Reverse mortgage compliance readiness: a working checklist

Federal requirements

HECM compliance sits primarily on FHA/HUD requirements (HUD Handbook 4000.1 and applicable Mortgagee Letters), plus general mortgage-lending federal requirements that apply across products:

• HMDA reporting for applicable transactions
• TILA/RESPA disclosure timing and content, including reverse-specific disclosure requirements
• Counseling requirements and certificate validity tracking
• Financial assessment documentation standards
• Fair lending and ECOA considerations in underwriting decisions

A useful readiness test: for any given closed file, could you reconstruct — without asking the loan officer — why each disclosure was sent when it was, and what evidence supports the FA outcome?

State-level variation

Reverse mortgage requirements vary by state in several recurring categories:

• Licensing — originator and entity licensing requirements, including any reverse-mortgage-specific endorsements
• Additional counseling or disclosure requirements — some states require disclosures or waiting periods beyond federal minimums
• Senior-protection statutes — a number of states have specific protections for borrowers above a certain age, which can affect required disclosures or sales practices
• Recording and closing requirements — attorney-state vs. escrow-state closing practices, and any state-specific closing document requirements

Because these requirements change independently of federal rules and don't move on a predictable schedule, they're best tracked as their own inventory rather than folded into a general compliance calendar. See our state-by-state compliance framework for a structured approach to organizing this tracking.

Evidence and audit trail

For each control, readiness generally means being able to answer three questions quickly: what was required, what was done, and who can show it. Concretely, that means:

• Override reasons captured at the point of decision, not reconstructed afterward
• Document versions tied to the specific disclosure or form version in effect on the date they were sent
• A retrievable timeline of status changes for any given file, not just its current state

Common exam findings

Recurring findings in reverse mortgage compliance reviews tend to cluster around a small set of issues:

• Counseling certificates that expired between issuance and application, without a documented re-counseling step
• Missing or inconsistent documentation supporting compensating factors used to avoid a LESA
• Disclosure timing that can't be reconstructed from the file after the fact
• Non-borrowing spouse eligibility determinations without supporting documentation on file

Building a review cadence

A workable cadence separates three different review types rather than treating "compliance review" as one activity: pre-funding file review (catches issues before they're irreversible), post-closing quality control sampling (catches systemic patterns), and periodic policy review (catches drift between what your procedures say and what HUD or state requirements actually currently require).