  3. Confirm disclosure timing
  4. Review disclosure compliance

Step 5: Final Compliance Check

  1. Complete compliance checklist
  2. Verify all requirements met
  3. Document compliance verification
  4. Proceed to closing

Common Compliance Issues

Missing Documents

  • Identify missing documents
  • Request documents promptly
  • Document requests
  • Follow up on outstanding items

Disclosure Issues

  • Verify disclosure timing
  • Check disclosure accuracy
  • Regenerate if needed
  • Document corrections

Calculation Errors

  • Verify calculations
  • Check input values
  • Recalculate if needed
  • Document corrections

Licensing Issues

  • Verify loan officer licensing
  • Check state requirements
  • Update license information
  • Resolve licensing issues

Documentation

Compliance Notes

Document compliance verification:

  • Compliance review date
  • Issues identified
  • Resolutions
  • Final compliance status

Compliance Checklist

Maintain compliance checklist:

  • All items checked
  • Issues documented
  • Resolutions noted
  • Final approval

Best Practices

  1. Be Thorough: Complete comprehensive review
  2. Be Systematic: Follow checklist methodically
  3. Be Timely: Complete before closing
  4. Be Documented: Document all verification
  5. Be Compliant: Ensure regulatory compliance

Regulatory References

HECM Requirements

  • HUD 4000.1 Handbook
  • FHA guidelines
  • HECM program requirements

Federal Regulations

  • Truth in Lending Act (TILA)
  • Real Estate Settlement Procedures Act (RESPA)
  • Home Mortgage Disclosure Act (HMDA)

State Requirements

  • State-specific regulations
  • State licensing requirements
  • State disclosure requirements

Troubleshooting

Compliance Issues

  • Identify specific issues
  • Research requirements
  • Consult compliance resources
  • Resolve before closing

Missing Information

  • Request promptly
  • Document requests
  • Follow up
  • Resolve before closing

Calculation Discrepancies

  • Verify calculations
  • Check inputs
  • Recalculate
  • Document corrections

Next Steps

After compliance verification:

For questions about compliance, contact your administrator or refer to the Compliance Documentation.