If an MLO is underwriting a HECM and the client moves into a retirement community before closing, what should the MLO do?

If an MLO is underwriting a HECM and the client moves into a retirement community before closing, what should the MLO do?

• A. Proceed with underwriting
• B. Notify Underwriting
• C. Cancel the application
• D. Delay until the client returns

Answer: (B)

Occupancy as the borrower’s principal residence is a fundamental requirement for a HECM. If the client moves into a retirement community before closing, the borrower’s residency status changes, which can affect eligibility and closing conditions. The MLO should promptly notify underwriting so they can re-evaluate the file in light of the new occupancy status, determine whether the borrower still qualifies, and decide on the next steps—such as requesting updated occupancy documentation, adjusting conditional requirements, or halting the loan if the primary residence rule can no longer be met. This keeps the file accurate and compliant with program rules and avoids proceeding on an occupancy basis that no longer exists.

Occupancy as the borrower’s principal residence is a fundamental requirement for a HECM. If the client moves into a retirement community before closing, the borrower’s residency status changes, which can affect eligibility and closing conditions. The MLO should promptly notify underwriting so they can re-evaluate the file in light of the new occupancy status, determine whether the borrower still qualifies, and decide on the next steps—such as requesting updated occupancy documentation, adjusting conditional requirements, or halting the loan if the primary residence rule can no longer be met. This keeps the file accurate and compliant with program rules and avoids proceeding on an occupancy basis that no longer exists.