Spaces:
Sleeping
Sleeping
# II. Origination Through Post-Closing/Endorsement
## D. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages
### 3. Acceptable Reporting Forms and Protocols (04/10/2025)
#### (D) Leasehold Interest
##### (1) Definition
Leasehold Interest refers to real estate where the residential improvements are located on land that is subject to long-term lease from the underlying fee owner, creating a divided estate in the Property.
##### (2) Standard
###### (a) Forward Mortgage Requirements
A Mortgage secured by real estate under Leasehold requires a renewable lease with a term of not less than 99 years, or a lease that will extend not less than 10 years beyond the maturity date of the Mortgage.
###### (b) Reverse Mortgage (HECM) Requirements
A reverse mortgage, or Home Equity Conversion Mortgage (HECM), secured by real estate on a Leasehold that is under a renewable lease for not less than 99 years, or a lease with the actuarial life expectancy of the Mortgagor. Sub-Leasehold Estates are not eligible for FHA mortgage insurance.
##### (3) Required Analysis and Reporting
An Appraiser must contact the Mortgagee if the Leasehold Interest does not meet this requirement.
### ii. Legal and Land Use Considerations
#### (A) Party or Lot Line Wall
##### (1) Standard
A building constructed on or next to a property line must be separated from the adjoining building by a wall extending the full height of the building from the foundation to the ridge of the roof.
##### (2) Required Analysis and Reporting
The Appraiser must note if the party or lot line wall does not extend to the ridge of the roof or beyond.
#### (B) Nonresidential Use of Property
##### (1) Standard
The nonresidential portion of the Total Floor Area may not exceed 49 percent.
---
**Handbook 4000.1 822**
**Last Revised: 01/10/2025**