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.

Question 1 - Mortgagee Letter 2003-19, page 1, states, "Under the partial claim option, a mortgagee will advance funds on behalf of a mortgagor in the amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months PITI)." Since the funds were advanced to bring the loan current, what date should the mortgagee enter into block 8?

Answer - The date should be the date of the last installment paid.

Question 2 - If a mortgagee qualifies a mortgagor for Special Forbearance with the loan cure resulting in a Loan Modification; can the mortgagee file a claim for each loss mitigation option used?

Answer - No, Mortgagee Letter 2002-17 advises that the incentive payment for combination usage is now limited to payment after the cure option has been established.

Question 3 - If a mortgagor adheres to the submission of monthly payments, but fails to return an executed Special Forbearance Agreement, can the mortgagee file for a Special Forbearance incentive claim?

Answer - No, Mortgagee Letter 2002-17, Page 9, states in part the mortgagee must file the incentive claim within 60 days of the date the Special Forbearance was executed. Since the mortgagee does not have a Special Forbearance Agreement that has been executed by the mortgagor the mortgagee cannot file the incentive claim.

Question 4 - What is the mortgagee's timeframe to file a Loan Modification incentive claim?

Answer - Mortgage Letter 2000-05, page 23, Paragraph N, "Filing for Incentive Payment" states in part the mortgagee must file the claim for incentive payment within 60 days of the execution date of the modification agreement.

Question 5 - Is it permissible to qualify a mortgagor and file an incentive claim for Special Forbearance Type II when that mortgagor had been on a Special Forbearance Type I but has failed due to a subsequent event that affected their household income and/or expenses?

Answer - Mortgagee Letter 2002-17, Page 6, Review and Re-negotiation provides that plans may be re-negotiated if the mortgagor's financial circumstances have changed. However, re-negotiated plans may not exceed HUD's requirement that the loan be no more than 12 months delinquent. Mortgagees may only file for the Special Forbearance incentive claim once per default.

Question 6 - How long do mortgagees have to file a second supplemental claim for non-routine foreclosure fees and costs from final settlement date?

Answer - HUD's Claims Handbook 4330.4, Chapter 7, Section 7-2, discusses supplemental claims in thorough detail and gives a time frame of 6 months from date of final settlement for filing supplemental claims.

Question 7 - When should self-curtailment occur?

Answer - Mortgagees are responsible for "self-curtailment" on claims when reasonable diligence and/or Single Family Default Monitoring System reporting requirements are not met and must enter the curtailment date in Block 31. See Mortgagee Letter 2005-30, Single Family Foreclosure Policy and Procedural Changes: Reasonable Diligence Requirements, for a discussion of these requirements and steps to take when these requirements are not met. Review Attachment 4 for examples. Additional information is available in Mortgagee Letter 1997-18.

If the mortgagee determines during its quality control review that it failed to self-curtail when submitting the claim, it should remit a check to repay the over-claimed amount(s). Include the FHA case number prominently on the check and make it payable to the US Department of Housing and Urban Development, and send it to: HUD Single Family Claims, PO Box 979046, St. Louis, MO 63197-9000 [or] HUD Single Family Claims, HUD Box 979046, US Bank, 1005 Convention Plaza, St. Louis, MO 63101.

Question 8 - Where can interpretations of suspended claim errors notifications be found?

Answer - Mortgagees may check claim status on the FHA Connection by making the following selections: Single Family FHA - Single Family Servicing - Claims Processing - Claims Status.

Question 9 - Can a claim be submitted without a paper Mortgage Insurance Certificate (MIC)?

Answer - Yes. Mortgagee Letter 2005-11, Update to Mortgagee Letter 2003-17; Claim Filing Changes and Data Integrity, announced the elimination of MIC submission as a requirement for filing claims for FHA mortgage insurance benefits.

Question 10 - What is the proper methodology for listing the Section 235 subsidy payment from HUD when filing a claim through FHA Connection?

Answer - Upon initiation of foreclosure on a Section 235 loan, the mortgagee is required to suspend the Section 235 subsidy. Any subsidy received during the mortgagor's delinquency should be applied to the mortgagor's account.

Question 11 - If a mortgage company sells a portfolio of loans to another institution and retains servicing, is it possible to file a Single-Family Application for Insurance Benefits in the mortgagee's name and receive proceeds to be forwarded to the new institution or will the claim need to be filed in the name of the new holder?

Answer - If the holder of record has provided authorization for a servicing mortgagee to act on its behalf, specifically allowing the servicing mortgagee to receive claim proceeds on its behalf, it would be permissible to identify the servicing institution as the payee for HUD claim purposes. However, the servicing institution must be an FHA-approved mortgagee and must also have identified to HUD both a bank account and a payee address for such claim payments. Keep in mind that, a mortgagee may identify only one bank account per mortgagee ID.

Question 12 - Mortgagee Letter 2008-21 now allows mortgagees to include attorney fees and foreclosure costs in a Loan Modification and a Partial Claim. When filing an incentive claim, should the mortgagee break out the attorney fees and foreclosure costs separately on the claim form?

Answer - No. The Mortgagee Letter states that the legal fees and related foreclosure costs may now be capitalized into the modified principal balance or, for partial claims, these amounts may be included in the partial claim amount. There are no changes to the filing instructions for Loan Modifications and Partial Claims. As appropriate for the type of claim being filed, enter the new "modified" amount to Part A, block 11(b) or the Partial Claim Note amount to Part B, line 107.

For Loan Modifications, mortgagees should continue to enter the allowable "Title Search Fee" to Part B, line 113.

Free Consultation
Request a NO OBLIGATION
consultation with a foreclosure
specialist today!
Foreclosure Hotline: 602-377-0021