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Assumptions FAQ
Assumption of an FHA-insured mortgage is a servicing function where the responsibility of the mortgage is acquired by another person through either Simple or Creditworthiness process. Individuals may assume mortgages originated prior to December 1, 1986, by utilizing the "Simple Assumption" process. For those mortgages originated on December 1, 1986 and thereafter, HUD placed certain restrictions on the assumption of those FHA-insured mortgages and those mortgages have to go through the Creditworthiness Assumption process.
Please refer to the Assumption Chart for:
1) Mortgage Original Closing Date
2) Owner-Occupancy Requirement, and/or
3) Investor Limitation.
Question 1 - If a mortgage has been assumed, whose name(s) should appear on a Partial Claim Subordinate Note and Mortgage?
Answer - The name(s) that should appear on the Partial Claim Subordinate Note and Mortgage is the mortgagor qualified for the Loss Mitigation Option.
Question 2 - Should a mortgage be called due and payable if it is current, but the mortgagor who assumed the mortgage refuses to go through the creditworthiness process?
Answer -
Even if the mortgage is current (per HUD Handbook 4330.1 REV-5, Chapter 6, Paragraph 6-5 A), if the assumptor falls within one of the categories stated in the assumption chart referenced above and the assumptor refuses to go through the creditworthiness process, then the mortgagee must enforce this requirement and issue the acceleration letter.
Question 3 - The present mortgagors are eight payments delinquent. During the Loss Mitigation Review, it was determined that they qualified for a Loan Modification. The loan originated December 12, 1988 and the present mortgagors assumed this mortgage less than 12 months ago. Since the assumption took place less than a year ago, is this assumptor eligible for a Loan Modification?
Answer - Yes, the assumptor would be eligible for a Loan Modification as the loan originated December 12, 1988 and 12 months have elapsed since the origination date.
Question 4 - In looking at the possibility of an assumption, must the mortgage be underwritten or can an Approved Direct Endorsement (DE) Underwriter sign off on the Analysis Worksheet?
Answer - An Approved DE Underwriter can sign off on the Analysis Worksheet on an assumption.
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Other FAQ Resources
We don't make this stuff up, this is all government approved information
Assumptions
Assumption of an FHA-insured mortgage is a servicing function where the responsibility or paying for a mortgage is taken over by another person through simple assumption or creditworthiness assumption. read more |
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Claims
The vehicle utilized for payment of insurance proceeds from HUD to a Mortgagee is the Insurance Benefit Claim form HUD- 27011. This form is utilized for all submissions of claims for Conveyance of Property and Loss Mitigation Option incentives. read more |
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Deed-in-Lieu
A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments. DIL Fact Sheet / read more |
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Extension of Time
To comply with required time frames, an Extension of Time may be granted for a mortgagee to initiate or complete a Loss Mitigation (except Preforeclosure Sales) and/or foreclosure action. A mortgagee is required to submit to NSC-Oklahoma City, form HUD-50012, Request for Extension of Time, prior to the expiration of the respective time frame to Fax Number (405) 609-8405. read more |
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FHA Connection
FHA Connection (FHAC) is a portal used by mortgagees to report on and update the status of their FHA portfolio. In addition, the FHAC facilitates the following Single Family Servicing functions: Claims Processing, Delinquent Loans, HECM Reports, Monthly Premiums, Mortgage Record Changes, Mortgage Calculator, Mortgage Servicing Data Quality system and Lender Query by Case Number. FHAC FAQs. read more |
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FHA-HAMP
FHA-HAMP provides homeowners in default a greater opportunity to retain homeownership using a partial claim combined with a loan modification. Read Mortgagee Letter 09-23, the Questions and Answers document, and the FHA-HAMP Fact Sheet. |
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Foreclosure
Foreclosure should only be considered as a last resort and should not be initiated until all relief options have been exhausted. When foreclosure cannot be avoided, it must be started quickly and prosecuted vigorously to minimize losses to both the mortgagee and HUD. read more |
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General Loss Mitigation
This category includes all Loss Mitigation questions that are not specific to one of the five Loss Mitigation Options. read more |
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General Servicing
This category includes all General Servicing items stated within HUD Handbook 4330.1 REV-5, Administration of Insured Home Mortgages. read more |
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Loan Modification
A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford. Loan Modification Fact Sheet. read more |
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Partial Claim
Under the Partial Claim option, a mortgagee will advance funds on behalf of a mortgagor in an amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months PITI). The mortgagor will execute a promissory note and subordinate mortgage payable to HUD. Currently, these promissory or "Partial Claim" notes assess no interest and are not due and payable until the mortgagor either pays off the first mortgage or no longer owns the property. Partial Claim Fact Sheet. read more |
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Preforeclosure Sale
The Preforeclosure Sale (PFS) Program allows the mortgagor in default to sell his/her home and use the net sale proceeds to satisfy the mortgage debt even though these proceeds are less than the amount owed. Preforeclosure Sale Fact Sheet. read more |
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Preforeclosure Sale Variance
A mortgagee is required to submit to NSC - Oklahoma City, form HUD-90041, Request for Variance Procedure, to request permission from HUD regarding any Preforeclosure Sale Program exception as well as to request an Extension of Time pertaining to the Preforeclosure Sale Program. Variances are considered on a case-by-case basis. Requests are to be faxed to (405) 609-8405. read more |
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Single Family Default Monitoring System
Data reported to the Single Family Default Monitoring System (SFDMS) is used to measure the effectiveness of origination and servicing activities, and the potential risk to the insurance fund. For additional information, please see www.hud.gov/offices/hsg/sfh/nsc/sfdms.cfm
read more |
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Special Forbearance
A Special Forbearance (SFB) is a written repayment agreement between a mortgagee and a mortgagor, which contains a plan to reinstate an asset that is minimum three mortgage payments due and unpaid. Special Forbearance Fact Sheet. read more |
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Variance
On company letterhead, mortgagees are required to submit to NSC-Oklahoma City any request requiring a variance associated with Special Forbearance, Loan Modification, Partial Claim or Deed-in-Lieu of Foreclosure eligibility criteria or servicing guidelines. Variances are considered on a case-by-case basis. Requests are to be faxed to (405) 609-8405. read more |
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