# Compliance for Claude Playbook Bundle: FHA Loss Mit — current waterfall + recent ML stack _Generated 2026-10-13T23:46:00+00:00 by build-playbook-downloads.py from Compliance for Claude, at claudeforcompliance.com._ HUD Handbook 4000.1 Part III.A.2 + FHA servicing CFR + recent HUD Mortgagee Letters (2024-2025) + FNMA Servicing Part D cross-reference + Reg X §1024.41 consumer-protection floor. --- # FHA Single Family Housing Policy Handbook 4000.1, III. SERVICING AND LOSS MITIGATION > A. Title II Insured Housing Programs Forward Mortgages > 2. Default Servicing — h. Loss Mitigation Program **Register slug:** `hud-4000-1-iii-a-3-loss-mit` **Obligation count:** 5 ## Register description HUD Handbook 4000.1 Part III.A.2 (Loss Mitigation Review subchapter) governs the FHA Loss Mitigation Program: Mortgagee duties to address delinquency early, follow the Collection Communication Timeline, use the 9-option Loss Mitigation Waterfall (Repayment Plan, Forbearance, Partial Claim, Loan Modification, Combination, Payment Supplement, OWL, Pre-Foreclosure Sale, Deed-in-Lieu), and re-evaluate delinquent loans. Includes 90-Day Review pre-4- installment-default evaluation rule, SCRA-protection duty for servicemember Borrowers, and consideration of Owner-Occupant + Non-Occupant Borrowers for all options. Fills HUD 4000.1 Part III Loss Mitigation gap. ## Obligations #### HUD Handbook 4000.1 III.A.2 — Address delinquency at earliest possible time **Obligation ID:** `hud-4000-1-iii-a-3-loss-mit-address-delinquency-earliest-time` **Workflow phase:** default_collections **Owner role:** loss_mitigation_specialist **Cadence:** continuous **Operative duty (lender voice):** > h. Loss Mitigation Program (12/30/2025) HUD’s Loss Mitigation Options are intended to minimize economic impact to the MMIF and to avoid foreclosure, when possible. The Loss Mitigation Options are: • Repayment Plan; • Forbearance; • Partial Claim; • Loan Modification; • Combination Loan Modification and Partial Claim; • Payment Supplement; • Outside of the Waterfall Loan Modification (OWL); • Pre-Foreclosure Sale (PFS **Compliance obligation:** > For every Delinquent FHA-insured Mortgage, can [LENDER] evidence (via servicing logs, contact-attempt records, early-stage workout-option offers) that all reasonable means were considered to address delinquency at the earliest possible time? **Verbatim regulator text:** ``` h. Loss Mitigation Program (12/30/2025) HUD’s Loss Mitigation Options are intended to minimize economic impact to the MMIF and to avoid foreclosure, when possible. The Loss Mitigation Options are: • Repayment Plan; • Forbearance; • Partial Claim; • Loan Modification; • Combination Loan Modification and Partial Claim; • Payment Supplement; • Outside of the Waterfall Loan Modification (OWL); • Pre-Foreclosure Sale (PFS); and • Deed-in-Lieu (DIL) of Foreclosure. In implementing HUD’s Loss Mitigation Program, the Mortgagee must: • consider all reasonable means to address delinquency at the earliest possible time; • adhere to the requirements for communication with Borrowers in Default as set out in the Collection Communication Timeline; • utilize HUD’s Loss Mitigation Options to avoid foreclosure, when feasible; and • re-evaluate each Delinquent Mortgage for Loss Mitigation Options, as required. When reviewing Borrowers for Loss Mitigation Options, a streamlined or refinanced Mortgage on the same Property and by the same Borrowers is not considered a new Mortgage for seasoning requirements. The Mortgagee may offer eligible Borrowers Loss Mitigation Options in accordance with program-specific procedures for: • Section 203(q) Mortgages, Mortgages on Property in Allegany Reservation of Seneca Indians; • Section 248 Mortgages on Indian Land insured pursuant to Section 248 of the National Housing Act; and • Section 247 Mortgages, Mortgages on Hawaiian Home Lands insured pursuant to Section 247 of the National Housing Act. i. Definitions For the purposes of loss mitigation, the following definitions apply: Borrower refers to the original Borrower who signs the Note and their heirs, executors, administrators, assigns, and approved substitute Borrowers. This includes any Borrower who is occupying or not occupying the Property. Financial Hardship refers to an increase in living expenses or a loss of income affecting the Borrower’s ability to continue their Mortgage Payments as attested by the Borrower. ii. Servicemember Status The Mortgagee must offer eligible servicemember Borrowers mortgage protections under the SCRA and Servicing FHA-Insured Mortgages for Servicemember-Borrowers. iii. Standard (A) Eligibility to Participate in HUD Programs The Mortgagee must verify that the Borrowers are eligible to participate in HUD’s Loss Mitigation Program. To be eligible to participate in HUD’s Loss Mitigation Program, the Borrower: • may not own other real estate subject to FHA insurance, except within the stated exceptions; • has not been the Borrower, except through inheritance or as a co-signer only, on prior loans on which an FHA claim has been paid within the past three years; • for purposes of a Loan Modification, Partial Claim, Combination Loan Modification and Partial Claim, or Payment Supplement, must not be debarred, suspended or subject to a HUD Limited Denial of Participation (LDP) as determined in accordance with Excluded Parties requirements; and • for purposes of a Partial Claim, Combination Loan Modification and Partial Claim, or Payment Supplement, may not have unresolved delinquent Federal Debt as determined in accordance with Borrower Ineligibility Due to Delinquent Federal Non-Tax Debt requirements. The Delinquent FHA-insured Mortgage associated with the Loss Mitigation does not constitute a disqualifying delinquent Federal Debt. (1) Occupancy (a) Definitions An Owner-Occupant Borrower refers to a Borrower residing in the Property secured by the FHA-insured Mortgage as a Principal Residence. A Non-Occupant Borrower refers to a Borrower on a Mortgage securing a Property that is not occupied by any Borrower or is not the Principal Residence. (b) Standard The Mortgagee must consider Owner-Occupant Borrowers and Non-Occupant Borrowers for all Loss Mitigation Options. (2) Non-Borrowers Who Acquired Title through an Exempted Transfer The Mortgagee may consider Repayment Plans, Forbearances, Permanent Home Retention Options, and Home Disposition Options for a non-borrower who acquires title to a Property securing an FHA-insured Mortgage if the Mortgage is not due and payable pursuant to the Garn-St. Germain Depository Institutions Act, (i.e., an Exempted Transfer), and that the non-borrower: • is willing to assume personal liability for repayment of the Mortgage in accordance with the agreed loss mitigation terms; • will occupy the home as a Principal Residence; • meets the criteria for loss mitigation assistance; • for a Permanent Home Retention Option, successfully completes a six- month TPP; and • for a Permanent Home Retention Option, has a valid SSN or EIN or meets the eligibility requirement exception regarding social security numbers. (B) 90-Day Review A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower with the determination of eligibility. (C) Required Documentation The Mortgagee must retain in the Servicing File and the Claim File, if applicable, documentation evidencing that the Borrower is eligible to participate in an FHA transaction, and a copy of the Notice to Borrower, and document efforts to reach each Borrower in Default in advance of the 90-Day Review deadline. The Mortgagee may obtain confirmation from the Borrower, verbally or in writing, that the Borrower does not own any other FHA-insured Property or meets one of the stated exceptions. iv. Evaluation of Borrower for Loss Mitigation Assistance (A) Definition A Complete Loss Mitigation Request is a request for loss mitigation assistance that contains all information from the Borrower required to evaluate all Loss Mitigation Home Retention Options and Home Disposition Options. (B) Standard The Mortgagee must ensure that the Complete Loss Mitigation Request includes: • the reason for Financial Hardship; • Borrower occupancy status; and • documentation that may impact a Mortgagee’s ability to provide a Loss Mitigation Option for Servicemembers, or Non-Borrowers Who Acquired Title through an Exempted Transfer. The Borrower is not required to provide financial documentation to be evaluated for a Loss Mitigation Option. The Mortgagee must not use any financial documentation about the Borrower to disqualify the Borrower from a Loss Mitigation Option other than the required Financial Hardship documentation. The Mortgagee must not condition the use of a Loss Mitigation Option on the receipt of a Borrower’s cash contribution or a Borrower’s payment of fees or charges. For loss mitigation requests received after the initiation of foreclosure, the Mortgagee must evaluate and respond to Complete Loss Mitigation Requests according to the time frame requirements in Loss Mitigation during the Foreclosure Process. (C) Financial Hardship Documentation Mortgagees must obtain the Borrower’s reason for Financial Hardship and documentation, as required in the table below. The Mortgagee may obtain the reason for Financial Hardship verbally, electronically, or in writing. Type of Hardship Required Hardship Documentation Unemployment Not required Reduction in income: a hardship that has caused a decrease in your income due to circumstances outside your control (e.g., elimination of overtime, reduction in regular working hours, a reduction in base pay) Not required Increase in housing-related expenses: a hardship that has caused an increase in your housing expenses due to circumstances outside your control (e.g., uninsured losses, increased property taxes, HOA special assessment) Not required Disaster (natural or man-made) impacting the Property or Borrower's place of employment Not required Long-term or permanent disability, or serious illness of a Borrower/co- Borrower or dependent Family Member Not required Divorce or legal separation Final divorce decree or final separation agreement OR Recorded quitclaim deed Separation of Borrowers unrelated by marriage, civil union, or similar domestic partnership under applicable law Recorded quitclaim deed OR Legally binding agreement evidencing that the non-occupying Borrower or co- Borrower has relinquished all rights to the Property Death of Borrower or death of either the primary or secondary wage earner Death certificate OR Obituary or newspaper article reporting the death Active duty servicemember employment transfer/relocation For active duty servicemembers: Permanent Change of Station (PCS) orders or letter showing transfer Other hardship not listed above Not required unless needed to evidence legal ownership due to the hardship The Mortgagee must review the required documents to identify if the documents indicate that Borrowers or non-borrowers: • have or will have legal ownership of the Property; and • will be included on Loss Mitigation documents for the Permanent Home Retention Option. (D) Required Documentation The Mortgagee must document in the Servicing File and the Claim File, if applicable, the Complete Loss Mitigation Request and the date of receipt. v. HUD’s Loss Mitigation Option Waterfall The Mortgagee must evaluate Borrowers using the Loss Mitigation Option Waterfall below and the requirements for the specific Loss Mitigation Options. Loss Mitigation Waterfall Options Question Decision Point Yes (If the Loss Mitigation Option cannot be offered, proceed to the next Question) No 1 Is the Borrower no more than 120 Days* in Default and able to repay arrearages over a set period of no more than 24 months? *Default may be greater than 120 Days for specific Borrowers Review for a Repayment Plan Proceed to Question 2 2 Does the Borrower require a period of reduced or suspended payments before they are able to resume payments? Review for a Forbearance Proceed to Question 3 3 Has the Borrower received a Permanent Home Retention Option in the past 24 months (other than for a PDMDA)? Proceed to Question 8 Proceed to Question 4 4 Does the Borrower attest they can resume making their current Mortgage Payments? Review for a Standalone Partial Claim Proceed to Question 5 5 Can a Standalone Loan Modification achieve the target payment? Review for a Standalone Loan Modification Proceed to Question 6 6 Can a Combination Loan Modification and Partial Claim achieve the target payment? Review for a Combination Loan Modification and Partial Claim Proceed to Question 7 7 Does the Borrower qualify for a Payment Supplement? Review for a Payment Supplement Return to Question 6, if required, or proceed to Question 8 8 Does the Borrower meet the requirements to participate in a Home Disposition Option? Review for a PFS If an approved PFS marketing period is unsuccessful, review for a DIL of Foreclosure Foreclosure vi. Notice to Borrower after Loss Mitigation Review The Mortgagee must send a written notice to the Borrower after an evaluation of the Borrower for Loss Mitigation Option eligibility, which indicates: • the Mortgagee’s determination of the Borrower’s eligibility for a Loss Mitigation Option and which Loss Mitigation Option, if any, the Mortgagee will offer to the Borrower; • the amount of time in which the Borrower must accept or reject an offer of a Loss Mitigation Option; • the actual reason or reasons they have been denied for any HUD Loss Mitigation Option; • the process for appeals or escalation of cases; • the process and time frame for submission of additional information that may impact the Mortgagee’s evaluation; • the Mortgagee’s points of contact; and • if loss mitigation is denied, rejected by the Borrower, unsuccessful, or unable to be considered due to the Borrower’s failure to execute the documents to complete the Loss Mitigation Option or to provide additional information requested by the Mortgagee, and any applicable appeal period has expired: o the Borrower’s Mortgage may be included in a Single Family Loan Sale (SFLS); or o the Borrower’s Mortgage may be foreclosed upon. vii. Loss Mitigation Agreements (A) Definition A Loss Mitigation Agreement refers to all Permanent Home Retention or Home Disposition Options documents that require execution by the Borrower. (B) Standard The Mortgagee must ensure that Loss Mitigation Agreements are executed by all parties necessary to ensure: • that HUD’s first lien position is preserved; and • that the Agreement is enforceable under state and local law. The Mortgagee may exclude certain signatories to the Agreement or waive the need for a quit claim deed because of divorce, legal separation, domestic violence, mental incapacity, military deployment, or abandonment if the Mortgagee can ensure HUD’s first lien position and the Agreement is enforceable under state and local law. (C) Mortgagee Signature Where a Mortgagee signature is required on a Loss Mitigation Agreement, the servicing Mortgagee with this delegated authority may provide this signature. (D) Authorized Third Parties When a Loss Mitigation Agreement is to be signed by an Authorized Third Party with authority to act on behalf of the Borrower, the Mortgagee must include a copy of that party’s authorization in the Servicing File and Claim File, if applicable. (E) Electronic Signatures The use of electronic signatures is voluntary. HUD will accept an electronic signature conducted in accordance with the Policy on Use of Electronic Signatures on HUD Loss Mitigation documents requiring signatures, unless otherwise prohibited by law. (F) No Waiver of Rights The Mortgagee must not include any language in any loss mitigation documents that requires Borrowers to waive their rights under state or federal law or under the mortgage contract as a condition for consideration, approval, or implementation of a Loss Mitigation Option. viii. Loss Mitigation during Bankruptcy Proceedings (A) Standard The Mortgagee must comply with and seek relief, if appropriate, from the automatic stay. The Mortgagee may review Borrowers with active Chapter 7 or Chapter 13 bankruptcy cases for Loss Mitigation Options to the extent that such loss mitigation does not violate federal bankruptcy laws or orders of the bankruptcy court or bankruptcy trustee. (1) Eligibility for Loss Mitigation The Mortgagee may consider Loss Mitigation Options for those Borrowers who have received a Chapter 7 bankruptcy discharge and did not reaffirm the FHA- insured mortgage debt under applicable law. (2) Bankruptcy Proceedings for which Borrower Has an Attorney The Mortgagee must, upon receipt of notice of a bankruptcy filing, send information to the Borrower’s attorney indicating that Loss Mitigation Options may be available, and provide: • requirements for additional financial information documentation; • applicable time frames; • Mortgagee contact information; and • additional instructions to facilitate workout discussions, as appropriate. The Mortgagee must ensure that this communication does not infer that it is in any way an attempt to collect a debt. (3) Bankruptcy Proceedings for which Borrower does Not Have an Attorney (Bankruptcy Pro Se) Where the Borrower filed the bankruptcy pro se, the Mortgagee must send information indicating that Loss Mitigation Options may be available to the Borrower, with a copy to the bankruptcy trustee. The Mortgagee must ensure that this communication does not infer that it is in any way an attempt to collect a debt. (B) Required Documentation The Mortgagee must retain documentation supporting efforts to comply with or seek relief from automatic stays and documentation supporting any delays in meeting required HUD timelines in the Servicing File and the Claim File. ix. Escalated Cases (A) Definition Escalated Cases are Borrower inquiries and complaints requiring additional Mortgagee review because they include allegations of: • improper analysis of Borrower information or denials of Loss Mitigation Options; • foreclosures initiated or continued in violation of HUD’s policy; or • other violations of HUD policy. (B) Standard The Mortgagee must escalate cases to its designated escalation team at the request of: • HUD staff; or • the Borrower or Borrower’s Authorized Third Party representative. (C) Escalation Processes The Mortgagee must escalate and respond to cases in accordance with their written internal policies. The Mortgagee must ensure that, at a minimum, the policies include the following: • which staff members will be responsible for resolving escalated cases. These staff members must: o not be the same staff members responsible for the first evaluation of the loss mitigation application; and o have access to the Borrowers’ Servicing Files; • provide for timely responses to escalated cases as follows: o within seven Days of categorizing a Borrower’s inquiry or complaint as an escalated case, the Mortgagee should notify the Borrower in writing that their inquiry and/or complaint has been escalated and that a resolution to their case will be provided no later than 30 Days from the date of escalation; and o if the Mortgagee is unable to resolve an escalated case within 30 Days, the Mortgagee must send the Borrower written updates on the status of their case every 15 Days until the case is resolved; • provide Borrowers with the direct contact information of the department and/or staff member responsible for resolving its escalated cases; • include methodologies for assessing a Servicer’s compliance with its escalation policies. These methodologies must be included in a Mortgagee’s Quality Control (QC) Plan; and • detail the Mortgagee’s process for resolving escalated cases and managing foreclosure activity when a foreclosure sale has been scheduled. x. Required Documentation The Mortgagee must document their compliance with HUD’s Loss Mitigation Program in the Servicing File and the Claim File, if applicable, including: • all loss mitigation actions, including all efforts to contact the Borrowers; and • all documentation used to analyze and make loss mitigation decisions and to confirm compliance with loss mitigation requirements. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `8c03836f77f317e1` _Fetched_: 2026-05-25T14:10:11Z **Consequence of non-compliance:** Late-engagement loss mitigation reduces workout-success and is a FHA Servicing Guide deficiency. --- #### HUD Handbook 4000.1 III.A.2 — Re-evaluate each Delinquent Mortgage for Loss Mitigation Options **Obligation ID:** `hud-4000-1-iii-a-3-loss-mit-reevaluate-each-delinquent` **Workflow phase:** default_collections **Owner role:** loss_mitigation_specialist **Cadence:** continuous **Operative duty (lender voice):** > [LENDER] (Mortgagee) shall re-evaluate each Delinquent Mortgage > for Loss Mitigation Options, as required. Re-evaluation is > ongoing, not one-shot — circumstances change and prior workout > ineligibility may resolve; [LENDER] cannot lock a Borrower > into a single point-in-time eligibility determination. **Compliance obligation:** > For every Delinquent FHA-insured Mortgage, can [LENDER] evidence a re-evaluation schedule and produce subsequent-evaluation records reflecting any change in Borrower circumstances? **Verbatim regulator text:** ``` re-evaluate each Delinquent Mortgage for Loss Mitigation Options, as required. ``` _Authority_: HUD Handbook 4000.1 III.A.2 — Loss Mitigation Program _Source_: _Snapshot_: `3bf33edadcf6461d` _Fetched_: 2026-05-25T14:10:11Z **Consequence of non-compliance:** One-shot loss-mit determinations missing re-evaluation are a FHA Servicing Guide breach + CFPB Reg X dual-tracking exposure. --- #### HUD Handbook 4000.1 III.A.2.iii(A)(1)(b) — Consider Owner-Occupant AND Non-Occupant Borrowers for all Loss Mitigation Options **Obligation ID:** `hud-4000-1-iii-a-3-loss-mit-consider-owner-occupant-and-non-occupant` **Workflow phase:** default_collections **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-evaluation **Operative duty (lender voice):** > The Mortgagee must consider Owner-Occupant Borrowers and Non-Occupant Borrowers for all Loss Mitigation Options. **Compliance obligation:** > For every Loss Mitigation evaluation, can [LENDER] evidence that occupancy status (Owner-Occupant vs Non-Occupant) was NOT used to disqualify the Borrower from waterfall consideration? **Verbatim regulator text:** ``` The Mortgagee must consider Owner-Occupant Borrowers and Non-Occupant Borrowers for all Loss Mitigation Options. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-25T14:10:11Z **Consequence of non-compliance:** Excluding Non-Occupant Borrowers from waterfall review is a FHA Servicing Guide breach + potential fair-housing / ECOA exposure. --- #### HUD Handbook 4000.1 III.A.2.iii(B) — 90-Day Review: complete Loss Mit evaluation before 4 monthly installments + send written Notice **Obligation ID:** `hud-4000-1-iii-a-3-loss-mit-90-day-review-before-4-installments` **Workflow phase:** default_collections **Owner role:** loss_mitigation_specialist **Cadence:** per-defaulted-loan **Operative duty (lender voice):** > A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower with the determination of eligibility. **Compliance obligation:** > For every Defaulted FHA-insured Mortgage, can [LENDER] evidence (a) Loss Mitigation evaluation completed BEFORE the 4th monthly installment came due unpaid, AND (b) written Notice to Borrower with determination of eligibility? **Verbatim regulator text:** ``` A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower with the determination of eligibility. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-25T14:10:11Z **Consequence of non-compliance:** Missing the pre-4-installment evaluation or written notice is a 90-Day Review breach; FHA Servicing Guide defect + potential dual-tracking risk under Reg X. --- #### HUD Handbook 4000.1 III.A.2.ii — Offer SCRA mortgage protections to eligible servicemember Borrowers **Obligation ID:** `hud-4000-1-iii-a-3-loss-mit-servicemember-scra-protections` **Workflow phase:** default_collections **Owner role:** loss_mitigation_specialist **Cadence:** per-servicemember-borrower **Operative duty (lender voice):** > The Mortgagee must offer eligible servicemember Borrowers mortgage protections under the SCRA and Servicing FHA-Insured Mortgages for Servicemember-Borrowers. **Compliance obligation:** > For every Defaulted FHA-insured Mortgage where the Borrower is or may be a servicemember, can [LENDER] evidence (a) SCRA-eligibility verification (DMDC check, military orders) and (b) offer of the applicable SCRA mortgage protections? **Verbatim regulator text:** ``` The Mortgagee must offer eligible servicemember Borrowers mortgage protections under the SCRA and Servicing FHA-Insured Mortgages for Servicemember-Borrowers. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-25T14:10:11Z **Consequence of non-compliance:** Missing SCRA protections expose [LENDER] to federal SCRA enforcement + FHA Servicing Guide breach + DOJ exposure (SCRA private right of action). --- --- # FHA Single Family Housing Policy Handbook 4000.1, III. SERVICING AND LOSS MITIGATION > A. Title II Insured Housing Programs Forward Mortgages > 2. Default Servicing — a. Mortgages in Delinquency or Default **Register slug:** `hud-4000-1-iii-a-2` **Obligation count:** 1 ## Register description HUD Handbook 4000.1 Part III.A.2 governs Default Servicing for FHA forward mortgages: Delinquency vs Default definitions (Default = 30-day uncorrected failure); standard requiring FHA-conforming servicing of delinquent/default loans; 30-day-month convention for Default-related timelines; CRA + IRS reporting accuracy; Late Charge 15-day-late trigger and 4% P&I cap (post-3/14/2016 cases); advance-written-notice requirement before assessing Late Charge. Fills HUD 4000.1 Part III.A.2 chapter gap. ## Obligations #### HUD Handbook 4000.1 Part III.A.2 **Obligation ID:** `hud-4000-1-iii-a-2-full` **Operative duty (lender voice):** > a. Mortgages in Delinquency or Default (03/31/2022) i. Definitions A Mortgage is Delinquent any time a Mortgage Payment is due and not paid. A Mortgage is in Default when the Borrower fails to make any payment or perform any other obligation under the Mortgage, and such failure continues for a period of 30 Days. The date of Default is 30 Days after: • the first uncorrected failure to perform any obligation under the **Verbatim regulator text:** ``` a. Mortgages in Delinquency or Default (03/31/2022) i. Definitions A Mortgage is Delinquent any time a Mortgage Payment is due and not paid. A Mortgage is in Default when the Borrower fails to make any payment or perform any other obligation under the Mortgage, and such failure continues for a period of 30 Days. The date of Default is 30 Days after: • the first uncorrected failure to perform any obligation under the Mortgage; or • the first failure to make a monthly payment which subsequent payments by the Borrower are insufficient to cover when applied to the overdue monthly payments in the order in which they become due. ii. Standard The Mortgagee must ensure FHA-insured Mortgages in Delinquency or Default are serviced in accordance with FHA requirements and applicable laws. For the purpose of determining the date of Default and timelines related to Default, HUD considers all months to have 30 Days. b. Reporting to Consumer Reporting Agencies and the IRS (03/31/2022) The Mortgagee is responsible for: • complying with applicable law and federal regulations relating to reporting to consumer reporting agencies; and • ensuring that all reported information is accurate. The Mortgagee is also responsible for any required IRS reporting regarding acquisition of secured Property or cancellation of mortgage debt, in accordance with the Internal Revenue Code (IRC). c. Late Charges (10/01/2025) i. Definition Late Charges are charges assessed if a Mortgage Payment is received more than 15 Days after the due date. ii. Standard The Mortgagee may consider a Borrower’s Mortgage Payment late if the payment is received by the Mortgagee more than 15 Days after the due date, except for payments received from Borrowers in accordance with a Trial Payment Plan Agreement. The Mortgagee may assess a late charge on the 17th Day. For Mortgages assigned a case number on or after March 14, 2016, the Mortgagee may assess a Late Charge, not to exceed 4 percent of the overdue payment of Principal and Interest (P&I) and in accordance with applicable state and federal laws. For Mortgages assigned a case number before March 14, 2016, the Mortgagee may assess a Late Charge calculated based on overdue PITI if permitted under the terms of the mortgage Note and under applicable state and federal laws. (A) Notifying the Borrower of the Late Charge Before collecting the Late Charge or returning a Mortgage Payment to the Borrower for failing to pay the Late Charge, the Mortgagee must provide the Borrower with an advance written notice of the charge. The Mortgagee must include in the advance notice the following information: • the due date of the monthly Mortgage Payment; • the amount of the regular monthly Mortgage Payment; • the date on which the Late Charge will be imposed; and • the amount of the Late Charge (or the full amount now due which consists of the regular monthly Mortgage Payment plus the Late Charge amount). (B) Application of Subsequent Payment to Unpaid Late Charges After advance notice has been sent to the Borrower, the Mortgagee may: • treat any subsequent payment that does not include the Late Charge in accordance with HUD’s Partial Payments for Mortgages in Default section; and • deduct amounts due for Late Charges owed for a previous installment. (C) Default/Foreclosure Due to Unpaid Late Charges A Mortgage may be technically in Default by its terms if a Late Charge is not paid within 30 Days after it becomes due. However, the Mortgagee may not initiate foreclosure action when the only delinquency is due to: • unpaid Late Charges that are due on the account; and/or • unpaid monthly payments that remain unpaid because the Mortgagee did not comply with HUD’s Partial Payments for Mortgages in Default section. iii. Required Documentation The Mortgagee must ensure that the Servicing File reflects any Late Charges assessed and includes any advance written notice of such charges sent to the Borrower. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-25T14:10:11Z --- --- # FHA Single Family Housing Policy Handbook 4000.1, III. SERVICING AND LOSS MITIGATION > A. Title II Insured Housing Programs Forward Mortgages > 2. Default Servicing — a. Mortgages in Delinquency or Default **Register slug:** `hud-4000-1-iii-a-2-a` **Obligation count:** 1 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.a. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.a **Obligation ID:** `hud-4000-1-iii-a-2-a-full` **Operative duty (lender voice):** > a. Mortgages in Delinquency or Default (03/31/2022) i. Definitions A Mortgage is Delinquent any time a Mortgage Payment is due and not paid. A Mortgage is in Default when the Borrower fails to make any payment or perform any other obligation under the Mortgage, and such failure continues for a period of 30 Days. The date of Default is 30 Days after: • the first uncorrected failure to perform any obligation under the **Verbatim regulator text:** ``` a. Mortgages in Delinquency or Default (03/31/2022) i. Definitions A Mortgage is Delinquent any time a Mortgage Payment is due and not paid. A Mortgage is in Default when the Borrower fails to make any payment or perform any other obligation under the Mortgage, and such failure continues for a period of 30 Days. The date of Default is 30 Days after: • the first uncorrected failure to perform any obligation under the Mortgage; or • the first failure to make a monthly payment which subsequent payments by the Borrower are insufficient to cover when applied to the overdue monthly payments in the order in which they become due. ii. Standard The Mortgagee must ensure FHA-insured Mortgages in Delinquency or Default are serviced in accordance with FHA requirements and applicable laws. For the purpose of determining the date of Default and timelines related to Default, HUD considers all months to have 30 Days. b. Reporting to Consumer Reporting Agencies and the IRS (03/31/2022) The Mortgagee is responsible for: • complying with applicable law and federal regulations relating to reporting to consumer reporting agencies; and • ensuring that all reported information is accurate. The Mortgagee is also responsible for any required IRS reporting regarding acquisition of secured Property or cancellation of mortgage debt, in accordance with the Internal Revenue Code (IRC). c. Late Charges (10/01/2025) i. Definition Late Charges are charges assessed if a Mortgage Payment is received more than 15 Days after the due date. ii. Standard The Mortgagee may consider a Borrower’s Mortgage Payment late if the payment is received by the Mortgagee more than 15 Days after the due date, except for payments received from Borrowers in accordance with a Trial Payment Plan Agreement. The Mortgagee may assess a late charge on the 17th Day. For Mortgages assigned a case number on or after March 14, 2016, the Mortgagee may assess a Late Charge, not to exceed 4 percent of the overdue payment of Principal and Interest (P&I) and in accordance with applicable state and federal laws. For Mortgages assigned a case number before March 14, 2016, the Mortgagee may assess a Late Charge calculated based on overdue PITI if permitted under the terms of the mortgage Note and under applicable state and federal laws. (A) Notifying the Borrower of the Late Charge Before collecting the Late Charge or returning a Mortgage Payment to the Borrower for failing to pay the Late Charge, the Mortgagee must provide the Borrower with an advance written notice of the charge. The Mortgagee must include in the advance notice the following information: • the due date of the monthly Mortgage Payment; • the amount of the regular monthly Mortgage Payment; • the date on which the Late Charge will be imposed; and • the amount of the Late Charge (or the full amount now due which consists of the regular monthly Mortgage Payment plus the Late Charge amount). (B) Application of Subsequent Payment to Unpaid Late Charges After advance notice has been sent to the Borrower, the Mortgagee may: • treat any subsequent payment that does not include the Late Charge in accordance with HUD’s Partial Payments for Mortgages in Default section; and • deduct amounts due for Late Charges owed for a previous installment. (C) Default/Foreclosure Due to Unpaid Late Charges A Mortgage may be technically in Default by its terms if a Late Charge is not paid within 30 Days after it becomes due. However, the Mortgagee may not initiate foreclosure action when the only delinquency is due to: • unpaid Late Charges that are due on the account; and/or • unpaid monthly payments that remain unpaid because the Mortgagee did not comply with HUD’s Partial Payments for Mortgages in Default section. iii. Required Documentation The Mortgagee must ensure that the Servicing File reflects any Late Charges assessed and includes any advance written notice of such charges sent to the Borrower. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- --- # HUD Handbook 4000.1 III.A.2.b **Register slug:** `hud-4000-1-iii-a-2-b` **Obligation count:** 1 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.b. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.b **Obligation ID:** `hud-4000-1-iii-a-2-b-full` **Operative duty (lender voice):** > b. Reporting to Consumer Reporting Agencies and the IRS (03/31/2022) The Mortgagee is responsible for: • complying with applicable law and federal regulations relating to reporting to consumer reporting agencies; and • ensuring that all reported information is accurate. The Mortgagee is also responsible for any required IRS reporting regarding acquisition of secured Property or cancellation of mortgage debt, in accor **Verbatim regulator text:** ``` b. Reporting to Consumer Reporting Agencies and the IRS (03/31/2022) The Mortgagee is responsible for: • complying with applicable law and federal regulations relating to reporting to consumer reporting agencies; and • ensuring that all reported information is accurate. The Mortgagee is also responsible for any required IRS reporting regarding acquisition of secured Property or cancellation of mortgage debt, in accordance with the Internal Revenue Code (IRC). ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- --- # FHA Single Family Housing Policy Handbook 4000.1, III. SERVICING AND LOSS MITIGATION > A. Title II Insured Housing Programs Forward Mortgages > 2. Default Servicing — c. Late Charges **Register slug:** `hud-4000-1-iii-a-2-c` **Obligation count:** 1 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.c. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.c **Obligation ID:** `hud-4000-1-iii-a-2-c-full` **Operative duty (lender voice):** > c. Late Charges (10/01/2025) i. Definition Late Charges are charges assessed if a Mortgage Payment is received more than 15 Days after the due date. ii. Standard The Mortgagee may consider a Borrower’s Mortgage Payment late if the payment is received by the Mortgagee more than 15 Days after the due date, except for payments received from Borrowers in accordance with a Trial Payment Plan Agreement. The Mortgagee may a **Verbatim regulator text:** ``` c. Late Charges (10/01/2025) i. Definition Late Charges are charges assessed if a Mortgage Payment is received more than 15 Days after the due date. ii. Standard The Mortgagee may consider a Borrower’s Mortgage Payment late if the payment is received by the Mortgagee more than 15 Days after the due date, except for payments received from Borrowers in accordance with a Trial Payment Plan Agreement. The Mortgagee may assess a late charge on the 17th Day. For Mortgages assigned a case number on or after March 14, 2016, the Mortgagee may assess a Late Charge, not to exceed 4 percent of the overdue payment of Principal and Interest (P&I) and in accordance with applicable state and federal laws. For Mortgages assigned a case number before March 14, 2016, the Mortgagee may assess a Late Charge calculated based on overdue PITI if permitted under the terms of the mortgage Note and under applicable state and federal laws. (A) Notifying the Borrower of the Late Charge Before collecting the Late Charge or returning a Mortgage Payment to the Borrower for failing to pay the Late Charge, the Mortgagee must provide the Borrower with an advance written notice of the charge. The Mortgagee must include in the advance notice the following information: • the due date of the monthly Mortgage Payment; • the amount of the regular monthly Mortgage Payment; • the date on which the Late Charge will be imposed; and • the amount of the Late Charge (or the full amount now due which consists of the regular monthly Mortgage Payment plus the Late Charge amount). (B) Application of Subsequent Payment to Unpaid Late Charges After advance notice has been sent to the Borrower, the Mortgagee may: • treat any subsequent payment that does not include the Late Charge in accordance with HUD’s Partial Payments for Mortgages in Default section; and • deduct amounts due for Late Charges owed for a previous installment. (C) Default/Foreclosure Due to Unpaid Late Charges A Mortgage may be technically in Default by its terms if a Late Charge is not paid within 30 Days after it becomes due. However, the Mortgagee may not initiate foreclosure action when the only delinquency is due to: • unpaid Late Charges that are due on the account; and/or • unpaid monthly payments that remain unpaid because the Mortgagee did not comply with HUD’s Partial Payments for Mortgages in Default section. iii. Required Documentation The Mortgagee must ensure that the Servicing File reflects any Late Charges assessed and includes any advance written notice of such charges sent to the Borrower. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- --- # FHA Single Family Housing Policy Handbook 4000.1, III. SERVICING AND LOSS MITIGATION > A. Title II Insured Housing Programs Forward Mortgages > 2. Default Servicing — d. Partial Payments for Mortgages in Default **Register slug:** `hud-4000-1-iii-a-2-d` **Obligation count:** 1 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.d. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.d **Obligation ID:** `hud-4000-1-iii-a-2-d-full` **Operative duty (lender voice):** > d. Partial Payments for Mortgages in Default (10/01/2025) i. Acceptance of Partial Payments Unless subject to the exceptions in the Return of Partial Payments for Mortgage in Default section, the Mortgagee must accept any Partial Payment and either: • apply the payment to the Borrower’s account; or • identify the payment with the Borrower’s account and hold the payment in a suspense account. When a full monthly insta **Verbatim regulator text:** ``` d. Partial Payments for Mortgages in Default (10/01/2025) i. Acceptance of Partial Payments Unless subject to the exceptions in the Return of Partial Payments for Mortgage in Default section, the Mortgagee must accept any Partial Payment and either: • apply the payment to the Borrower’s account; or • identify the payment with the Borrower’s account and hold the payment in a suspense account. When a full monthly installment due under the Mortgage is accumulated, the Mortgagee must apply that amount to the Borrower’s account. ii. Application of Partial Payments Totaling a Full Monthly Payment (A) Standard When Partial Payments held for disposition total a full monthly Mortgage Payment, the Mortgagee must apply Borrower payments, in the following order, to: • MIPs due, if any; • charges for Ground Rents, taxes, special assessments, including any assessments related to a PACE obligation, flood insurance premiums, if required, and fire and other hazard insurance premiums; • interest on the Mortgage; • amortization of the principal of the Mortgage; and • Late Charges, provided that any amounts owed for Late Charges must be handled consistent with Truth in Lending Act (TILA) regulations. This application of Partial Payments as a full monthly installment advances the date of the oldest unpaid installment, but not the initial date of Default. (B) Required Documentation When applying Partial Payments totaling a full monthly Mortgage Payment, the Mortgagee must: • report the appropriate Status Code in the Single Family Default Monitoring System (SFDMS); and • advance the Oldest Unpaid Installment (OUI) date one month. iii. Return of Partial Payments for Mortgages in Default (A) Standard If the Mortgage is in Default, the Mortgagee may return the Partial Payment to the Borrower with a letter of explanation only under the following circumstances: • when the payment represents less than half of the full amount due under the terms of the Mortgage, including Late Charges, at the time the payment is tendered; • when the payment is less than the amount agreed to in a Forbearance or Repayment Plan; • when the payment is less than the amount stated in an approved Trial Payment Plan (TPP) Agreement; • when the Property is occupied by a rent-paying tenant and the rents are not being applied to the Mortgage Payments; • when the first legal action to initiate foreclosure has been completed; or • when it is 14 Days or more after the Mortgagee has mailed the Borrower a statement of the full amount due, including Late Charges, which advises that it intends to refuse to accept future Partial Payments (see Application of Subsequent Payment to Unpaid Late Charges), and either of the following conditions have occurred: o four or more full monthly installments are due but unpaid; or o a delinquency of any amount, including Late Charges, has continued for at least six months since the account first became Delinquent. (B) Required Documentation The Mortgagee must ensure that its Servicing File reflects any Partial Payments returned to the Borrower and includes any letters of explanation for the returned payments. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `8c03836f77f317e1` _Fetched_: 2026-05-23T00:28:40Z --- --- # HUD Handbook 4000.1 III.A.2.e **Register slug:** `hud-4000-1-iii-a-2-e` **Obligation count:** 1 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.e. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.e — Lien Status **Obligation ID:** `hud-4000-1-iii-a-2-e-preserve-first-lien-status` **Workflow phase:** servicing **Owner role:** compliance_officer **Cadence:** ongoing **Operative duty (lender voice):** > The Mortgagee must preserve the first lien status of the FHA-insured Mortgage. HUD will not pay a claim on a Mortgage that is not in first priority position. **Compliance obligation:** > For every FHA-insured Mortgage in [LENDER]'s servicing portfolio, can [LENDER] evidence preservation of first lien status (no intervening senior lien, no inadvertent subordination, title monitoring per [LENDER]'s P&P)? **Verbatim regulator text:** ``` The Mortgagee must preserve the first lien status of the FHA-insured Mortgage. HUD will not pay a claim on a Mortgage that is not in first priority position. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z **Consequence of non-compliance:** Claim ineligibility — HUD will not pay a claim on a Mortgage that is not in first priority position. --- --- # HUD Handbook 4000.1 III.A.2.h **Register slug:** `hud-4000-1-iii-a-2-h` **Obligation count:** 3 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.h. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.h.iii(A) — Eligibility to Participate in HUD Programs **Obligation ID:** `hud-4000-1-iii-a-2-h-borrower-eligibility-verification` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-evaluation **Operative duty (lender voice):** > The Mortgagee must verify that the Borrowers are eligible to participate in HUD’s Loss Mitigation Program. **Compliance obligation:** > For every FHA-insured Mortgage in Default for which [LENDER] offered a Loss Mitigation Option, can [LENDER] evidence Borrower-eligibility verification under III.A.2.h.iii(A)? **Verbatim regulator text:** ``` The Mortgagee must verify that the Borrowers are eligible to participate in HUD’s Loss Mitigation Program. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- #### HUD Handbook 4000.1 III.A.2.h.iii(B) — 90-Day Review **Obligation ID:** `hud-4000-1-iii-a-2-h-90-day-evaluation` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-defaulted-loan **Operative duty (lender voice):** > A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower with the determination of eligibility. **Compliance obligation:** > For every FHA-insured forward Mortgage in Default, can [LENDER] evidence completion of the loss-mit evaluation before four monthly installments became due and unpaid, and delivery of the written Notice to Borrower with the determination of eligibility? **Verbatim regulator text:** ``` A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower with the determination of eligibility. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- #### HUD Handbook 4000.1 III.A.2.h.iv(B) — Evaluation of Borrower for Loss Mitigation Assistance, Standard **Obligation ID:** `hud-4000-1-iii-a-2-h-no-borrower-cash-contribution` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-offer **Operative duty (lender voice):** > The Mortgagee must not condition the use of a Loss Mitigation Option on the receipt of a Borrower’s cash contribution or a Borrower’s payment of fees or charges. **Compliance obligation:** > For every FHA Loss Mitigation Option offered, can [LENDER] evidence that the offer was not conditioned on a Borrower cash contribution or on Borrower payment of fees or charges? **Verbatim regulator text:** ``` The Mortgagee must not condition the use of a Loss Mitigation Option on the receipt of a Borrower’s cash contribution or a Borrower’s payment of fees or charges. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- --- # HUD Handbook 4000.1 III.A.2.i **Register slug:** `hud-4000-1-iii-a-2-i` **Obligation count:** 3 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.i. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.i.ii(A)(2) — Repayment Plans Standard **Obligation ID:** `hud-4000-1-iii-a-2-i-repayment-plan-affordability-review` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-evaluation **Operative duty (lender voice):** > The Mortgagee must review the Borrower for a Repayment Plan if the Borrower affirms the monthly installment amount required under the terms of the Repayment Plan Agreement is affordable. **Compliance obligation:** > For every Borrower who affirmed affordability under a proposed Repayment Plan Agreement, can [LENDER] evidence a documented Repayment Plan review? **Verbatim regulator text:** ``` The Mortgagee must review the Borrower for a Repayment Plan if the Borrower affirms the monthly installment amount required under the terms of the Repayment Plan Agreement is affordable. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- #### HUD Handbook 4000.1 III.A.2.i.ii(A)(2) — Repayment Plans Standard, Term Cap **Obligation ID:** `hud-4000-1-iii-a-2-i-repayment-plan-24-month-cap` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-workout **Operative duty (lender voice):** > [LENDER] must ensure the term of the Repayment Plan does not exceed > 24 months, and must require the delinquency to be repaid in equal > monthly installments, in addition to the Mortgage Payments, over the > term of the Repayment Plan. **Compliance obligation:** > For every Repayment Plan Agreement, can [LENDER] evidence that the plan term does not exceed 24 months and that the delinquency is repaid in equal monthly installments in addition to the Mortgage Payments over the term? **Verbatim regulator text:** ``` • ensure the term of the Repayment Plan does not exceed 24 months; and • require the delinquency to be repaid in equal monthly installments, in addition to the Mortgage Payments, over the term of the Repayment Plan. ``` _Authority_: HUD Handbook 4000.1 III.A.2.i.ii(A)(2) — Standard _Source_: _Snapshot_: `8c03836f77f317e1` _Fetched_: 2026-05-23T00:28:40Z --- #### HUD Handbook 4000.1 III.A.2.i.ii(A)(4) — Repayment Plan Agreement **Obligation ID:** `hud-4000-1-iii-a-2-i-repayment-plan-agreement-15-day-delivery` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-workout **Operative duty (lender voice):** > The Mortgagee must provide the Borrower with the Repayment Plan Agreement at least 15 Days before the date the first installment is due. **Compliance obligation:** > For every Repayment Plan Agreement, can [LENDER] evidence delivery to the Borrower at least 15 Days before the first installment due date? **Verbatim regulator text:** ``` The Mortgagee must provide the Borrower with the Repayment Plan Agreement at least 15 Days before the date the first installment is due. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- --- # FHA Single Family Housing Policy Handbook 4000.1, III. SERVICING AND LOSS MITIGATION > A. Title II Insured Housing Programs Forward Mortgages > 2. Default Servicing — j. Home Disposition Options **Register slug:** `hud-4000-1-iii-a-2-j` **Obligation count:** 1 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.j. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.j **Obligation ID:** `hud-4000-1-iii-a-2-j-full` **Operative duty (lender voice):** > j. Home Disposition Options (12/30/2025) i. Standard The Mortgagee must review Borrowers for Home Disposition Options who are unable to sustain the Mortgage with the assistance of a Loss Mitigation Home Retention Option. The Home Disposition Options include: • Pre-Foreclosure Sale (PFS); and • Deed-in-Lieu (DIL). The Mortgagee must notify the Borrower that they may be able to avoid foreclosure by selling their home w **Verbatim regulator text:** ``` j. Home Disposition Options (12/30/2025) i. Standard The Mortgagee must review Borrowers for Home Disposition Options who are unable to sustain the Mortgage with the assistance of a Loss Mitigation Home Retention Option. The Home Disposition Options include: • Pre-Foreclosure Sale (PFS); and • Deed-in-Lieu (DIL). The Mortgagee must notify the Borrower that they may be able to avoid foreclosure by selling their home with a traditional sale or a PFS Option. If the Borrower advises that their financial situation has improved during the PFS or DIL process and wants to retain the Property, the Mortgagee must review the Borrower for one additional Loss Mitigation Home Retention Option. ii. Pre-Foreclosure Sales (A) Definition A Pre-Foreclosure Sale (PFS), also known as a Short Sale, refers to the sale of real estate that generates proceeds that are less than the amount owed on the Property and in which the lien holders agree to release their liens and forgive the deficiency balance on the real estate. There are two PFS Options: • Standard PFS; and • PFS for Servicemembers. (B) Requirements for all PFS Options (1) PFS Outreach Requirements (a) Form HUD-90035, Information Sheet: Pre-foreclosure Sale Procedure When the Mortgagee has identified a Borrower as a qualified candidate for a PFS or a Borrower has expressed an interest in participating, the Mortgagee must provide to the Borrower, electronically or by mail, form HUD-90035, Information Sheet: Pre-foreclosure Sale Procedure, adding its toll-free or collect telephone number to the form. (b) Disclosure Requirements for PFS Transactions Prior to approving the Borrower for the PFS Option, the Mortgagee must notify the Borrower of the following in writing: • The Mortgage must be three or more full monthly payment due and unpaid (61 Days or more past due) on the date the Mortgagee approves the Borrower’s participation in a Standard PFS. • On the date the PFS for Servicemembers transaction closes, the Mortgage must be in Default status (minimum 31 Days Delinquent). • Until the PFS transaction has closed, the Borrower must maintain the Property in “ready to show” condition, make basic property repairs, and perform all normal property maintenance activities (e.g., interior cleaning, lawn maintenance, etc.). o The Borrower must report all damage and/or repair expenses resulting from fire, flood, or other natural causes immediately to the insurance company and Mortgagee. • PFS transactions are reported to consumer reporting agencies and will likely affect the Borrower’s ability to obtain another Mortgage and other types of credit. • If the Borrower is a servicemember, it is recommended that the Borrower obtain guidance from their employer regarding the PFS’s impact on their security clearance and employment. Where the Property is encumbered with a PACE obligation, the property sales contract must indicate whether the obligation will remain with the Property or be satisfied by the seller at, or prior to closing. Where the obligation will remain, all terms and conditions of the PACE obligation must be fully disclosed to the buyer in accordance with applicable law (state and local) and made part of the sales contract. (2) Required Documentation for PFS The Mortgagee must maintain all required Borrower Income and Assets and hardship documentation in the Servicing File and the Claim File. (C) PFS Options (1) Standard PFS (a) Definition A Standard PFS Option is available for Owner-Occupant and Non-Occupant Borrowers and does not require verification of hardship. (b) Standard PFS Standards [This section is impacted by a waiver.] The Mortgagee must ensure that the Owner-Occupant or Non-Occupant Borrower meet the following requirements: • the Borrower indicates a Financial Hardship affecting their ability to sustain the Mortgage; • the Borrower must be 61 Days or more Delinquent on the FHA- insured Mortgage as of the date of the Mortgagee’s approval; • each Borrower has a credit score of 620 or below; and • the Borrower must have exhausted or been deemed ineligible for all permanent Loss Mitigation Home Retention Options. (c) Corporations or Partnerships Requesting PFS Option The Mortgagee must submit a variance request for HUD approval via EVARS to use the PFS Option when the Property is owned by a corporation or partnership. (2) PFS for Servicemembers (a) Definition A Streamlined PFS for Servicemembers with PCS Orders is a Streamlined PFS that may be offered to servicemembers with PCS Orders who must relocate to a new duty station at least 50 miles away from their existing residence. (b) Streamlined PFS for Servicemembers with PCS Orders Standards The Mortgagee must ensure that servicemembers meet the following requirements for a Streamlined PFS for Servicemembers with PCS Orders: • The servicemember has PCS Orders to relocate to a duty station at least 50 miles away from their existing residence and provides the Mortgagee with a copy of such orders. • The servicemember submits an affidavit certifying that: o the Property securing the FHA-insured Mortgage is or was their Principal Residence when the PCS orders were issued; and o new permanent housing has been or will be obtained as a result of the orders. On the date the PFS closing occurs, the Mortgagee must ensure that the Mortgage is in Default status (minimum 31 Days Delinquent). (D) Property Valuation (1) Appraisals (a) Standard The Mortgagee must obtain a standard electronically-formatted appraisal performed by an FHA Roster Appraiser pursuant to the following requirements: • The appraisal must contain an “As-Is” Fair Market Value (FMV) for the subject Property and must be completed in accordance with the Pre-Foreclosure Sale Program requirements in the Appraiser and Property Requirements for Title II Forward and Reverse Mortgages section; and • A copy of the appraisal must be provided to the homeowner, sales agent, or HUD, upon request. (b) Required Analysis and Reporting of a Property Assessed Clean Energy Obligation The Appraiser must review the sales contract, if applicable, and property tax records for the Property to determine the amount outstanding and the terms of the Property Assessed Clean Energy (PACE) obligation: • if the Mortgagee notifies the Appraiser that the subject Property will remain subject to a PACE obligation; • when the Appraiser observes that the property taxes for the subject Property are higher than average for the neighborhood and type of dwelling; or • when the Appraiser observes energy-related building components or equipment or is aware of other PACE-allowed improvements during the inspection process. The Appraiser must report the outstanding amount of the PACE obligation for the subject Property and provide a brief explanation of the terms. Where energy and other PACE-allowed improvements have been made to the Property through a PACE program, and the PACE obligation will remain outstanding, the Appraiser must analyze and report the impact on value of the Property, whether positive or negative, of the PACE-related improvements and any additional obligation (i.e., the PACE special assessment). (c) Appraisal Validity Period The as-is appraisal used for a PFS transaction is valid for 180 Days from the effective date of the appraisal report. If a Mortgagee determines that a subsequent as-is appraisal is required, the Mortgagee may obtain a new as-is appraisal, even if the Property was appraised by an FHA Roster Appraiser within the preceding 180 Days. If a third or any subsequent appraisal is required, the Mortgagee must submit a variance request for HUD approval via EVARS. (d) Required Documentation The Mortgagee must retain a copy of the appraisal in the Servicing File and the Claim File. (2) Validation of Appraised Value (a) Standard Prior to authorizing the marketing of the Property, the Mortgagee must review the appraisal to determine if further HUD approval is required to proceed with the as-is appraised value of the Property, as determined by the appraisal performed by an FHA Roster Appraiser. The Mortgagee must obtain a Broker’s Price Opinion (BPO) or Automated Valuation Model (AVM) if the as-is appraised value of the Property is: • less than the unpaid principal balance by an amount of $75,000 or greater; or • less than 50 percent of the unpaid principal balance. If a BPO or AVM is required, the Mortgagee must submit a variance request for HUD approval via EVARS, before proceeding with the PFS using the as-is appraised value. If a BPO or AVM is not required, the Mortgagee is not required to submit a request for a variance through EVARS. (b) Requirements for Variance Request for Property Valuation When required to submit a variance request to validate the as-is appraised value via EVARS, the Mortgagee must: • note on the variance request the specific reason for the request; and • upload the following attachments: o the as-is appraisal; o the BPO or AVM; and o any additional supporting documents needed for HUD review, if applicable. The Mortgagee must obtain approval before authorizing the marketing of the Property. (c) Required Documentation The Mortgagee must retain in the Claim File a copy of the BPO or AVM and the approved variance, if required. (3) List Price The Mortgagee must ensure that the Borrower lists the Property for sale at no less than the “As-Is” value as determined by an appraisal completed in accordance with the requirements in Pre-Foreclosure Sale Program. (E) Property Condition A Property that is condemned or that the Mortgagee determined is abandoned is not eligible for PFS. (1) Surchargeable Damage (a) Definition Surchargeable Damage is damage to a Property caused by fire, flood, earthquake, tornado, hurricane, boiler explosion (for condominiums only), or Mortgagee Neglect. (b) Standard The Mortgagee is responsible for the cost of Surchargeable Damage. (c) PFS Request for Damaged Property The Mortgagee must submit a variance request for HUD approval via EVARS before approving the use of the PFS Option for a Property with Surchargeable Damage as follows: • The Mortgagee must first obtain the Government’s Estimate of the Cost to Repair the Surchargeable Damage by contacting HUD’s Mortgagee Compliance Manager (MCM). • Upon receipt of the Government’s Estimate of the Cost to Repair, the Mortgagee must submit form HUD-90041, Request for Variance: Pre- foreclosure Sale Procedure, via EVARS to obtain HUD approval prior to entering into a PFS Agreement with the Borrower. The Mortgagee must note on the variance request the specific reason for the request and attach any supporting documents needed for HUD’s review. (d) “As-Is” Subject to Surchargeable Damage If the Property is being sold “As-Is” subject to the Surchargeable Damage, the Mortgagee must deduct the Government’s Repair Cost Estimate of the damage from its PFS Claim. (e) “As Repaired” Subject to Surchargeable Damage If the Property is being sold “As Repaired” and funds for Surchargeable Damage repairs are escrowed or provided as a credit to the Borrower at closing, the Mortgagee must not include in its Net Sale Proceeds calculation the amount of the repair escrow or repair credit. (2) Damage other than Surchargeable Damage If the damage is not considered Surchargeable Damage, the Mortgagee is not required to obtain HUD approval prior to approving the PFS Agreement. (3) Hazard Insurance Claim Where applicable, the Mortgagee must work with the Borrower to file a hazard insurance claim and either: • use the proceeds to repair the Property; or • adjust the PFS Claim by the amount of the insurance settlement (Non- Surchargeable Damage) or the Government’s Repair Cost Estimate. (4) Disclosure of Damage after PFS Approval In the event the Mortgagee becomes aware that the Property has sustained significant damage after a Borrower has received the Approval to Participate (ATP) in the PFS Program, the Mortgagee must re-evaluate the Property to determine if it continues to qualify for the PFS Program or terminate participation if the extent of the damage changes the Property’s FMV. (F) Condition of Title The Mortgagee must ensure that all FHA-insured mortgaged Properties sold under the PFS Program have marketable title. Before approving a Borrower for participation in the PFS Program, the Mortgagee must obtain a title search or preliminary report and determine whether the title is impaired by: • unresolvable title problems; • liens that cannot be discharged as permitted by HUD; or • a PACE obligation. (G) Owner-Occupant Borrower Compensation (1) Compensation Amount HUD offers Owner-Occupant Borrowers who act in good faith and successfully sell their Properties using the PFS Option a compensation of up to $3,000. (2) Use of Compensation The Owner-Occupant Borrower may: • apply the entire amount of the $3,000 compensation or a portion of it to resolve liens, including a PACE obligation; • offset the sales transaction costs not paid by HUD (including a home warranty plan fee, costs of optional repairs, and the buyer’s closing expenses); and/or • use the compensation for relocation or transition assistance. The Mortgagee must instruct the Closing Agent to: • pay the HUD relocation or transition assistance from Net Sale Proceeds; and • itemize on the Closing Disclosure or similar legal document any relocation or transition assistance received by HUD or from other entities. (3) Required Documentation The Mortgagee must ensure that the Closing Disclosure or similar legal document accurately reflects the use of any Borrower compensation amount. (H) PFS Program Participation Requirements (1) Approval to Participate (a) Definition A Pre-Foreclosure Sale (PFS) Approval to Participate (ATP) is an agreement signed by the Borrower to confirm their willingness to comply with the PFS Program requirements. (b) Standard After determining that a Borrower and Property meet the PFS eligibility requirements, the Mortgagee must notify the Borrower by sending: • an ATP for the PFS Program (form HUD-90045, Approval to Participate: Pre-foreclosure Sale Procedure Property Sales Information Property Occupancy & Maintenance), including the date by which the Borrower’s Sales Contract must be executed under Pre- Foreclosure Sale Marketing Period guidance; and • a Pre-Foreclosure Sale Addendum. The Mortgagee must send these documents to the Borrower via methods providing confirmation or a timestamp of delivery. The Mortgagee must receive the signed ATP within 10 Days of the date of delivery of the ATP. (2) Use of Licensed Real Estate Broker (a) Borrower Retention of Licensed Real Estate Broker The Borrower is responsible for retaining the services of a licensed real estate broker/agent within seven Days of the date of delivery of the ATP. (b) Required Listing Disclosure The Mortgagee must ensure that the established Listing Agreement between the seller and the agent/broker includes the following cancellation clause: “Seller may cancel this Agreement prior to the ending date of the listing period without advance notice to the agent/broker, and without payment of a commission or any other consideration if the property is conveyed to the mortgage insurer or the mortgage holder. The sale completion is subject to approval by the mortgagee.” (c) Real Estate Broker Duties The real estate broker/agent must market the Property within the preestablished time frame stated in the ATP and list the Property in accordance with the property valuation requirements. (d) Real Estate Broker Conflicts of Interest The real estate broker/agent selected must have no conflict of interest with the Borrower, the Mortgagee, the Appraiser or the buyer associated with the PFS transaction. The broker/agent must not claim a sales commission on a PFS of a broker’s/agent’s own Property or that of a spouse, sibling, parent, or child. Any conflict of interest, appearance of a conflict, or self-dealing by any of the parties to the transaction is strictly prohibited. (3) Arm’s Length PFS Transaction (a) Definition An Arm’s Length PFS Transaction is between two unrelated parties that is characterized by a selling price and other conditions that would prevail in an open market environment and without hidden terms or special understandings existing between any of the parties involved in the transaction. (b) Standard [Text was deleted in this section.] The Mortgagee must ensure that the following arm’s length requirements apply to parties involved in PFS transactions: • Any PFS proposed by the Borrower or their agent and approved by the Mortgagee must be an Arm’s Length Transaction between the Borrower and prospective buyer, subject to the exceptions in the Permitted Non-Arm’s Length Transactions section. • Except for real estate agents and brokers representing a party to the PFS, no party that is a signatory on the sales contract, including addenda, can serve in more than one capacity. • The broker hired to sell the Property must not share a business interest with the Mortgagee. • If the Mortgagee knows that a shared interest exists between the Appraiser and sales agent, the Mortgagee must note this in the Servicing File and the Claim File. (c) Permitted Non-Arm’s Length Transactions HUD permits non-Arm’s Length PFS Transactions, to the extent necessary to comply with state law, where state law prohibits placement of an Arm’s Length Transaction requirement on property sales. If clauses (a) and (c) of the PFS Addendum are impermissible under state law, the Mortgagee may strike these clauses from the PFS Addendum prior to execution, provided that the transaction complies with all PFS Program requirements. (d) Relocation Service Contribution The Mortgagee may permit a relocation service affiliated with the Borrower’s employer to contribute a fixed sum toward the proceeds of the PFS transaction without altering the arm’s length nature of the sale, as long as the result is an outright sale of the Property and cancellation of the FHA mortgage insurance. (4) Mortgagee Monitoring of PFS The Mortgagee must monitor the PFS to ensure the Borrower’s compliance with the terms in the ATP and with all PFS Program requirements. The Mortgagee must terminate a Borrower’s participation in the PFS Program in the event of noncompliance. (I) Pre-Foreclosure Sale Marketing Period (1) Maximum Marketing Period The Borrower has four months from the date of the Borrower’s ATP to acquire a contract of sale. (2) Minimum Marketing Period The Mortgagee must ensure that PFS Properties are listed in the Multiple Listing Service (MLS) for a minimum of 15 Days before offers are evaluated. After this initial listing period, the broker/agent may evaluate offers as they are received. This 15-Day minimum marketing period must follow the date of the Borrower’s ATP. (3) Extension to PFS Marketing Period HUD provides an automatic two-month extension to the deadline to initiate foreclosure for completion of a PFS transaction if there is a signed contract of sale, but settlement has not occurred by the end of the fourth month following the date of the Borrower’s ATP in the PFS Program. (4) Monthly Review of Marketing Status On a monthly basis, Mortgagees must review the Property’s marketing status with the Borrower and/or real estate broker/agent. (5) Property Inspection The Mortgagee must inspect Properties during the PFS period if: • the Property is vacant; • the Mortgagee has reason to suspect that the Property has become vacant; or • the Borrower or Authorized Third Party has not maintained contact with the Mortgagee. (6) Previously Initiated Foreclosures The Mortgagee may not initiate a four-month PFS marketing period for a Property after the first legal action to initiate foreclosure has occurred. If the Mortgagee has received an acceptable contract of sale that meets the PFS requirements, the PFS marketing period must only be issued for the time needed to close based on the close of escrow date on the contract of sale. The Mortgagee may only cancel or temporarily suspend the foreclosure action where such suspension is permissible under state law. (J) Evaluation of Offers (1) Standard The listing real estate broker/agent must provide the Mortgagee with an offer that: • yields the highest net return to HUD; and • meets HUD’s requirements for an acceptable contract of sale. The listing real estate broker/agent must ensure that: • all offers submitted to the Mortgagee for approval are signed by both the seller and the buyer prior to submission; and • the PFS Addendum is signed by all the applicable parties (except for the Closing Agent). (2) Back-up Offers Once an offer has been submitted to the Mortgagee for approval, the listing real estate broker/agent must retain any offer that the seller elects to hold for “back- up” until a determination has been made on the previously submitted offer. (3) Required Documentation The listing real estate broker/agent must retain all offers received, including offers not submitted for approval, in accordance with state law. (K) Contract Approval by Mortgagee (1) Standard In reviewing the contract of sale, the Mortgagee must: • ensure that the PFS sale is an outright sale of the Property and not a sale by assumption; • review the sales documentation to determine that there are: o no hidden terms or special agreements existing between any of the parties involved in the PFS transaction; and o no contingencies that might delay or jeopardize a timely settlement; and • determine that the Property was marketed pursuant to HUD requirements and that the minimum required Tiered Net Sale Proceeds have been met. The following anti-fraud measures apply to PFS transactions: • A Mortgagee must not approve a Borrower for a PFS if the Mortgagee knows or has reason to know of a Borrower’s fraud or misrepresentation of information. • All parties involved in a PFS transaction must sign and date a PFS Addendum as a contingency for a PFS transaction to close. (2) Sales Contract Review Period After receiving an executed contract of sale for a Borrower approved to participate in the PFS Program, the Mortgagee must send to the Borrower form HUD-90051, Sales Contract Review: Pre-foreclosure Sale Procedure, no later than five business days from the Mortgagee’s receipt of an executed contract for sale. (3) Net Sale Proceeds (a) Definition Net Sale Proceeds are the proceeds of a PFS sale, calculated by subtracting reasonable and customary closing settlement costs, and any outstanding balances on Partial Claim(s) or Payment Supplement(s) from the property sales price. (b) Standard Regardless of the Property’s sale price, a Mortgagee may only approve a PFS contract for sale if the Tiered Net Sale Proceeds are at or above HUD’s minimum allowable thresholds. HUD’s requirements for minimum Tiered Net Sale Proceeds are based on the length of time the Property has been competitively marketed for sale under an ATP as follows: • Days 1-30 of marketing: The Mortgagee may only approve offers that will result in minimum Net Sale Proceeds of 88 percent of the “As-Is” appraised FMV. • Days 31-60 of marketing: The Mortgagee may only approve offers that will result in minimum Net Sale Proceeds of 86 percent of the “As-Is” appraised FMV. • Days 61-120 of marketing: The Mortgagee may only approve offers that will result in minimum Net Sale Proceeds of 84 percent of the “As-Is” appraised FMV. The Mortgagee has the discretion to deny or delay sales where an offer may meet or exceed the Net Sale Proceeds of 84 percent, if it is presumed that continued marketing would likely produce a higher sale amount. The Mortgagee is liable for any FHA Insurance Claim Overpayment on a PFS transaction that closes with less than the required Tiered Net Sale Proceeds, unless a variance has been granted by HUD. (c) Settlement Costs (i) Allowable Settlement Costs [Text was deleted in this section.] The Mortgagee may include the following settlement costs in its Net Sale Proceeds calculation: • sales commission consistent with the prevailing rate but, not to exceed 6 percent; • real estate taxes pro-rated to the date of closing; • local/state transfer tax stamps and other closing costs customarily paid by the seller, including the seller’s costs for a title search and Owner’s Title Insurance; • compensation payable to the Owner-Occupant Borrower of $3,000, or to be used to resolve junior liens; • for Non-Occupant Borrowers, HUD will allow $1,500 of Net Sale Proceeds to be used to resolve junior liens; • the entire outstanding Partial Claim amount must be paid when calculating the Net Sale Proceeds. The seller, buyer, or other Interested Party may contribute the difference if the amount of Net Sale Proceeds falls below the allowable threshold; and • up to 1 percent of the buyer’s first mortgage amount if the sale includes FHA financing. (ii) Unacceptable Settlement Costs The Mortgagee must not include the following costs in the Net Sale Proceeds calculation: • repair reimbursements or allowances; • home warranty fees; • Discount Points or mortgage fees for non FHA-financing; • Mortgagee’s Title Insurance fee; and • Third-Party Fees incurred by the Mortgagee or Borrower to negotiate a PFS. (d) Third-Party Fees With the exception of reasonable and customary real estate commissions, the Mortgagee must ensure that third-party fees incurred by the Mortgagee or Borrower to negotiate a PFS are not included on the Closing Disclosure or similar legal documents unless explicitly permitted by state law. The Mortgagee, its agents, or any outsourcing firm it employs must not charge any fee to the Borrower for participation in the PFS Program. (e) Partial Claim and Payment Supplement Subordinate Mortgages The Mortgagee must ensure that all outstanding Partial Claims and Payment Supplements are paid in full. The Mortgagee must deduct any outstanding balances on Partial Claim and Payment Supplement Subordinate Mortgages from the Net Sale Proceeds. The Mortgagee must ensure sufficient proceeds from the PFS satisfy all Partial Claim and Payment Supplement balances, and the funds are remitted directly to HUD’s Loan Servicing Contractor. If, after satisfying the Partial Claim or Payment Supplement, the Net Sale Proceeds fail to meet the applicable Tiered Net Sale Proceeds requirement, the Mortgagee must request and obtain approval from HUD via EVARS before closing. (4) Title I Liens If the Mortgagee discovers that a Borrower has a HUD Title I Mortgage secured by the Property, the Mortgagee must contact the Title I subordinate lien holder to advise the Borrower’s participation in a PFS. HUD may require the Mortgagee to negotiate the release of the lien in order to proceed with a PFS. If the Title I Mortgage has been assigned to HUD, the Mortgagee must contact HUD’s Financial Operations Center. (5) Discharge of Junior Liens [Text was deleted in this section.] The Mortgagee must provide for the discharge of junior liens as follows: • If the Borrower has the financial ability, the Borrower must be required to satisfy or obtain release of liens. • If the Owner-Occupant Borrower receives compensation ($3,000), this compensation may be applied toward discharging liens. • If no other sources are available, the Non-Occupant Borrower may obligate up to an additional $1,500 from sale proceeds toward discharging liens or encumbrances. (6) Section 235 Recapture The Mortgagee must first determine if the Mortgage is subject to recapture as referenced in Section 235 Mortgages. If a recapture amount is owed to HUD, the Mortgagee must contact HUD’s Loan Servicing Contractor prior to approving the PFS. (L) Closing and Post-closing Responsibilities (1) Mortgagee Responsibilities Prior to Closing The Mortgagee must provide the Closing Agent with: • form HUD-90052, Closing Worksheet: Pre-foreclosure Sale Procedure, which lists all amounts payable from Net Sale Proceeds; and • the PFS Addendum that was signed by: o buyers; o buyers’ agent; o sellers; o sellers’ agent (listing agent); and o transaction facilitators/negotiators, if applicable. The Mortgagee must receive from the Closing Agent: • a copy of the Closing Disclosure or similar legal document which includes a calculation of the actual Net Sale Proceeds, and • the executed form HUD-90052, which must be included in the Servicing File and the Claim File. The Mortgagee must review the Final Terms of the PFS Transaction to ensure that: • the final terms of the PFS transaction are consistent with the sales contract; • only allowable settlement costs have been deducted from the seller’s proceeds; and • the Net Sale Proceeds will be equal to or greater than the allowable thresholds. (2) Closing Agent Responsibilities after Final Approval Once the Mortgagee gives final approval for the PFS and the settlement occurs, the Closing Agent must: • pay the expenses out of the Net Sale Proceeds and forward the Net Sale Proceeds to the Mortgagee; • forward a copy of the Closing Disclosure or similar legal document to the Mortgagee to be included in the Servicing File and the Claim File no later than three business days after the PFS transaction closes; and • sign the PFS Addendum on or before the date the PFS transaction closes, unless explicitly prohibited by state statute. (3) Satisfaction of Mortgage Debt Upon receipt of the portion of the Net Sale Proceeds designated for Mortgage satisfaction, the Mortgagee must satisfy the Mortgage debt and may file a claim for mortgage insurance benefits. (M) Early Termination of PFS Program Participation (1) Standard (a) Borrower-Initiated Termination The Mortgagee must permit a Borrower to voluntarily terminate participation in the PFS Program at any time. (b) Mortgagee-Initiated Termination The Mortgagee may terminate a Borrower’s PFS Program participation at its discretion for any of the following reasons: • discovery of unresolvable title problems; • determination that the Borrower is not acting in good faith to market the Property; • significant change in property condition or value; or • the Mortgagee has approved the Borrower for a Permanent Home Retention Option after the Borrower advised the Mortgagee that their financial situation has improved, and they want to retain their home. (c) Notification of PFS Program Participation Termination The Mortgagee must send the Borrower a written notice providing the reason for terminating their PFS program participation and the termination date of the PFS. (2) Required Documentation The Mortgagee must retain a copy of the Notification of PFS Program Participation Termination in the Servicing File. (N) Failure to Complete a PFS Transaction At the expiration of the PFS marketing period, should the Borrower be unable to complete a PFS transaction, the Mortgagee must re-evaluate available Loss Mitigation Options as follows: • If the Borrower’s financial condition has improved to the point that reinstatement is a viable option, review the Borrower’s eligibility for one of the Loss Mitigation Home Retention Options; and • If reinstatement is not feasible, review the Borrower for a DIL of Foreclosure. Within 90 Days after the expiration of the PFS marketing period, the Mortgagee must consider and approve the Borrower for an alternate Loss Mitigation Option or complete the first legal action to initiate foreclosure. Should additional time be needed to complete a DIL or to initiate foreclosure, Mortgagees must submit a request for an extension of time for HUD approval via EVARS. (O) Extensions of Foreclosure Time Frame for PFS (1) Standard After PFS early termination or option failure, HUD provides an automatic 90-Day extension to the deadline to complete a Loss Mitigation Option or to perform the first legal action initiating foreclosure. The automatic 90-Day extension begins the Day after the PFS ATP is terminated or expires. If the Mortgagee has not yet received the Net Sale Proceeds from the Closing Agent and the automatic 90-Day extension is nearing expiration, the Mortgagee must submit a request for extension for HUD approval via EVARS no later than 10 Days before the 90-Day extension expires. (2) Required Documentation The Mortgagee must retain in the Servicing File and the Claim File documentation of any extensions received from HUD. (P) Deficiency Judgments If a foreclosure occurs after the Borrower unsuccessfully participated in the PFS process in good faith, neither the Mortgagee nor HUD will pursue the Borrower for a deficiency Judgment. (Q) PFS Incentive The Mortgagee may claim an incentive for each completed PFS transaction that complies with all HUD PFS requirements. (R) Mortgage Insurance Termination The Mortgagee must not submit a mortgage insurance termination on PFS transactions. HUD will only pay FHA mortgage insurance benefits when the status of the mortgage insurance is “active.” The Mortgagee must report the PFS Sale to consumer reporting agencies. iii. Deed-in-Lieu of Foreclosure (A) Definition [Text was deleted in this section.] A Deed-in-Lieu (DIL) of Foreclosure is a Loss Mitigation Home Disposition Option in which a Borrower voluntarily offers the deed to HUD in exchange for a release from all obligations under the Mortgage. (B) Disclosure Requirements for DIL Prior to approving a Borrower for a DIL, the Mortgagee must notify the Borrower in writing of the following: • The Mortgage must be in Default on the date the DIL special warranty deed is executed, pursuant to Section 204 of the National Housing Act (12 U.S.C. § 1710). • DIL transactions are generally reported to consumer reporting agencies, and will likely affect the Borrower’s ability to obtain another Mortgage and other types of credit. • If the Borrower is a servicemember, it is recommended that the Borrower obtain guidance from their employer regarding the DIL’s impact on their security clearance and employment. (C) DIL Options There are two types of DIL options: Standard DIL and DIL for Servicemembers. (1) Standard DIL A Standard Deed-in-Lieu (DIL) is a DIL transaction for Owner-Occupant Borrowers and Non-Occupant Borrowers. The Mortgagee must ensure that: • the Borrower has attempted to complete a PFS; • the Borrower and the Property meet the requirements for a Standard PFS; and • the Mortgage is 61 Days or more Delinquent as of the date of the Mortgagee’s approval. (2) DIL for Servicemembers A DIL for Servicemembers is a DIL for servicemembers with PCS orders who must relocate to a new duty station at least 50 miles away from their existing residence, without the Mortgagee verifying hardship. The Mortgagee must ensure that: • Servicemembers and the Property meet the requirements for a PFS for Servicemembers; • the Mortgage is 31 Days or more Delinquent on the date the DIL special warranty deed is executed; and • Servicemembers have attempted to complete a PFS Option. (3) DIL Exceptions for Borrowers with More than One FHA-Insured Mortgage The Mortgagee must obtain a certification from the Borrower that the Borrower does not own any other FHA-insured Property. If the Borrower owns more than one FHA-insured Property, the Mortgagee must submit a request for HUD approval via EVARS to offer a DIL Option to a Borrower who owns more than one FHA-insured Property. (4) Condition of Title The Borrower or Mortgagee must be able to convey a clear and marketable title to the Secretary. The Mortgagee must obtain a title search or preliminary report and determine whether the title is impaired by: • unresolvable title problems; • liens that cannot be discharged as permitted by HUD; or • a PACE obligation. (5) Deficiency Judgment HUD will not accept a DIL when it has elected to pursue a deficiency Judgment against the Borrower. (D) DIL Owner-Occupant Borrower Relocation Assistance (1) Amount of Relocation Assistance HUD offers Owner-Occupant Borrowers a consideration of up to $3,000 in relocation assistance upon vacating the Property and satisfaction of the requirements of the DIL Agreement. HUD will not pay this relocation assistance if the Property is occupied at conveyance. (2) Use of Relocation Assistance The Owner-Occupant Borrower may apply the entire amount of the relocation assistance or a portion of it to resolve liens, including PACE obligation liens. (E) DIL Agreement (1) Standard The Borrower and the Mortgagee must execute a DIL Agreement in writing. HUD does not require a specific format for documenting a DIL Agreement. The Mortgagee must ensure that the DIL documentation complies with all applicable laws and regulations. (2) DIL Agreement Terms The Mortgagee must ensure that the DIL Agreement contains the following: • certification that the Borrower does not own other Property subject to a Mortgage insured by or held by HUD; • the Transfer Date; • notification of possible income tax consequences; • acknowledgment that Borrowers who comply with all requirements of the Agreement will not be pursued for deficiency Judgments; • a statement describing the physical condition in which the Property will be conveyed; • agreement with the Borrower to convey the Property vacant and free of Personal Property, unless HUD has approved an Occupied Conveyance; • itemization of keys, built-in-fixtures, and equipment to be delivered by the Mortgagee on or before the Transfer Date; • evidence that utilities, assessments, and HOA dues are paid in full by the Transfer Date, unless otherwise agreed to by all parties; and • the amount of relocation assistance payable to and/or on behalf of the Owner-Occupant Borrower will not exceed $3,000. (3) Required Documentation The Mortgagee must retain a copy of the executed DIL Agreement in the Servicing File and the Claim File. (F) DIL Conveyance to HUD (1) Mortgage in Default The Mortgagee must ensure that the Mortgage is in Default when the DIL is recorded and the Property is conveyed to HUD. (2) Discharge of Liens The Mortgagee must provide for the discharge of liens as follows: • The Mortgagee must complete a title search and ensure the release of liens and/or endorsements to the title policy are obtained. • HUD will not accept titles subject to most liens, including IRS and HOA liens. HUD will allow liens securing repayment of Section 235 assistance payments, Partial Claim advances, and Title I liens. • HUD will allow a notice of lien recorded in the land records securing repayment of a PACE obligation that may only become subject to an enforceable claim (i.e., a lien) for delinquent regularly scheduled PACE special assessment payments and otherwise complies with the eligibility and acceptability criteria for Properties encumbered with a PACE obligation provided in PACE Obligation Review. • If the Owner-Occupant Borrower receives relocation assistance, this assistance may be applied toward discharging liens. (3) Special Warranty Deed The Borrower and the Mortgagee must convey the Property through a special warranty deed and, when possible, the Borrower must convey title directly to HUD. The Mortgagee must cancel and surrender to the Borrower the original credit instrument, indicating that the Mortgage has been satisfied. If it is necessary to convey title to the Mortgagee, and then to HUD, the Mortgagee must document the reason in the Servicing File and the Claim File. (4) Conveyance Time Frame The Mortgagee must record the special warranty deed and deliver the original, recorded deed to HUD’s MCM within 45 Days of the date the clear and marketable title was conveyed to the Secretary. (5) Occupied Properties The Mortgagee must ensure that the Property is vacant at the time of conveyance. HUD will not accept a DIL if the collateral Property is occupied at the time of conveyance to HUD, unless authorized for Occupied Conveyance. (6) Option Not to Convey The Mortgagee may elect not to convey title to HUD and to terminate the contract of mortgage insurance. If this occurs, the Mortgagee must use form HUD-27050- A, Insurance Termination, and select Voluntary Termination (Term Type 21) in FHAC to notify HUD. (G) DIL Incentive The Mortgagee may submit a claim for an incentive for each completed DIL transaction that complies with all HUD DIL requirements. (H) DIL Foreclosure Time Frames The Mortgagee must complete the DIL or initiate foreclosure within six months of the date of Default, unless the Mortgagee has qualified for an automatic extension or has received an extension approved by HUD via EVARS. If the DIL follows a failed PFS, the DIL must be completed or foreclosure initiated within 90 Days of the failure. (I) Reporting to Consumer Reporting Agencies and the IRS The Mortgagee must not report DIL transactions to consumer reporting agencies as foreclosures. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `8c03836f77f317e1` _Fetched_: 2026-05-23T00:28:40Z --- --- # HUD Handbook 4000.1 III.A.2.k **Register slug:** `hud-4000-1-iii-a-2-k` **Obligation count:** 1 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.k. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.k **Obligation ID:** `hud-4000-1-iii-a-2-k-full` **Operative duty (lender voice):** > Servicing And Loss Mitigation: • the correct and complete claim is submitted to HUD within 60 Days of the > execution date of the Permanent Home Retention Option or Home Disposition > The Mortgagee may submit a claim for an incentive for the successful completion of the > approved Loss Mitigation Options, including for Loss Mitigati… **Verbatim regulator text:** ``` • the correct and complete claim is submitted to HUD within 60 Days of the execution date of the Permanent Home Retention Option or Home Disposition The Mortgagee may submit a claim for an incentive for the successful completion of the approved Loss Mitigation Options, including for Loss Mitigation Options associated with a PDMDA (also referred to as Disaster options), listed below. Loss Mitigation Option Mortgagee Incentive Partial Claim $500 for a Partial Claim Loan Modification (including OWL) $750 for a Loan Modification *Additionally, the Mortgagee is eligible to be reimbursed up to $250 for fees associated with title search, title policy, and/or recordation. $1,750 PFS $1,000 DIL $250 ii. Reimbursement for Loan Modification Title Search and Recordation The Mortgagee may submit a claim to be reimbursed up to $250 for fees associated with title search, title policy, and/or recordation associated for an executed Loan Modification where: • three or more full monthly payments are Delinquent (i.e., 61 Days or more Delinquent) when the Standalone Loan Modification, Combination Loan Modification and Partial Claim, or OWL is approved; • the Loss Mitigation Option was completed in accordance with FHA requirements; • the correct and complete claim for $250 is submitted to HUD within 120 Days of the execution date of the Loan Modification, or Loan Modification as part of a Combination Loan Modification and Partial Claim. The claim for reimbursement up to $250 for fees associated with title search, title policy, and/or recordation may be included with the claim for a Mortgagee incentive. Mortgagees that do not qualify for an incentive may still submit a claim for this l. Presidentially-Declared Major Disaster Areas (10/01/2025) i. Disaster Declarations Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, the President has authority to declare a major disaster for any area which has been affected by damage of sufficient severity and magnitude to warrant major disaster assistance. Disaster declarations and information regarding available federal assistance for each ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- --- # HUD Handbook 4000.1 III.A.2.l **Register slug:** `hud-4000-1-iii-a-2-l` **Obligation count:** 3 ## Register description HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.l. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD Handbook 4000.1 III.A.2.l.i — Disaster Declarations **Obligation ID:** `hud-4000-1-iii-a-2-l-implement-pdmda-procedures` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-disaster-declaration **Operative duty (lender voice):** > Whenever the President declares a major disaster, [LENDER] must > implement the procedures set forth in this section for each > designated area that is eligible for federal disaster assistance, > designated for public assistance, individual assistance, or both, > unless otherwise specified. **Compliance obligation:** > For every Presidentially-declared major disaster affecting FHA-insured Mortgages in [LENDER]'s portfolio, can [LENDER] evidence implementation of the PDMDA procedures (disaster loss-mit assistance, moratorium notice, monitoring, and disaster-option offers) for each designated area? **Verbatim regulator text:** ``` Whenever the President declares a major disaster, the Mortgagee must implement the procedures set forth in this section for each designated area that is eligible for federal disaster assistance, designated for public assistance, individual assistance, or both, unless otherwise specified. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1 (issued 2025-11-26) _Source_: _Snapshot_: `8c03836f77f317e1` _Fetched_: 2026-05-23T00:28:40Z --- #### HUD Handbook 4000.1 III.A.2.l.ii(A) — PDMDA Moratorium and Outreach **Obligation ID:** `hud-4000-1-iii-a-2-l-contact-borrower-in-pdmda` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-pdmda-loan **Operative duty (lender voice):** > [LENDER] must attempt to contact Borrowers whose Property is located > in a PDMDA to notify the Borrower that disaster loss mitigation > assistance is available. **Compliance obligation:** > For every FHA-insured Mortgage with a Property located in a PDMDA, can [LENDER] evidence an attempt to contact the Borrower to notify them that disaster loss mitigation assistance is available? **Verbatim regulator text:** ``` Mortgagees must attempt to contact Borrowers whose Property is located in a PDMDA to notify the Borrower that disaster loss mitigation assistance is available. If the first legal action has been completed or the Borrower has been referred to foreclosure, the Mortgagee must notify the Borrower that a foreclosure moratorium is in place for 90 Days beginning on the date of the disaster declaration for that area. ``` _Authority_: HUD Handbook 4000.1 III.A.2.l.ii(A) — Standard _Source_: _Snapshot_: `8c03836f77f317e1` _Fetched_: 2026-05-23T00:28:40Z --- #### HUD Handbook 4000.1 III.A.2.l.ii(C) — Hazard or Flood Insurance Settlement **Obligation ID:** `hud-4000-1-iii-a-2-l-no-foreclosure-that-jeopardizes-insurance-recovery` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-pdmda-loan-with-insurance-claim **Operative duty (lender voice):** > The Mortgagee must take no action to initiate or complete foreclosure proceedings, after expiration of a disaster-related foreclosure moratorium, if such action will jeopardize the full recovery of a hazard or flood insurance settlement. **Compliance obligation:** > For every PDMDA-affected FHA-insured Mortgage where a hazard or flood insurance settlement is pending, can [LENDER] evidence that no action was taken to initiate or complete foreclosure that would jeopardize the full recovery of that settlement? **Verbatim regulator text:** ``` The Mortgagee must take no action to initiate or complete foreclosure proceedings, after expiration of a disaster-related foreclosure moratorium, if such action will jeopardize the full recovery of a hazard or flood insurance settlement. ``` _Authority_: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) _Source_: _Snapshot_: `e1bca3432cf19e09` _Fetched_: 2026-05-23T00:28:40Z --- --- # 24 CFR §203.500 — Mortgage servicing generally **Register slug:** `fha-24cfr-203.500` **Obligation count:** 3 ## Register description 24 CFR §203.500 establishes the general FHA single-family servicing framework under Part 203 Subpart C. ## Obligations #### 24 CFR §203.500 — Mandatory compliance with Subpart C servicing practices **Obligation ID:** `fha-24cfr-203.500-subpart-c-compliance-required` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-fha-serviced-loan **Operative duty (lender voice):** > [LENDER], as an FHA-approved mortgagee servicing FHA-insured mortgages, > must comply with the servicing practices specified in 24 CFR Part 203 > Subpart C; failure to comply is not a basis for denial of insurance > benefits but is cause for imposition of a civil money penalty > (including a penalty under §30.35(c)(2)) or withdrawal of HUD's > approval of [LENDER]. [LENDER] shall not commence foreclosure or > acquire title until the Subpart C requirements have been followed. **Compliance obligation:** > Can [LENDER] evidence (i) that it follows the Subpart C FHA single-family servicing practices on every FHA-insured loan it services, and (ii) that no foreclosure was commenced and no title was acquired before the applicable §203.500 Subpart C requirements were satisfied? **Verbatim regulator text:** ``` This subpart identifies servicing practices of lending institutions that HUD considers acceptable for mortgages insured by HUD. Failure to comply with this subpart shall not be a basis for denial of insurance benefits, but failure to comply will be cause for imposition of a civil money penalty, including a penalty under § 30.35(c)(2), or withdrawal of HUD's approval of a mortgagee. It is the intent of the Department that no mortgagee shall commence foreclosure or acquire title to a property until the requirements of this subpart have been followed. ``` _Authority_: 24 CFR §203.500 _Source_: _Snapshot_: `8ab3739e2cccc82b` _Fetched_: 2026-09-26T20:27:20Z **Consequence of non-compliance:** civil money penalty (including §30.35(c)(2)) or withdrawal of HUD mortgagee approval --- #### 24 CFR §203.500 — No foreclosure / title acquisition until Subpart C followed **Obligation ID:** `fha-24cfr-203.500-foreclosure-and-title-precondition` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-fha-foreclosure-or-title-acquisition **Operative duty (lender voice):** > [LENDER], as an FHA-approved mortgagee servicing FHA-insured > mortgages, shall not commence foreclosure or acquire title to a > property until the requirements of 24 CFR Part 203 Subpart C have > been followed. This is the Department of HUD's stated intent in > §203.500 and operates as a procedural precondition on foreclosure / > title-acquisition activity. **Compliance obligation:** > For every FHA-insured loan [LENDER] services where foreclosure has been commenced or title has been acquired, can [LENDER] evidence that the applicable Part 203 Subpart C servicing-practice requirements were completed before foreclosure was commenced or title acquired? **Verbatim regulator text:** ``` It is the intent of the Department that no mortgagee shall commence foreclosure or acquire title to a property until the requirements of this subpart have been followed. ``` _Authority_: 24 CFR §203.500 _Source_: _Snapshot_: `8ab3739e2cccc82b` _Fetched_: 2026-09-26T20:27:20Z --- #### 24 CFR §203.500 — Consequence of noncompliance: civil money penalty / mortgagee-approval withdrawal **Obligation ID:** `fha-24cfr-203.500-civil-money-penalty-consequence` **Workflow phase:** servicing **Owner role:** compliance_officer **Cadence:** ongoing **Operative duty (lender voice):** > Failure by [LENDER] to comply with FHA Part 203 Subpart C servicing > practices is not a basis for denial of insurance benefits but is > cause for imposition of a civil money penalty (including a penalty > under §30.35(c)(2)) or withdrawal of HUD's approval of [LENDER] as > an FHA mortgagee. [LENDER]'s compliance-management framework must > treat Subpart C noncompliance as a HUD-enforcement-tier finding > rather than merely an insurance-benefit risk. **Compliance obligation:** > Can [LENDER] evidence that its compliance-management framework treats §203.500 Subpart C noncompliance as a HUD-enforcement-tier exposure (civil money penalty under §30.35(c)(2) or mortgagee-approval withdrawal), and that findings are tracked, root-caused, and remediated accordingly? **Verbatim regulator text:** ``` Failure to comply with this subpart shall not be a basis for denial of insurance benefits, but failure to comply will be cause for imposition of a civil money penalty, including a penalty under § 30.35(c)(2), or withdrawal of HUD's approval of a mortgagee. ``` _Authority_: 24 CFR §203.500 _Source_: _Snapshot_: `8ab3739e2cccc82b` _Fetched_: 2026-09-26T20:27:20Z **Consequence of non-compliance:** civil money penalty (including §30.35(c)(2)) or withdrawal of HUD mortgagee approval --- --- # 24 CFR §203.604 — Contact with the mortgagor **Register slug:** `fha-24cfr-203.604` **Obligation count:** 2 ## Register description 24 CFR §203.604 requires the FHA-approved mortgagee to conduct (or make a reasonable effort to arrange) a meeting with the delinquent mortgagor before three full monthly installments are unpaid and at least 30 days before foreclosure is commenced. ## Obligations #### 24 CFR §203.604(a) **Obligation ID:** `fha-24cfr-203.604-a` **Operative duty (lender voice):** > (a): (a) For mortgages insured pursuant to this part, except those mortgages insured on Indian Land pursuant to section 248 of the National Housing Act: (1) The mortgagee must conduct a meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installmen… **Verbatim regulator text:** ``` (a) For mortgages insured pursuant to this part, except those mortgages insured on Indian Land pursuant to section 248 of the National Housing Act: (1) The mortgagee must conduct a meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid and at least 30 days before foreclosure is commenced, or at least 30 days before assignment is requested if the mortgage is insured on Hawaiian homelands pursuant to section 247 of the National Housing Act. The meeting with the mortgagor must be conducted in a manner as determined by the Secretary. (i) If default occurs on a repayment plan, the mortgagee must conduct a meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, no later than 30 days after such default. (ii) [Reserved] (2) A meeting with the mortgagor is not required if: (i) The mortgagor has clearly indicated that they will not cooperate in the meeting; (ii) The mortgagor is on a repayment plan to bring the mortgage current, and the mortgagor is meeting the terms of the repayment plan; or (iii) A reasonable effort to arrange a meeting with the mortgagor is unsuccessful. (3) A reasonable effort to arrange a meeting with the mortgagor shall consist of, at a minimum, two verifiable attempts to contact the mortgagor utilizing methods determined by the Secretary. ``` _Authority_: 24 CFR §203.604(a) _Source_: _Snapshot_: `1412decf1f953e32` _Fetched_: 2026-09-26T20:27:24Z --- #### 24 CFR §203.604(b) **Obligation ID:** `fha-24cfr-203.604-b` **Operative duty (lender voice):** > (b): (b) For mortgages insured on Indian Land pursuant to section 248 of the National Housing Act: (1) The mortgagee must conduct a face-to-face meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid and at… **Verbatim regulator text:** ``` (b) For mortgages insured on Indian Land pursuant to section 248 of the National Housing Act: (1) The mortgagee must conduct a face-to-face meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid and at least 30 days before assignment is requested. (i) If default occurs on a repayment plan arranged other than during a face-to-face meeting, the mortgagee must have a face-to-face meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, within 30 days after default or at least 30 days before assignment is requested. (ii) [Reserved] (2) A face-to-face meeting is not required if: (i) The mortgagor has clearly indicated that they will not cooperate in the meeting; (ii) The mortgagor is on a repayment plan to bring the mortgage current, and the mortgagor is meeting the terms of the repayment plan; or (iii) A reasonable effort to arrange a meeting with the mortgagor is unsuccessful. (3) A reasonable effort to arrange a face-to-face meeting with the mortgagor shall include at a minimum, one letter sent to the mortgagor certified by the Postal Service as having been dispatched and at least one trip to see the mortgagor at the mortgaged property. In addition, the mortgagee must document that it has made at least one telephone call to the mortgagor for the purpose of trying to arrange a face-to-face meeting. The mortgagee may appoint an agent to perform its responsibilities under paragraph (b) of this section. (4) The mortgagee must also: (i) Inform the mortgagor that HUD will make information regarding the status and payment history of the mortgagor's loan available to credit bureaus and prospective creditors; (ii) Inform the mortgagor of other available assistance, if any; and (iii) Inform the mortgagor of the names and addresses of HUD officials to whom further communications may be addressed. ``` _Authority_: 24 CFR §203.604(b) _Source_: _Snapshot_: `1412decf1f953e32` _Fetched_: 2026-09-26T20:27:24Z --- --- # FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 **Register slug:** `hud-ml-2024-02` **Obligation count:** 8 ## Register description HUD ML 2024-02 establishes the Payment Supplement loss mitigation option, combining a standalone Partial Claim to bring the Mortgage current with a new Monthly Principal Reduction (MoPR) for a three-year period, and establishes related servicing-transfer responsibilities and SFDMS reporting requirements for Mortgages in a Payment Supplement Period. ## Obligations #### HUD ML 2024-02 — Laws and Requirements Applicable to Mortgage Servicing (III.A.1.a.ii(A)) **Obligation ID:** `hud-ml-2024-02-servicing-laws-compliance` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** continuous **Operative duty (lender voice):** > [LENDER], as an FHA-approved Mortgagee servicing FHA-insured Mortgages, > must comply with all laws, rules, and requirements applicable to mortgage > servicing, including full compliance with the applicable requirements > under the purview of the Consumer Financial Protection Bureau (CFPB) > (including RESPA and TILA), and, if applicable, Ginnie Mae's > mortgage-backed securities requirements. FHA requirements that are more > stringent or restrictive than applicable law (as set forth in Handbook > 4000.1) override the lesser standard. **Compliance obligation:** > Can [LENDER] evidence that its FHA mortgage-servicing program operates in full compliance with CFPB-administered requirements (RESPA, TILA), Ginnie Mae MBS requirements where applicable, and the more-stringent FHA requirements in Handbook 4000.1? **Verbatim regulator text:** ``` Mortgagees must comply with all laws, rules, and requirements applicable to mortgage servicing, including full compliance with the applicable requirements under the purview of the Consumer Financial Protection Bureau (CFPB), including the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), and, if applicable, Ginnie Mae’s mortgage-backed securities requirements. ``` _Authority_: HUD ML 2024-02 — III.A.1.a.ii(A) _Source_: _Snapshot_: `faddf184eead830b` _Fetched_: 2026-05-22T19:54:43Z --- #### HUD ML 2024-02 — SFDMS Default Reporting: Types of Mortgages to Report (III.A.2.h.ii(B)(1)) **Obligation ID:** `hud-ml-2024-02-sfdms-payment-supplement-reporting` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** monthly **Operative duty (lender voice):** > Each month, [LENDER] must report Default servicing activities through > HUD's Single Family Default Monitoring System (SFDMS) for all Mortgages > that are 30, 60, and 90 Days or more in Default, and for all Mortgages > in a Payment Supplement Period, as of the last Day of the month. **Compliance obligation:** > For each monthly SFDMS reporting cycle, can [LENDER] demonstrate that it reported Default servicing activities for every FHA-insured Mortgage that was 30, 60, or 90+ Days delinquent, and for every Mortgage in a Payment Supplement Period, as of the last Day of the month? **Verbatim regulator text:** ``` Each month, the Mortgagee must report Default servicing activities for all Mortgages that are 30, 60, and 90 Days or more in Default and all Mortgages in a Payment Supplement Period, as of the last Day of the month. ``` _Authority_: HUD ML 2024-02 — III.A.2.h.ii(B)(1) _Source_: _Snapshot_: `faddf184eead830b` _Fetched_: 2026-05-22T19:54:43Z --- #### HUD ML 2024-02 — Responsibility during Transfers of Servicing Rights (III.A.1.b.i(B)) **Obligation ID:** `hud-ml-2024-02-servicing-transfer-payment-supplement` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-servicing-transfer **Operative duty (lender voice):** > Where [LENDER] is the Transferee Servicing Mortgagee on a Transfer Date, > [LENDER] must ensure transfer of any outstanding Payment Supplement > Account and associated servicing records, and assume responsibility for > all servicing actions associated with the Payment Supplement — including > accounting of funds held in the Payment Supplement Account, administration > of the Borrower's Payment Supplement, obtaining the complete Payment > Supplement files, and obtaining any outstanding funds in the Payment > Supplement Account. **Compliance obligation:** > For every servicing-rights transfer involving an FHA-insured Mortgage with an active Payment Supplement, can [LENDER] (as Transferee Servicing Mortgagee) evidence transfer of the Payment Supplement Account, associated servicing records, complete Payment Supplement files, and outstanding Payment Supplement Account funds on or about the Transfer Date? **Verbatim regulator text:** ``` The Transferee Servicing Mortgagee must also ensure transfer of any outstanding Payment Supplement Account and associated servicing records. ``` _Authority_: HUD ML 2024-02 — III.A.1.b.i(B) _Source_: _Snapshot_: `faddf184eead830b` _Fetched_: 2026-05-22T19:54:43Z --- #### FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 — Purpose **Obligation ID:** `hud-ml-2024-02-s01` **Operative duty (lender voice):** > This Mortgagee Letter (ML) establishes the Payment Supplement loss mitigation option. **Verbatim regulator text:** ``` This Mortgagee Letter (ML) establishes the Payment Supplement loss mitigation option. ``` _Authority_: FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 _Source_: _Snapshot_: `faddf184eead830b` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 — Effective Date **Obligation ID:** `hud-ml-2024-02-s02` **Operative duty (lender voice):** > The provisions of this ML may be implemented starting May 1, 2024, and must be implemented no later than January 1, 2025. All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1). **Verbatim regulator text:** ``` The provisions of this ML may be implemented starting May 1, 2024, and must be implemented no later than January 1, 2025. All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1). ``` _Authority_: FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 _Source_: _Snapshot_: `faddf184eead830b` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 — Affected Programs **Obligation ID:** `hud-ml-2024-02-s03` **Operative duty (lender voice):** > The provisions of this ML apply to all FHA Title II Single Family forward mortgage programs. **Verbatim regulator text:** ``` The provisions of this ML apply to all FHA Title II Single Family forward mortgage programs. ``` _Authority_: FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 _Source_: _Snapshot_: `faddf184eead830b` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 — Background **Obligation ID:** `hud-ml-2024-02-s04` **Operative duty (lender voice):** > The current COVID-19 Recovery Loss Mitigation Options (COVID-19 Recovery Options) have proven to be very successful in helping delinquent Borrowers bring their Mortgages current and, for Borrowers who cannot afford to resume their previous Mortgage Payments, in providing significant payment reduction. Since March 2020, Mortgagees have provided nearly 1.9 million COVID-19 loss mitigation actions to Borrowers. On Janua **Verbatim regulator text:** ``` The current COVID-19 Recovery Loss Mitigation Options (COVID-19 Recovery Options) have proven to be very successful in helping delinquent Borrowers bring their Mortgages current and, for Borrowers who cannot afford to resume their previous Mortgage Payments, in providing significant payment reduction. Since March 2020, Mortgagees have provided nearly 1.9 million COVID-19 loss mitigation actions to Borrowers. On January 30, 2023, HUD extended and expanded its COVID-19 Loss Mitigation Options. While these options have been very effective, interest rates have risen to levels significantly higher than the interest rates of many of the Mortgages in FHA’s portfolio, impacting the ability of Mortgagees to meaningfully assist Borrowers who cannot afford to resume their regular monthly payments. In light of these conditions, HUD has evaluated additional options for Mortgagees to further assist Borrowers and reduce losses to HUD’s Mutual Mortgage Insurance Fund (MMIF). To that end, this ML establishes a new loss mitigation option, the Payment Supplement, which will combine a standalone Partial Claim to bring the Mortgage current with a new Monthly Principal Reduction (MoPR) payment. This will temporarily reduce the Borrower’s monthly Mortgage Payment for a period of three years, without requiring the Mortgage to be modified. After the Payment Supplement Period ends, the Borrower will be responsible for resuming payment of the full monthly Principal and Interest (P&I) amount. HUD intends to make the Payment Supplement a permanent part of FHA’s loss mitigation options and will incorporate language to do so in a future ML or as an update to Handbook 4000.1. HUD also understands that the Payment Supplement may create payment shock for Borrowers at the end of the Payment Supplement Period. HUD intends to assess this issue on an ongoing basis as Borrowers begin to reach the end of their Payment Supplement Period to help inform future updates to FHA loss mitigation. The Payment Supplement relies on HUD’s statutory Partial Claim authority under Section 230 of the National Housing Act. HUD’s statutory authority to pay a Partial Claim allows for Partial Claim funds to be applied first to any arrearage and then to make payments to the principal due under the Mortgage. As a result, Borrowers receiving a Payment Supplement will have Partial Claim funds applied to their arrearage in the same manner as the standalone Partial Claim and then receive a MoPR to cover a portion of the principal due with the Borrower’s monthly Mortgage Payment (which is not currently permitted in connection with a standalone Partial Claim) for a period of three years. The Payment Supplement will be funded by FHA’s MMIF and evidenced by a zero-interest Note and subordinate Mortgage, along with a Payment Supplement Agreement, which is a rider to and incorporated by reference into the Payment Supplement promissory Note, given in favor of the Secretary (similar to current documentation for Partial Claims). This Note and subordinate Mortgage do not require repayment until maturity of the Mortgage, sale or transfer of the Property, payoff of the Mortgage, or termination of FHA insurance on the Mortgage. This ML also extends the COVID-19 Recovery Options through April 30, 2025. Mortgagees are reminded that, for the COVID-19 Recovery Modifications, they must comply with the Government National Mortgage Association’s (Ginnie Mae) mortgage-backed securities requirement that loans must be 90 or more Days Delinquent before they can be bought out of a Ginnie Mae pool. ``` _Authority_: FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 _Source_: _Snapshot_: `faddf184eead830b` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 — Summary of Changes **Obligation ID:** `hud-ml-2024-02-s05` **Operative duty (lender voice):** > This ML: • updates Laws and Requirements Applicable to Mortgage Servicing (III.A.1.a.ii(A)); • updates Responsibility during Transfers of Servicing Rights – Standard (III.A.1.b.i(B)); • updates Single Family Default Monitoring System Default Reporting – Types of Mortgages to Report (III.A.2.h.ii(B)(1)); • updates HUD’s Loss Mitigation Program – Definitions (III.A.2.j.i); • updates FHA-HAMP – Eligibility (III.A.2.k.v( **Verbatim regulator text:** ``` This ML: • updates Laws and Requirements Applicable to Mortgage Servicing (III.A.1.a.ii(A)); • updates Responsibility during Transfers of Servicing Rights – Standard (III.A.1.b.i(B)); • updates Single Family Default Monitoring System Default Reporting – Types of Mortgages to Report (III.A.2.h.ii(B)(1)); • updates HUD’s Loss Mitigation Program – Definitions (III.A.2.j.i); • updates FHA-HAMP – Eligibility (III.A.2.k.v(B)); • updates Borrowers Impacted by a PDMDA during COVID-19 (III.A.2.n.iv(A)); • updates COVID-19 Advance Loan Modification – Standard (III.A.2.o.ii(C)); • updates COVID-19 Recovery Loss Mitigation Options – Standard (III.A.2.o.iii(B)); • updates Incentives for COVID-19 Recovery Options (III.A.2.o.iii(B)(3)); • updates COVID-19 Recovery Modification – Standard – Step 7 (III.A.2.o.iii(C)(2)(c)); • adds Payment Supplement (III.A.2.o.iii(C)(3)); and • updates the Claim Types section by adding Claim Type 33 – Payment Supplement (IV.A.2.l). FHA Single Family Housing Policy Handbook 4000.1 Servicing and Loss Mitigation The policy changes will be incorporated into Handbook 4000.1 as follows: Servicing Roles and Responsibilities – Standard (III.A.1.a.ii) (A) Laws and Requirements Applicable to Mortgage Servicing Mortgagees must comply with all laws, rules, and requirements applicable to mortgage servicing, including full compliance with the applicable requirements under the purview of the Consumer Financial Protection Bureau (CFPB), including the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), and, if applicable, Ginnie Mae’s mortgage-backed securities requirements. FHA requirements that are more stringent or restrictive than those provided for in applicable law are set forth in this Handbook 4000.1 and the Mortgagee must comply with these requirements. Responsibility during Transfers of Servicing Rights (III.A.1.b.i) (B) Standard The Transferor Servicing Mortgagee remains responsible for the servicing of an FHA-insured Mortgage until the Transfer Date. The Transferor Servicing Mortgagee must verify that the change of legal rights to service has been reported accurately. On the Transfer Date, the Transferee Servicing Mortgagee assumes responsibility for: • all servicing actions, including: o ensuring resolution of any servicing errors that were, and remain, the responsibility of the Transferor Servicing Mortgagee; o where applicable, reporting the Delinquency/Default Status (DDS) Codes in HUD’s Single Family Default Monitoring System (SFDMS); • obtaining the complete mortgage file, including origination and servicing records; and • ensuring that the original Mortgages, mortgage Notes, or deeds of trust are preserved. The Transferee Servicing Mortgagee must also ensure transfer of any outstanding Payment Supplement Account and associated servicing records. Where applicable, on the Transfer Date, the Transferee Servicing Mortgagee assumes responsibility for: • all servicing actions associated with the Payment Supplement, including but not limited to: o accounting of funds held in the Payment Supplement Account related to a Borrower’s Payment Supplement; and o administration of the Borrower’s Payment Supplement; • obtaining the complete files relating to the Payment Supplement; and • obtaining any outstanding funds in the Payment Supplement Account. Single Family Default Monitoring System Default Reporting – Standard (III.A.2.h.ii(B)) (1) Types of Mortgages to Report Each month, the Mortgagee must report Default servicing activities for all Mortgages that are 30, 60, and 90 Days or more in Default and all Mortgages in a Payment Supplement Period, as of the last Day of the month. The Mortgagee must report the status of four classes of Mortgages each month: • New Delinquencies: The Mortgagee must report Defaulted accounts when one full installment is due and unpaid (30 Days Delinquent – Status Code 42) and must continue reporting the applicable Status Code until the Default is resolved. • Open Delinquencies: The Mortgagee must continue to report a Status Code 42 until a servicing action has been initiated/approved and/or completed, which would warrant a Status Code change. • Delinquencies Resolved During the Cycle Month: The Mortgagee must report the appropriate Status Code to reflect that the delinquency has been addressed. • Mortgages Receiving a Payment Supplement: The Mortgagee must report Status Code 51 with the applicable oldest unpaid installment date and additional Status Codes as applicable. HUD’s Loss Mitigation Program (III.A.2.j) i. Definitions HUD’s Loss Mitigation Options are intended to minimize economic impact to the MMIF and to avoid foreclosure, when possible. The Loss Mitigation Options are: • Informal or Formal Forbearance • Special Forbearance (SFB)-Unemployment • FHA-Home Affordable Modification Program (FHA-HAMP) Loan Modification, FHA-HAMP Standalone Partial Claim, and FHA- HAMP Combination Loan Modification/Partial Claim o All FHA-HAMP Options are temporarily suspended and must not be offered through April 30, 2025, except for Non-Borrowers Who Acquired Title through an Exempted Transfer (III.A.2.j.ii(A)(4)(b)). Mortgagees must evaluate all other Borrowers for the COVID-19 Recovery Home Retention Options (III.A.2.o.iii(C)). • Pre-Foreclosure Sale (PFS) o Standard PFS is temporarily suspended and must not be offered through April 30, 2025, except for Non-Borrowers Who Acquired Title through an Exempted Transfer (III.A.2.j.ii(A)(4)(b)). Mortgagees must evaluate all other eligible Borrowers for the COVID-19 PFS (III.A.2.o.iii(D)(1)). • Deed-in-Lieu (DIL) of Foreclosure o Standard DIL is temporarily suspended and must not be offered through April 30, 2025, except for Non-Borrowers Who Acquired Title through an Exempted Transfer (III.A.2.j.ii(A)(4)(b)). Mortgagees must evaluate all other eligible Borrowers for the COVID-19 DIL (III.A.2.o.iii(D)(2)). For Borrowers affected by a non-COVID-19 Presidentially-Declared Major Disaster Area (PDMDA) or a COVID-19 PDMDA and National Emergency, the Mortgagee must comply with the Loss Mitigation requirements in Loss Mitigation for Borrowers in PDMDAs (III.A.2.n.iv(A)). FHA-HAMP (III.A.2.k.v) (B) Eligibility All FHA-HAMP Options are temporarily suspended and must not be offered through April 30, 2025, except for Non-Borrowers Who Acquired Title through an Exempted Transfer (III.A.2.j.ii(A)(4)(b)). Mortgagees must evaluate all other Borrowers for the COVID-19 Recovery Home Retention Options (III.A.2.o.iii(C)). Loss Mitigation for Borrowers in PDMDAs (III.A.2.n.iv) (A) Borrowers Impacted by a PDMDA during COVID-19 For Borrowers impacted by a PDMDA through April 30, 2025: • For Borrowers who are currently being evaluated for a COVID-19 Loss Mitigation Option, before the date of a new PDMDA disaster declaration, the Mortgagee must continue to follow the COVID-19 Loss Mitigation guidance. • For all other Borrowers, the Mortgagee must evaluate the Borrower for Forbearance Options for Borrowers in PDMDAs (III.A.2.n.iv(C)) and then evaluate the Borrower for the COVID-19 Recovery Home Retention Options (III.A.2.o.iii(C)), regardless of the reported reason for default. For any buildings in a PDMDA that are substantially damaged, Mortgagees must follow the PDMDA guidance in Monitoring of Repairs to Substantially Damaged Homes (III.A.2.n.iii). This requirement applies to all Properties covered by a non-COVID-19 PDMDA, including those already under a COVID-19 Loss Mitigation Option. COVID-19 Advance Loan Modification (Pre-Waterfall Step) (III.A.2.o.ii) (C) Standard Mortgagees must review Borrowers who are 90 or more Days delinquent for a COVID-19 ALM through April 30, 2025. If the Borrower is eligible, the Mortgagee must: • prepare and send out the Loan Modification documents to the Borrower; and • provide a cover letter that includes: o an explanation of terms including the modified Mortgage Payment amount; o the date the next payment is due; o a statement that no lump sum payment is required; o a statement that if the Borrower does not accept this offer, this does not prevent them from obtaining another loss mitigation option to bring their Mortgage current; o a statement that the Borrower must sign and return the Loan Modification documents within 30 Days of receipt of the documents and no later than May 30, 2025; and o information for the Borrower to contact the Mortgagee, if needed. The Mortgagee does not have to contact the Borrower prior to reviewing the Borrower for the COVID-19 ALM or sending out the modification documents. Borrowers who do not qualify for the COVID-19 ALM or who do not complete and return the signed COVID-19 ALM Loan Modification documents must be evaluated for the COVID-19 Recovery Options. COVID-19 Recovery Loss Mitigation Options (III.A.2.o.iii) (B) Standard The Mortgagee must review eligible Borrowers for the COVID-19 Recovery Options through April 30, 2025. Eligible Borrowers may receive more than one COVID-19 Recovery Option. Non-Borrowers Who Acquired Title through an Exempted Transfer (III.A.2.j.ii(A)(4)(b)) are not eligible for the COVID-19 Recovery Options and must be evaluated for FHA’s standard Loss Mitigation Options (III.A.2.j). For eligible Borrowers, the Mortgagee must review all Borrowers who are in Default or verified to be in Imminent Default (III.A.2.g), as defined in sections III.A.2.g(i–iii) only, regardless of the reason for Default. The Mortgagee must adhere to the requirements under Early Default Intervention (III.A.2.h). The Borrower must be at least three or more full monthly payments due and unpaid (61 Days Delinquent) at the time the permanent loss mitigation documents are approved. The Mortgagee may consider a Borrower who has completed a Trial Payment Plan (TPP) and remains in Default as meeting this requirement. For Borrowers in Imminent Default: • the Mortgagee must ensure the Borrower meets the requirements for Imminent Default as defined in sections III.A.2.g(i–iii) only; or • the Mortgagee may consider that a Borrower has met the requirements for Imminent Default if the Borrower: o previously qualified for or used HAF funds to reinstate their Mortgage; and o attests that they cannot resume their monthly Mortgage Payments. The Mortgagee may offer Borrowers for the current Default episode an Informal or Formal Forbearance (III.A.2.k.iii) prior to reviewing the Borrower for a COVID-19 Recovery Home Retention Option. For Informal or Formal Forbearance, the Mortgagee may verbally verify the hardship and financial information with the Borrower. An analysis of Borrower financial information is not required, and no additional documentation is required. If the Borrower’s financial hardship is due to unemployment regardless of occupancy status, the Mortgagee must offer the SFB-Unemployment to eligible Borrowers prior to reviewing the Borrower for a COVID-19 Recovery Home Retention Option. The Mortgagee must ensure all requirements for a Special Forbearance-Unemployment (III.A.2.k.iv) are met except for: • the Defaulted Mortgage Status (III.A.2.k.iv(B)(1); • the occupancy requirement, the Mortgagee must consider eligible Non-Occupant Borrowers for the Special Forbearance (SFB)- Unemployment; and • the Mortgagee may verbally verify the unemployment status, and no additional documentation or analysis of financial information is required. COVID-19 Recovery Loss Mitigation Options – Standard (III.A.2.o.iii(B)) (3) Mortgagee Incentives for COVID-19 Recovery Options The Mortgagee may submit a claim for an incentive for the successful completion of a COVID-19 Recovery Option. The Mortgagee may only file a claim for incentives if the correct and complete claim is submitted to HUD within 60 Days of the execution date of the COVID-19 Recovery Option. Loss Mitigation Option Compensation COVID-19 Advance Loan Modification (ALM) $750, plus up to $250 for reimbursement of title search, endorsement to the title policy, and/or recording fees actually incurred COVID-19 Recovery Standalone Partial Claim $500 COVID-19 Recovery Modification $750, plus up to $250 for reimbursement of title search, endorsement to the title policy, and/or recording fees actually incurred Payment Supplement $1,750 COVID-19 PFS $1,000 COVID-19 DIL $250 COVID-19 Recovery Home Retention Options (III.A.2.o.iii(C)) (2) COVID-19 Recovery Modification (c) Standard Step 7 – Target Payment Not Achieved If the Mortgagee cannot achieve the target payment using the above steps, then: • if the COVID-19 Recovery Modification can achieve a minimum of 15 percent P&I payment reduction, the Mortgagee must offer the Borrower the COVID-19 Recovery Modification; or • if the COVID-19 Recovery Modification cannot achieve a minimum of 15 percent P&I payment reduction or the Borrower states they cannot make the monthly Mortgage Payment under the COVID-19 Recovery Modification, the Mortgagee must review the Borrower for the Payment Supplement. If the Borrower affirms that they can make the offered payment, the Mortgagee must complete that option. COVID-19 Recovery Home Retention Options (III.A.2.o.iii(C)) (3) Payment Supplement (a) Definitions The Payment Supplement is a loss mitigation option that utilizes Partial Claim funds to bring the Mortgage current coupled with the subsequent provision of a Monthly Principal Reduction (MoPR) applied toward the Borrower’s principal due each month for a period of 36 months to provide payment relief without modification of the Mortgage. The Payment Supplement is evidenced by a non-interest bearing Note, Subordinate Mortgage, and Payment Supplement Agreement, which is a rider to and is incorporated by reference into the Payment Supplement promissory Note, given in favor of the Secretary, representing the total of all funds paid from the Mutual Mortgage Insurance Fund (MMIF) to bring the Mortgage current and then temporarily pay a portion of principal owed by the Borrower each month to reduce the Borrower’s monthly Mortgage Payment. The Monthly Principal Reduction (MoPR) is the amount of principal reduction that the Mortgagee will disburse monthly from the Payment Supplement Account and apply to the payment of principal due on the Borrower’s FHA-insured first Mortgage during the Payment Supplement Period. The Minimum Monthly Principal Reduction (Minimum MoPR) must be equal to or greater than 5 percent of the P&I portion of the Borrower’s monthly Mortgage Payment as of the date the Payment Supplement Period begins. The Minimum MoPR must also be no less than $20.00 per month as of the date the Payment Supplement Period begins. Payment Supplement Documents refer to a non-interest bearing Note, Subordinate Mortgage, and a Payment Supplement Agreement, which is a rider to and is incorporated by reference into the Payment Supplement promissory Note, given in favor of the Secretary. The Payment Supplement Period is a 36 month period during which the Mortgagee applies the MoPR to temporarily reduce the Borrower’s monthly Mortgage Payment. The Payment Supplement Account is a separate, non-interest bearing, insured custodial account that holds the balance of the funds paid by FHA for the purpose of implementing the Payment Supplement, clearly marked as holding funds for the Payment Supplement, and kept separate from funds associated with the FHA-insured Mortgage, including escrow funds. (b) Eligibility The Mortgagee must ensure that: • the Mortgage is a fixed rate Mortgage; • sufficient Partial Claim funds are available to bring the Mortgage current and to fund the MoPR as determined in the Payment Supplement Calculations; • the Borrower meets the requirements for Loss Mitigation during Bankruptcy Proceedings (III.A.2.i.viii); • the principal portion of the Borrower’s first monthly Mortgage Payment after the Mortgage is brought current will be greater than or equal to the Minimum MoPR; and • the Borrower indicates they have the ability to make the Borrower’s portion of the monthly Mortgage Payment. No income documentation is required to determine the Borrower’s Payment Supplement. The Borrower is not eligible for a new Payment Supplement until 36 months after the date the Borrower previously executed Payment Supplement Documents. (c) Standard The Mortgagee must first advance funds for all amounts needed to bring the Mortgage current. The maximum MoPR is the lesser of a 25 percent P&I reduction for 36 months, or the principal portion of the monthly Mortgage Payment as of the date the Payment Supplement Period begins. The Mortgagee may only submit one claim for the Payment Supplement. The Mortgagee must submit the claim for the Payment Supplement no later than 60 Days after the date of execution of the Payment Supplement Documents by the Borrower. The claim must include: • all amounts needed to bring the Mortgage current before the start of the Payment Supplement Period; and • the total amount required for all estimated MoPR payments for the full Payment Supplement Period. The Mortgagee must retain the balance of the MoPR funds in the Payment Supplement Account for the benefit of the Borrower until disbursement of the funds: • for application of the MoPR; or • for remittance to HUD. The Payment Supplement Period is 36 months. For each month of the Payment Supplement Period, the Mortgagee must only disburse funds from the Payment Supplement Account to apply the MoPR to the principal portion of the monthly Mortgage Payment after the Mortgagee has received and accepted, at a minimum, the Borrower’s portion of the monthly Mortgage Payment. The Mortgagee must only apply the MoPR during the 36 months of the Payment Supplement Period. Additional funds received from the Borrower that exceed the minimum portion of the Borrower’s required payment do not impact the application of the MoPR. Any additional payment made by the Borrower must not be comingled with the MoPR or funds held in the Payment Supplement Account. The Mortgagee must not recalculate the MoPR during the Payment Supplement Period. The Mortgagee must not charge the Borrower any additional fees or interest for the Payment Supplement. (d) Payment Supplement Calculations To calculate the amount of the Partial Claim the Mortgagee submits to HUD for the Payment Supplement, the Mortgagee must follow the steps below. (i) Step 1 – Calculate Partial Claim Availability The Mortgagee must determine the maximum Partial Claim amount available for the Payment Supplement. The Payment Supplement, in addition to any other existing Partial Claim, must not exceed the Statutory Maximum for Partial Claims (III.A.2.k.v(F)(1)). The Mortgagee must calculate the statutory maximum for Partial Claims, and then subtract any outstanding Partial Claim balances to determine the amount available for the Payment Supplement. (ii) Step 2 – Calculate Amount Required to Reinstate the Mortgage Using a Payment Supplement The Mortgagee must calculate the amounts needed to bring the Mortgage current in accordance with COVID-19 Recovery Standalone Partial Claim, as described in the second bullet of Terms (III.A.2.o.iii(C)(1)(a)). The Mortgagee must waive all Late Charges and penalties, except that Mortgagees are not required to waive Late Charges and penalties, if any, accumulated prior to March 1, 2020. Mortgagees may include an additional monthly payment in calculating the amount needed to bring the Mortgage current, as the payment will be past due before the Borrower returns the completed Payment Supplement Documents. (iii) Step 3 – Calculate Partial Claim Funds Available for MoPR The Mortgagee must determine the amount of Partial Claim funds available for the MoPR. The Mortgagee must subtract the amount needed to bring the Mortgage current (calculated in Step 2) from the Borrower’s total Partial Claim funds available (calculated in Step 1). If the amount needed to bring the Mortgage current (Step 2) is greater than the Borrower’s total Partial Claim funds available (calculated in Step 1), the Borrower is not eligible for the Payment Supplement and the Mortgagee must offer the Borrower the lowest monthly P&I payment that can be achieved under the COVID-19 Recovery Modification. (iv) Step 4 – Calculate Maximum MoPR Step 4.A The Mortgagee must calculate the amount needed to reduce the P&I portion of the Borrower’s monthly Mortgage Payment by 25 percent. Step 4.B The Mortgagee must determine the maximum MoPR. The maximum MoPR is the lesser of the amount calculated in Step 4.A or the principal portion only of the Borrower’s monthly Mortgage Payment as of the date the Payment Supplement Period begins after the Mortgage is brought current. (v) Step 5 – Calculate the MoPR Step 5.A The Mortgagee must determine if the amount of Partial Claim funds available for the MoPR (calculated in Step 3) is greater than or equal to the maximum MoPR (calculated in Step 4.B) for 36 months. • If the Borrower has sufficient Partial Claim funds, the amount of the MoPR is the MoPR (calculated in Step 4.B) for the 36 months of the Payment Supplement Period. Proceed to Step 6. • If the Borrower does not have sufficient Partial Claim funds for the maximum MoPR for 36 months, the Mortgagee must proceed to Step 5.B. Step 5.B If the Borrower does not have sufficient Partial Claim funds available for the maximum MoPR for 36 months (calculated in Step 5.A), the Mortgagee must divide the amount of Partial Claim funds available for the MoPR (calculated in Step 3) by 36 months and proceed to Step 6. (vi) Step 6 – Payment Reduction Test The Mortgagee must determine if the MoPR will result in no less than the Minimum MoPR for a Payment Supplement Period of 36 months where the MoPR is only applied to the principal. • If the MoPR (calculated in Step 5) reduces the P&I portion of the Borrower’s monthly Mortgage Payment by no less than the Minimum MoPR, the Mortgagee must proceed to Step 7. • If the MoPR (calculated in Step 5) fails to reduce the P&I portion of the Borrower’s monthly Mortgage Payment by the Minimum MoPR, the Borrower is ineligible for the Payment Supplement. The Mortgagee must offer the Borrower the lowest monthly P&I payment that can be achieved under: o a COVID-19 Recovery Modification; or o a COVID-19 Recovery Standalone Partial Claim. If the Borrower affirms that they can make the offered payment, the Mortgagee must complete that option. (vii) Step 7 – Compare Savings with Available Permanent Home Retention Options If the MoPR (calculated in Step 5) achieves the Minimum MoPR, the Mortgagee must compare the proposed Borrower’s portion of the P&I monthly payment under the Payment Supplement with the Borrower’s proposed P&I monthly payment under the COVID-19 Recovery Modification to determine the greater payment reduction. If the Borrower is able to achieve a lower P&I monthly payment with the COVID-19 Recovery Modification, the Mortgagee must offer the Borrower the COVID-19 Recovery Modification. If the Borrower is not able to achieve a lower P&I monthly payment utilizing the COVID-19 Recovery Modification, the Mortgagee must offer the Borrower the Payment Supplement. The Mortgagee must document the Servicing File with the option offered to the Borrower. (e) Mortgages with an Interest Rate Buydown and Mortgages Affected by the Servicemember Civil Relief Act For Mortgages with an interest rate buydown and Mortgages affected by the Servicemembers Civil Relief Act (SCRA), the Mortgagee must: • calculate the MoPR based on the P&I portion of the monthly Mortgage Payment as of the date the Payment Supplement Period begins: o based on the Note rate of the Mortgage without the temporary interest rate buydown, if applicable; and o based on the Note rate of the Mortgage without the SCRA protection, if applicable; • ensure the MoPR does not exceed the principal portion of the monthly Mortgage Payment; • ensure the MoPR does not change during the Payment Supplement Period; and • ensure the Payment Supplement Period remains 36 months. (f) Payment Supplement Documents (i) Standard The Mortgagee must prepare the Payment Supplement Documents using HUD’s model Payment Supplement Documents or substantially similar documents. The Mortgagee must ensure that: • the Payment Supplement promissory Note and Payment Supplement Agreement are executed in the name of the Secretary; • all Payment Supplement Documents include the full FHA case number, are legally enforceable, and comply with all applicable laws; • the Payment Supplement Documents comply with all requirements for Partial Claims as listed under FHA-HAMP Loan Documents (III.A.2.k.v.H) except (1)(a), (5), (6)(a), and (9); and • the Payment Supplement subordinate Mortgage is recorded. The Mortgagee must provide the Borrower with the Payment Supplement Documents to be signed. The Borrower is required to sign and return the Payment Supplement Documents before the Mortgagee brings the Mortgage current and applies the first MoPR. (ii) Document Delivery Requirements The Mortgagee must deliver to HUD’s Loan Servicing Contractor: • no later than 60 Days from the execution date, the original Payment Supplement promissory Note and the Payment Supplement Agreement; • no later than six months from the execution date, the recorded Payment Supplement subordinate Mortgage; and • with each delivery of Payment Supplement Documents, the Mortgagee must include a cover letter or manifest with the FHA case number for the documents that are being delivered. The Mortgagee is automatically granted a 90-Day extension to the six-month deadline for the recorded Mortgage. Mortgagees may file requests for an additional extension in accordance with Requests for Extensions of Time for Delivery of Partial Claim Documents (III.A.2.k.v(H)(7)) if a Mortgagee experiences additional delays out of their control, including past the automatic 90-Day extension for the recorded Mortgage. (g) Payment Supplement Account (i) Standard The Mortgagee must segregate the funds paid by FHA for the MoPR in the Payment Supplement Account. The Payment Supplement Account must: • be deposited with a financial institution whose accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA); • not limit the Mortgagee’s access to funds for the MoPR, require an advance notice of withdrawal, or require the payment of a withdrawal penalty; • clearly identify the funds being held in that account as being derived from and held as part of the Payment Supplement Documents executed by the Borrower as part of the Payment Supplement loss mitigation action being undertaken by the Mortgagee; and • ensure that the funds in the Payment Supplement Account are not comingled with any funds held in accounts restricted by agreements with Ginnie Mae. Neither the Mortgagee nor the Borrower has any discretion in the use and application of the funds from the Payment Supplement. Mortgagees utilizing a Trust Clearing Account must withdraw the portion that is to be deposited into the Payment Supplement Account within 48 hours of receiving the Payment Supplement funds from HUD. Mortgagees are not prohibited from holding MoPR funds for multiple Mortgages in a single account for implementing the Payment Supplement; however, the Mortgagee must not commingle funds in the Payment Supplement Account, even temporarily, with any funds held in accounts restricted by agreements with Ginnie Mae, escrow funds, or funds used for the Mortgagee’s general operating purposes or any other purpose. If the Borrower enters into bankruptcy during the Payment Supplement Period, the Mortgagee must continue to apply the MoPR unless otherwise required or permitted by law. If so required, the Mortgagee must seek court approval for the Payment Supplement and the Borrower’s reaffirmation of the Partial Claim debt. Any additional loss mitigation offered during bankruptcy must be in accordance with Loss Mitigation during Bankruptcy Proceedings (III.A.2.i.viii). (ii) Interest on Payment Supplement Account Neither the Mortgagee nor the Borrower may earn interest on a Payment Supplement Account. (h) Required Documentation The Mortgagee must retain the following in the Servicing File and the Claim Review File: • documentation of the amount used to bring the Mortgage current at the start of the Payment Supplement Period; • documentation of the amount of each MoPR disbursed from the Payment Supplement Account applied to the principal due on the Borrower’s monthly Mortgage Payment; • a copy of the executed Payment Supplement Documents; • the date the Mortgagee received the executed Payment Supplement Documents from the Borrower and the date the subordinate Mortgage was sent to be recorded; and • evidence that the subordinate Mortgage was submitted timely for recording. (i) Disclosures to Borrower The Mortgagee must send the Borrower written disclosures annually and between 60 and 90 Days before the expiration of the Payment Supplement Period. Mortgagees may develop specific disclosure documents or may use or modify FHA’s model Annual Payment Supplement Disclosure and Final Payment Supplement Disclosure documents. Mortgagees must ensure that any disclosures comply with all applicable laws. (i) Annual Payment Supplement Disclosure The Mortgagee must send the Borrower a written disclosure annually, at minimum, during the Payment Supplement Period, including: • information about the Payment Supplement, including: o the amount used to bring the Mortgage current at the start of the Payment Supplement; o the accounting of the MoPR funds disbursed from the Payment Supplement Account and applied each month during the Payment Supplement Period; and o the funds remaining in the Payment Supplement Account; • the date of expiration of the Payment Supplement Period; • the total Payment Supplement Note amount; • the Borrower’s current monthly Mortgage Payment without MoPR and an explanation that if escrow amounts change, future payments may increase; and • a statement that the Borrower may voluntarily terminate the Payment Supplement and resume their full monthly Mortgage Payment without the MoPR and any remaining funds in the Payment Supplement Account will be returned to HUD to reduce the total outstanding Payment Supplement balance associated with the Borrower’s Payment Supplement Documents. The Mortgagee may include the disclosure as part of, or with, a monthly or annual billing statement. The disclosure may be sent electronically. (ii) Final Disclosure Prior to Expiration of the Payment Supplement The Mortgagee must send the Borrower a written disclosure between 60 and 90 Days before the expiration of the Payment Supplement Period, including information about: • the expiration of the Payment Supplement Period; and • the accounting of the Payment Supplement, including: o the total Payment Supplement Note amount; o the amount used to bring the Mortgage current at the start of the Payment Supplement; o the accounting of the MoPR funds disbursed from the Payment Supplement Account and applied each month for the Payment Supplement Period; o if applicable, any funds remaining in the Payment Supplement Account and a statement that FHA will use these funds to reduce the balance on the amount owed by the Borrower under the Payment Supplement Documents; and o the Borrower’s estimated first monthly Mortgage Payment following the expiration of the Payment Supplement. (j) Subsequent Default during Payment Supplement Period If a Borrower is 30 Days or more past due or in Imminent Default during the Payment Supplement Period, the Mortgagee must review the Borrower in accordance with the COVID-19 Recovery Loss Mitigation Options – Standard (III.A.2.o.iii(B). The appropriate action will determine if: • the MoPR will continue to be applied for the remainder of the Payment Supplement Period without changes to the Payment Supplement Agreement; or • the Payment Supplement will be terminated. (i) Mortgage Reinstatement without a Permanent Loss Mitigation Option – MoPR Continues If the Borrower, without the use of a permanent loss mitigation option, makes their portion of the missed monthly Mortgage Payments, the MoPR must be disbursed from the Payment Supplement Account and then applied to the missed payments as they are made. For these missed payments, the MoPR must be applied only to the principal portion of the missed Mortgage Payment and for the exact amount that would have been applied for an on-time payment, including when the Mortgage is brought current through payments made on a repayment plan or a forbearance plan. The MoPR must be applied for the remainder of the Payment Supplement Period as the Borrower makes each required payment. (ii) Mortgage Reinstatement with COVID-19 Recovery Standalone Partial Claim – MoPR Continues If the Borrower requires a new loss mitigation option to reinstate their Mortgage, the Mortgagee must first evaluate the Borrower for an additional COVID-19 Recovery Standalone Partial Claim to bring the Mortgage current. A Borrower may receive no more than two COVID-19 Recovery Standalone Partial Claims to reinstate the Mortgage during the Payment Supplement Period. The Mortgagee must determine the amount of funds needed for the COVID-19 Recovery Standalone Partial Claim by: • calculating the amount needed to bring the Mortgage current, per the requirements for a COVID-19 Recovery Standalone Partial Claim (III.A.2.o.iii(C)(1)); and • reducing the amount needed to bring the Mortgage current by the MoPR for each month it was not applied due to missed payments by the Borrower. If the Borrower has sufficient additional Partial Claim funds available, the Mortgagee must: • ensure the Borrower attests they can resume their portion of the monthly Mortgage Payment; • ensure all requirements in accordance with a COVID-19 Recovery Standalone Partial Claim (III.A.2.o.iii(C)(1)) are met; and • prepare and send the Borrower the documents for a COVID- 19 Recovery Standalone Partial Claim to reinstate the Mortgage. Upon receipt of the executed COVID-19 Recovery Standalone Partial Claim documents from the Borrower, the Mortgagee must: • disburse and then apply funds from the Payment Supplement Account to cover the MoPR for each month it was not applied due to missed payments by the Borrower; and • advance the funds from the COVID-19 Recovery Standalone Partial Claim necessary to reinstate the Mortgage. For missed payments, the MoPR must be applied only to the principal portion of the missed payment and for the exact amount that would have been applied for an on-time payment. After the Mortgage is reinstated, the Mortgagee must resume applying the MoPR. The Payment Supplement Period will not be extended beyond the original term set in the Payment Supplement Agreement. (iii) Mortgage Reinstatement with Other Permanent Loss Mitigation Option – MoPR Terminates If the Borrower cannot bring the Mortgage current through an additional COVID-19 Recovery Standalone Partial Claim, the Mortgagee must: • evaluate the Borrower for the available permanent loss mitigation options; • terminate the Payment Supplement and application of the MoPR upon receipt of the new executed loss mitigation documents; • send the Borrower documentation that the Payment Supplement has been terminated and a detailed account of how the Payment Supplement funds were applied; • no later than 30 Days after the date the Payment Supplement was terminated, remit any remaining funds from the Payment Supplement Account to HUD via Pay.gov - Single Family Notes Lender Entry Form; and • report the termination of the Payment Supplement through SFDMS. (iv) Mortgage Cannot Be Reinstated – MoPR Terminates For Borrowers who have not completed the Payment Supplement Period and cannot reinstate their Mortgage, the Mortgagee must ensure the following requirements are met, as applicable. (a) Pre-Foreclosure Sales In addition to the requirements for a PFS, the Mortgagee must: • proceed with the PFS requirements under Pre-Foreclosure Sale (III.A.2.l.ii); • prior to execution of the Approval to Participate (ATP) agreement (form HUD-90045, Approval to Participate Pre- foreclosure Sale Procedure Property Sales Information Property Occupancy & Maintenance), provide the Borrower with a disclosure statement including: o the Payment Supplement will be terminated upon receipt of the executed ATP and the Mortgagee will not advance funds to cover the MoPR during the PFS marketing period; o the amount of the Partial Claim that was used to bring the Mortgage current at the start of the Payment Supplement Period; o the total amount of funds that were disbursed from the Payment Supplement Account for MoPR payments; and o the amount of individual MoPR payments and the months for which they were applied; • terminate the Payment Supplement upon receipt of the executed ATP; • ensure that no funds remaining in the Payment Supplement Account are returned to the Borrower; • ensure that the funds remaining in the Payment Supplement Account are not used as a credit to the first Mortgage; • no later than 30 Days after the date of execution of the ATP, remit all remaining funds in the Payment Supplement Account to HUD via Pay.gov - Single Family Notes Lender Entry Form; • instruct the Closing Agent to pay off the outstanding amount due under the Payment Supplement Note and other Partial Claims, if any, at closing to HUD; and • no later than 45 Days after the date of termination of the Payment Supplement, upload the final accounting of the Payment Supplement into the SMART Integrated Portal (SIP). (b) Deed-in-Lieu of Foreclosure, Foreclosure Sales, and CWCOT In addition to the requirements for DIL (III.A.2.l.iii), Foreclosures (III.A.2.t), and CWCOT (III.A.2.r), the Mortgagee must: • terminate the Payment Supplement when the sale is completed or the deed is transferred; • ensure that no funds remaining in the Payment Supplement Account are returned to the Borrower; • ensure that the funds remaining in the Payment Supplement Account are not used as a credit to the first Mortgage; and • no later than 30 Days after the date the sale is completed or the deed is transferred, remit all remaining funds in the Payment Supplement Account to HUD via Pay.gov - Single Family Notes Lender Entry Form; and • no later than 45 Days after the date the sale is completed or the deed is transferred, upload the final accounting of the Payment Supplement into SIP. (k) Completion or Termination of the Payment Supplement A Payment Supplement is completed or terminated upon the earlier of: • the end date of the Payment Supplement Period; • the application of 36 MoPRs; or • early termination of the Payment Supplement. No later than 30 Days after the date of the completion or termination of the Payment Supplement, the Mortgagee must remit any funds remaining in the Payment Supplement Account to HUD via Pay.gov - Single Family Notes Lender Entry Form. (i) Early Termination of the Payment Supplement (a) Voluntary Termination Request The Mortgagee must terminate the Payment Supplement upon Borrower request if the Borrower signs a document affirming they can resume their full monthly Mortgage Payment without the MoPR and that they no longer wish to receive the MoPR. The Mortgagee must send the Borrower documentation that the Payment Supplement has been terminated and a detailed account of how the Payment Supplement funds were applied. (b) Loss Mitigation Home Retention Action Completed The Mortgagee must terminate the Payment Supplement when any subsequent loss mitigation home retention option is executed by all required parties, except for a COVID-19 Recovery Standalone Partial Claim. (c) PFS, DIL, Foreclosure, and CWCOT The Mortgagee must terminate the Payment Supplement upon receipt of an executed ATP for PFS or when the foreclosure sale, CWCOT sale, or transfer of deed is completed. (d) Transfers and Assumptions The Payment Supplement is non-transferrable and not assignable to a new Borrower. Upon approval by the Mortgagee of the transfer or assumption, or when the Mortgagee receives actual or constructive knowledge of the transfer of ownership, the Mortgagee must terminate the Payment Supplement. (e) Sale (non-PFS) or Refinance If the Property is being sold or the Mortgage is being refinanced, the Mortgagee must: • provide the Payment Supplement Payoff Statement upon request; and • terminate the Payment Supplement upon completion of the sale or refinance. (ii) Final Accounting of Payment Supplement No later than 45 Days after the date of completion or termination of the Payment Supplement, the Mortgagee must: • upload a final accounting of the Payment Supplement in the SMART Integrated Portal (SIP); and • input the amount of any funds remitted to HUD. The Mortgagee is not permitted to submit the final accounting until after remitting to HUD all remaining funds from the Payment Supplement Account, if any. The final accounting of the Payment Supplement is a document uploaded in SIP that must include: • the amount that was used to bring the Mortgage current at the start of the Payment Supplement Period; • the total amount applied to MoPR payments; and • the amount of individual MoPR payments and the months for which they were applied. The Mortgagee must also input in SIP the amount of funds, if any, that have been remitted to HUD via Pay.gov - Single Family Notes Lender Entry Form in SIP. (iii) Payment Supplement Payoff Statement The Mortgagee must issue Payment Supplement payoff statements until the final accounting of the Payment Supplement has been submitted to HUD. The Mortgagee must issue Payment Supplement payoff statements upon request and when the Mortgagee receives a payoff request for the Borrower’s first Mortgage. The Mortgagee must include in a Payment Supplement payoff statement, at a minimum: • the total amount due for the Payment Supplement, including itemizing: o the amount that was used to bring the Mortgage current at the start of the Payment Supplement Period; and o the total amount applied to MoPR payments; • a statement that the Payment Supplement is a subordinate lien in the name of the Secretary of HUD; • instructions that the payoff of funds owed under the Payment Supplement must be remitted to HUD via Pay.gov; • a statement that the payoff amount will change if additional account activity occurs including: o any payment made that triggers the application of a MoPR; and o returned payments due to a stop payment or insufficient funds; and • anything required by applicable laws. The Payment Supplement payoff statement must not include or reflect as a credit any remaining funds in the Payment Supplement Account. The Payment Supplement payoff statement must not include the balance of any additional outstanding Partial Claims. If HUD receives a request for a payoff statement of the Payment Supplement prior to receipt of the final accounting from the Mortgagee, HUD will provide the maximum amount available under the Payment Supplement and direct the requestor to contact the Mortgagee for the actual amount required to pay off the Payment Supplement. After completion or termination of the Payment Supplement and submission of the final accounting from the Mortgagee, the Mortgagee must not issue any payoff statements for the Payment Supplement. (iv) Required Documentation The Mortgagee must retain a copy of the final accounting and, if applicable, the Payment Supplement Payoff Statement in the Servicing File. (l) Errors or Miscalculations of Funds Associated with Payment Supplement If the Mortgagee makes an error or miscalculates the Payment Supplement that results in: • a claim overpayment to the Mortgagee, the Mortgagee must remit the overpaid amount immediately to HUD via Pay.gov - Single Family Notes Lender Entry Form; or • a claim underpayment to the Mortgagee, the Mortgagee must absorb the cost of the error or miscalculation. If the Mortgagee makes an error or miscalculates the amount of funds remitted to HUD at the completion or termination of the Payment Supplement resulting in the Mortgagee remitting less than the total remaining funds in the Payment Supplement Account to HUD, the Mortgagee must remit any remaining outstanding funds in the Payment Supplement Account immediately to HUD via Pay.gov - Single Family Notes Lender Entry Form. The Mortgagee must include its review process for ensuring the accurate calculation of Payment Supplement in its QC Plan. (m) Reporting to HUD The Mortgagee must report the use of a Payment Supplement in SFDMS, using Delinquency/Default Status (DDS) Code 51 – Payment Supplement Started. • While the Borrower remains in the Payment Supplement Period, the Mortgagee must continue to report DDS Code 51 with the applicable oldest unpaid installment date, including every month the Borrower makes their required payment under the Payment Supplement. If occupancy is not required to be determined, the Mortgagee must report Occupancy Status Code 7 – Occupancy Determination Not Required. • The Mortgagee must not report DDS Code 20 or 98 if the Payment Supplement is still in effect for the duration of the Payment Supplement Period. For Borrowers utilizing the Payment Supplement where another delinquent Status Code also applies, the Mortgagee must report DDS Code 51 first followed by any other applicable DDS Codes. After the completion or termination of the Payment Supplement Period, the Mortgagee must report: • DDS Code 98 if the Mortgage is current; or • the applicable code if the Mortgage is not current. (i) Borrower Resumes Payment After Payment Supplement Period If the Borrower resumes their monthly Mortgage Payment following the Payment Supplement Period or the Borrower requests to terminate the Payment Supplement and affirms they can resume their full monthly Mortgage Payment, the Mortgagee must report DDS Code 98. (ii) Subsequent Default For every month the Borrower does not make their required payment under the Payment Supplement, the Mortgagee must report DDS Code 51 with the applicable oldest unpaid installment date indicating that the Mortgage is past due. The Mortgagee must report the applicable Occupancy Status Code and Occupancy Status Date based on the most recent occupancy determination. If the Borrower does not make their required payment under the Payment Supplement and then reinstates their Mortgage without the use of a loss mitigation option, the Mortgagee must continue to report DDS Code 51 with the applicable oldest unpaid installment date. The Mortgagee must not report DDS Code 20 or 98 as long as the Payment Supplement is still in effect. (a) Forbearance Plan during Payment Supplement Period If the Borrower begins a forbearance plan during the Payment Supplement Period, the Mortgagee must: • report the appropriate DDS Code for the loss mitigation option utilized; and • continue to report DDS Code 51 with the applicable oldest unpaid installment date until new executed loss mitigation documents are received. (b) COVID-19 Recovery Standalone Partial Claim after Subsequent Default If the Borrower does not make their required payment under the Payment Supplement and then reinstates their Mortgage with the use of a COVID-19 Recovery Standalone Partial Claim, the Mortgagee must: • report the appropriate DDS Code for the standalone Partial Claim utilized; • continue to report DDS Code 51 with the applicable oldest unpaid installment date; and • not report DDS Code 20 or 98 as long as the Payment Supplement is still in effect. (c) Other Loss Mitigation Options after Subsequent Default If the Borrower does not make their required payment under the Payment Supplement and then reinstates their Mortgage with the use of other loss mitigation options, the Mortgagee must: • report the appropriate DDS Code for the loss mitigation option utilized; • continue to report DDS Code 51 with the applicable oldest unpaid installment date until new executed loss mitigation documents are received; and • report DDS Code 98 upon reinstatement and stop reporting DDS Code 51. (d) Option Failure If the Borrower does not sign and return the Payment Supplement Documents or does not make their required payment under the Payment Supplement and cannot reinstate their Mortgage with or without the use of loss mitigation, the Mortgagee must report DDS Code AQ – Option Failure with the applicable Occupancy Status Code and applicable Occupancy Status Date. (iii) Sale, Refinance, or Other Mortgage Termination If the Borrower sells the Property, refinances the Mortgage, or otherwise pays the Mortgage in full before the end of the Payment Supplement Period, the Mortgagee must report DDS Code 13. (iv) Assumption If the Mortgage is assumed before the end of the Payment Supplement Period, the Mortgagee must report DDS Code 21. (v) Bankruptcy If the Borrower is in bankruptcy and continues to make their required payment under the Payment Supplement, the Mortgagee is not required to report bankruptcy. FHA Single Family Housing Policy Handbook 4000.1 Claims and Disposition Claim Types (IV.A.2) l. Claim Type 33 – Payment Supplement The Mortgagee may file a claim for a Payment Supplement incentive and insurance benefits under Claim Type 33 – Payment Supplement after the Mortgage is brought current. The Mortgagee may include in its claim the amounts needed to bring the Mortgage current in the same manner as a COVID-19 Recovery Standalone Partial Claim, as described in the second bullet of Terms (III.A.2.o.iii(C)(1)(a)), in addition to the funds needed for the Monthly Principal Reduction (MoPR) payments required for the Payment Supplement Period. HUD will pay the Mortgagee a one-time financial incentive of $1,750 for the use of a Payment Supplement in compliance with Mortgagee Incentives for COVID-19 Recovery Options and all regulatory requirements and procedures relating to the submission of incentive claims. HUD must receive a correct and complete claim submission of Parts A and B via FHAC or FHA Catalyst no later than 60 Days after the execution date of the Payment Supplement Documents. ``` _Authority_: FHA Mortgagee Letter 2024-02 — Mortgagee Letter 2024-02 _Source_: _Snapshot_: `faddf184eead830b` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- --- # FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii **Register slug:** `hud-ml-2024-08` **Obligation count:** 7 ## Register description HUD Mortgagee Letter 2024-08. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD ML 2024-08 — FHA-Insured Forward Mortgages: Extension of Foreclosure Moratorium for Maui County, Hawaii **Obligation ID:** `hud-ml-2024-08-forward-mortgage-moratorium` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-affected-loan **Operative duty (lender voice):** > For FHA-insured Single Family forward mortgages secured by Properties > located in Maui County, Hawaii, [LENDER] must observe the extended > foreclosure moratorium through August 4, 2024, applying both to the > initiation of new foreclosures and to the completion of foreclosures > already in process; first-legal-action deadlines and Reasonable Diligence > Time Frames are extended by 180 Days from August 4, 2024. **Compliance obligation:** > For every FHA-insured forward Mortgage with subject Property in Maui County, Hawaii, can [LENDER] evidence that no foreclosure initiation or completion occurred during the moratorium period (through August 4, 2024) and that first-legal-action / Reasonable Diligence Time Frame deadlines were extended by 180 Days from August 4, 2024? **Verbatim regulator text:** ``` Properties located in Maui County, Hawaii and secured by FHA-insured Single Family forward mortgages are subject to an extended foreclosure moratorium through August 4, 2024. The moratorium applies to the initiation of foreclosures and to the completion of foreclosures in process. Deadlines for the first legal action and Reasonable Diligence Time Frame are extended by 180 Days from August 4, 2024. ``` _Authority_: HUD ML 2024-08 — FHA-Insured Forward Mortgages _Source_: _Snapshot_: `a94e224fae2e8539` _Fetched_: 2026-05-22T19:54:44Z --- #### HUD ML 2024-08 — HECM Foreclosure Moratorium for Maui County, Hawaii **Obligation ID:** `hud-ml-2024-08-hecm-moratorium` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-affected-loan **Operative duty (lender voice):** > For FHA-insured HECMs secured by Properties located in Maui County, > Hawaii, [LENDER] must observe a moratorium on foreclosures through August > 4, 2024 — but only where the HECM is Due and Payable for reasons other > than the death of the last remaining Borrower and is not subject to a > Deferral Period — applying to both the initiation of foreclosures and > foreclosures already in process. **Compliance obligation:** > For every FHA-insured HECM with subject Property in Maui County, Hawaii that became Due and Payable for reasons other than death of the last remaining Borrower (and was not subject to a Deferral Period), can [LENDER] evidence that no foreclosure initiation or completion occurred during the moratorium period (through August 4, 2024)? **Verbatim regulator text:** ``` The Mortgagee must observe a moratorium on foreclosures of FHA-insured HECMs secured by Properties located in Maui County, Hawaii through August 4, 2024. ``` _Authority_: HUD ML 2024-08 — HECM Foreclosure Moratorium _Source_: _Snapshot_: `a94e224fae2e8539` _Fetched_: 2026-05-22T19:54:44Z --- #### FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Purpose **Obligation ID:** `hud-ml-2024-08-s02` **Operative duty (lender voice):** > This Mortgagee Letter (ML) further extends the foreclosure moratorium in Maui County, Hawaii. **Verbatim regulator text:** ``` This Mortgagee Letter (ML) further extends the foreclosure moratorium in Maui County, Hawaii. ``` _Authority_: FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `a94e224fae2e8539` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Effective Date **Obligation ID:** `hud-ml-2024-08-s03` **Operative duty (lender voice):** > The provisions of this ML are effective immediately. The moratorium will remain in effect through August 4, 2024. **Verbatim regulator text:** ``` The provisions of this ML are effective immediately. The moratorium will remain in effect through August 4, 2024. ``` _Authority_: FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `a94e224fae2e8539` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Affected Programs **Obligation ID:** `hud-ml-2024-08-s04` **Operative duty (lender voice):** > The provisions of this ML apply to all FHA Title II Single Family forward and Home Equity Conversion Mortgage (HECM) programs. **Verbatim regulator text:** ``` The provisions of this ML apply to all FHA Title II Single Family forward and Home Equity Conversion Mortgage (HECM) programs. ``` _Authority_: FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `a94e224fae2e8539` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Background **Obligation ID:** `hud-ml-2024-08-s05` **Operative duty (lender voice):** > HUD provides an automatic 90-Day foreclosure moratorium beginning on the date of any Presidentially-Declared Major Disaster Area declaration. On August 10, 2023, President Joseph R. Biden declared Maui County, Hawaii a major disaster area due to the wildfires that decimated the county. HUD’s automatic foreclosure moratorium was set to expire on November 8, 2023, and due to the devastation in Maui, HUD extended the mo **Verbatim regulator text:** ``` HUD provides an automatic 90-Day foreclosure moratorium beginning on the date of any Presidentially-Declared Major Disaster Area declaration. On August 10, 2023, President Joseph R. Biden declared Maui County, Hawaii a major disaster area due to the wildfires that decimated the county. HUD’s automatic foreclosure moratorium was set to expire on November 8, 2023, and due to the devastation in Maui, HUD extended the moratorium through May 6, 2024. HUD is now further extending the foreclosure moratorium for properties located in Maui County, Hawaii due to the extent of the devastation from the wildfires, the reduced capacity to access needed resources, and the unique geographic location of Maui. HUD believes that Borrowers need the additional time provided by the moratorium to access federal, state, or local housing resources, rebuild, and consult with HUD- approved housing counselors. ``` _Authority_: FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `a94e224fae2e8539` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Summary of Changes **Obligation ID:** `hud-ml-2024-08-s06` **Operative duty (lender voice):** > This ML: • further extends the automatic foreclosure moratorium in III.A.2.n.ii Moratorium on Foreclosures for Properties located in Maui County, Hawaii; and • provides relief for FHA-insured HECMs. FHA-Insured Forward Mortgages - Extension of Foreclosure Moratorium for Maui County, Hawaii Properties located in Maui County, Hawaii and secured by FHA-insured Single Family forward mortgages are subject to an extended f **Verbatim regulator text:** ``` This ML: • further extends the automatic foreclosure moratorium in III.A.2.n.ii Moratorium on Foreclosures for Properties located in Maui County, Hawaii; and • provides relief for FHA-insured HECMs. FHA-Insured Forward Mortgages - Extension of Foreclosure Moratorium for Maui County, Hawaii Properties located in Maui County, Hawaii and secured by FHA-insured Single Family forward mortgages are subject to an extended foreclosure moratorium through August 4, 2024. The moratorium applies to the initiation of foreclosures and to the completion of foreclosures in process. Deadlines for the first legal action and Reasonable Diligence Time Frame are extended by 180 Days from August 4, 2024. Home Equity Conversion Mortgages (HECM) - Foreclosure Moratorium for Maui County, Hawaii The Mortgagee must observe a moratorium on foreclosures of FHA-insured HECMs secured by Properties located in Maui County, Hawaii through August 4, 2024. The foreclosure moratorium is applicable: • only if the HECM is Due and Payable for reasons other than the death of the last remaining Borrower and is not subject to a Deferral Period; and • to the initiation of foreclosures and foreclosures already in process. During the foreclosure moratorium, Mortgagees are also granted an automatic 180-Day extension for all servicing deadlines, including the deadlines for requesting to call a HECM Due and Payable and providing notice to HUD of loans which have automatically become Due and Payable. Mortgagees are granted an automatic 180-Day extension from the date of the moratorium expiration date to commence or recommence foreclosure action or evaluate the Borrower for loss mitigation. Where foreclosure has not been initiated, the Mortgagee may submit a request for an extension to HUD’s foreclosure-related deadlines through Home Equity Reverse Mortgage Information Technology (HERMIT) when prohibited from performing a required activity due to the foreclosure moratorium. ``` _Authority_: FHA Mortgagee Letter 2024-08 — Second Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `a94e224fae2e8539` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- --- # FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii **Register slug:** `hud-ml-2024-15` **Obligation count:** 7 ## Register description HUD Mortgagee Letter 2024-15. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD ML 2024-15 — FHA-Insured Forward Mortgages: Extension of Foreclosure Moratorium for Maui County, Hawaii **Obligation ID:** `hud-ml-2024-15-forward-mortgage-moratorium` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-affected-loan **Operative duty (lender voice):** > For FHA-insured Single Family forward mortgages secured by Properties > located in Maui County, Hawaii, [LENDER] must observe the extended > foreclosure moratorium through January 1, 2025, applying both to the > initiation of new foreclosures and to the completion of foreclosures > already in process; first-legal-action deadlines and Reasonable Diligence > Time Frames are extended by 180 Days from January 1, 2025. **Compliance obligation:** > For every FHA-insured forward Mortgage with subject Property in Maui County, Hawaii, can [LENDER] evidence that no foreclosure initiation or completion occurred during the moratorium period (through January 1, 2025) and that first-legal-action / Reasonable Diligence Time Frame deadlines were extended by 180 Days from January 1, 2025? **Verbatim regulator text:** ``` Properties located in Maui County, Hawaii and secured by FHA-insured Single Family forward mortgages are subject to an extended foreclosure moratorium through January 1, 2025. The moratorium applies to the initiation of foreclosures and to the completion of foreclosures in process. Deadlines for the first legal action and Reasonable Diligence Time Frame are extended by 180 Days from January 1, 2025. ``` _Authority_: HUD ML 2024-15 — FHA-Insured Forward Mortgages _Source_: _Snapshot_: `1bde80415ac946f5` _Fetched_: 2026-05-22T19:54:47Z --- #### HUD ML 2024-15 — HECM Foreclosure Moratorium for Maui County, Hawaii **Obligation ID:** `hud-ml-2024-15-hecm-moratorium` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-affected-loan **Operative duty (lender voice):** > For FHA-insured HECMs secured by Properties located in Maui County, > Hawaii, [LENDER] must observe a moratorium on foreclosures through > January 1, 2025 — but only where the HECM is Due and Payable for reasons > other than the death of the last remaining Borrower and is not subject > to a Deferral Period — applying to both the initiation of foreclosures > and foreclosures already in process. **Compliance obligation:** > For every FHA-insured HECM with subject Property in Maui County, Hawaii that became Due and Payable for reasons other than death of the last remaining Borrower (and was not subject to a Deferral Period), can [LENDER] evidence that no foreclosure initiation or completion occurred during the moratorium period (through January 1, 2025)? **Verbatim regulator text:** ``` The Mortgagee must observe a moratorium on foreclosures of FHA-insured HECMs secured by Properties located in Maui County, Hawaii through January 1, 2025. ``` _Authority_: HUD ML 2024-15 — HECM Foreclosure Moratorium _Source_: _Snapshot_: `1bde80415ac946f5` _Fetched_: 2026-05-22T19:54:47Z --- #### FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Purpose **Obligation ID:** `hud-ml-2024-15-s02` **Operative duty (lender voice):** > This Mortgagee Letter (ML) further extends the foreclosure moratorium in Maui County, Hawaii. **Verbatim regulator text:** ``` This Mortgagee Letter (ML) further extends the foreclosure moratorium in Maui County, Hawaii. ``` _Authority_: FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `1bde80415ac946f5` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Effective Date **Obligation ID:** `hud-ml-2024-15-s03` **Operative duty (lender voice):** > The provisions of this ML are effective immediately. The moratorium will remain in effect through January 1, 2025. **Verbatim regulator text:** ``` The provisions of this ML are effective immediately. The moratorium will remain in effect through January 1, 2025. ``` _Authority_: FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `1bde80415ac946f5` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Affected Programs **Obligation ID:** `hud-ml-2024-15-s04` **Operative duty (lender voice):** > The provisions of this ML apply to all FHA Title II Single Family forward and Home Equity Conversion Mortgage (HECM) programs. **Verbatim regulator text:** ``` The provisions of this ML apply to all FHA Title II Single Family forward and Home Equity Conversion Mortgage (HECM) programs. ``` _Authority_: FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `1bde80415ac946f5` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Background **Obligation ID:** `hud-ml-2024-15-s05` **Operative duty (lender voice):** > HUD provides an automatic 90-Day foreclosure moratorium beginning on the date of any Presidentially-Declared Major Disaster Area declaration. On August 10, 2023, President Joseph R. Biden declared Maui County, Hawaii a major disaster area due to the wildfires that decimated the county. HUD’s automatic foreclosure moratorium was set to expire on November 8, 2023, and due to the devastation in Maui, HUD extended the mo **Verbatim regulator text:** ``` HUD provides an automatic 90-Day foreclosure moratorium beginning on the date of any Presidentially-Declared Major Disaster Area declaration. On August 10, 2023, President Joseph R. Biden declared Maui County, Hawaii a major disaster area due to the wildfires that decimated the county. HUD’s automatic foreclosure moratorium was set to expire on November 8, 2023, and due to the devastation in Maui, HUD extended the moratorium through May 6, 2024, and again through August 4, 2024. HUD is now further extending the foreclosure moratorium for properties located in Maui County, Hawaii due to the extent of the devastation from the wildfires, the reduced capacity to access needed resources, and the unique geographic location of Maui. HUD believes that Borrowers need the additional time provided by the moratorium to access federal, state, or local housing resources, rebuild, and consult with HUD-approved housing counselors. ``` _Authority_: FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `1bde80415ac946f5` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii — Summary of Changes **Obligation ID:** `hud-ml-2024-15-s06` **Operative duty (lender voice):** > This ML: • further extends the automatic foreclosure moratorium in III.A.2.n.ii Moratorium on Foreclosures for Properties located in Maui County, Hawaii; and • provides relief for FHA-insured HECMs. FHA-Insured Forward Mortgages - Extension of Foreclosure Moratorium for Maui County, Hawaii Properties located in Maui County, Hawaii and secured by FHA-insured Single Family forward mortgages are subject to an extended f **Verbatim regulator text:** ``` This ML: • further extends the automatic foreclosure moratorium in III.A.2.n.ii Moratorium on Foreclosures for Properties located in Maui County, Hawaii; and • provides relief for FHA-insured HECMs. FHA-Insured Forward Mortgages - Extension of Foreclosure Moratorium for Maui County, Hawaii Properties located in Maui County, Hawaii and secured by FHA-insured Single Family forward mortgages are subject to an extended foreclosure moratorium through January 1, 2025. The moratorium applies to the initiation of foreclosures and to the completion of foreclosures in process. Deadlines for the first legal action and Reasonable Diligence Time Frame are extended by 180 Days from January 1, 2025. Home Equity Conversion Mortgages (HECM) - Foreclosure Moratorium for Maui County, Hawaii The Mortgagee must observe a moratorium on foreclosures of FHA-insured HECMs secured by Properties located in Maui County, Hawaii through January 1, 2025. The foreclosure moratorium is applicable: • only if the HECM is Due and Payable for reasons other than the death of the last remaining Borrower and is not subject to a Deferral Period; and • to the initiation of foreclosures and foreclosures already in process. During the foreclosure moratorium, Mortgagees are also granted an automatic 180-Day extension for all servicing deadlines, including the deadlines for requesting to call a HECM Due and Payable and providing notice to HUD of loans which have automatically become Due and Payable. Mortgagees are granted an automatic 180-Day extension from the date of the moratorium expiration date to commence or recommence foreclosure action or evaluate the Borrower for loss mitigation. Where foreclosure has not been initiated, the Mortgagee may submit a request for an extension to HUD’s foreclosure-related deadlines through Home Equity Reverse Mortgage Information Technology (HERMIT) when prohibited from performing a required activity due to the foreclosure moratorium. ``` _Authority_: FHA Mortgagee Letter 2024-15 — Third Extension of the Foreclosure Moratorium in Connection with the Presidentially-Declared Major Disaster Area in Maui County, Hawaii _Source_: _Snapshot_: `1bde80415ac946f5` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- --- # FHA Mortgagee Letter 2024-17 — Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens **Register slug:** `hud-ml-2024-17` **Obligation count:** 6 ## Register description HUD Mortgagee Letter 2024-17. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD ML 2024-17 — Optional Interim Exception for Nonjudicial Foreclosures (b) Standard **Obligation ID:** `hud-ml-2024-17-sip-submission-standard` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-foreclosure **Operative duty (lender voice):** > Where [LENDER] elects to use this optional interim procedure to request > release of a subordinate Secretary-held lien following a nonjudicial > foreclosure sale, [LENDER] may only do so where (i) the nonjudicial > foreclosure sale resulted in no Surplus Funds and (ii) nonjudicial is > the Preferred Method of Foreclosure for the state. If the Property is > subject to federal non-Secretary-held liens, [LENDER] must comply with > applicable law for those federal liens, including proceeding with a > judicial foreclosure if required. **Compliance obligation:** > For every request [LENDER] submitted under ML 2024-17's optional interim procedure to release a subordinate Secretary-held lien, can [LENDER] evidence (i) that the nonjudicial foreclosure sale produced no Surplus Funds, (ii) that nonjudicial was the state's Preferred Method of Foreclosure, and (iii) that compliance with applicable law was maintained for any federal non-Secretary-held liens? **Verbatim regulator text:** ``` Mortgagees may only request release of a subordinate Secretary-held lien where a nonjudicial foreclosure sale resulted in no Surplus Funds where nonjudicial is the Preferred Method of Foreclosure. ``` _Authority_: HUD ML 2024-17 — Optional Interim Exception (b) Standard _Source_: _Snapshot_: `f12a4dccdc7e69a3` _Fetched_: 2026-05-22T19:54:51Z --- #### HUD ML 2024-17 — Optional Interim Exception (c) Required Documentation **Obligation ID:** `hud-ml-2024-17-claim-file-retention` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-foreclosure **Operative duty (lender voice):** > Where [LENDER] uses the ML 2024-17 optional interim procedure to request > release of a subordinate Secretary-held lien, [LENDER] must retain > documentation of the information submitted to HUD through SIP in the > claim file for the affected Mortgage. **Compliance obligation:** > For every Mortgage where [LENDER] requested release of a subordinate Secretary-held lien via SIP under ML 2024-17, can [LENDER] produce from the claim file documentation of the information submitted to HUD through SIP (FHA Case Number, sale date, bid amounts, foreclosure attorney details, winning bidder type, method of foreclosure, no-Surplus-Funds certification)? **Verbatim regulator text:** ``` The Mortgagee must retain documentation of the information submitted to HUD through SIP in their claim file. ``` _Authority_: HUD ML 2024-17 — Optional Interim Exception (c) Required Documentation _Source_: _Snapshot_: `f12a4dccdc7e69a3` _Fetched_: 2026-05-22T19:54:51Z --- #### FHA Mortgagee Letter 2024-17 — Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens — Purpose **Obligation ID:** `hud-ml-2024-17-s02` **Operative duty (lender voice):** > This Mortgagee Letter (ML) establishes an optional interim process for releasing an FHA subordinate Secretary-held lien after a Mortgagee has completed a foreclosure sale through a nonjudicial process with no surplus funds. **Verbatim regulator text:** ``` This Mortgagee Letter (ML) establishes an optional interim process for releasing an FHA subordinate Secretary-held lien after a Mortgagee has completed a foreclosure sale through a nonjudicial process with no surplus funds. ``` _Authority_: FHA Mortgagee Letter 2024-17 — Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens _Source_: _Snapshot_: `f12a4dccdc7e69a3` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-17 — Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens — Effective Date **Obligation ID:** `hud-ml-2024-17-s03` **Operative duty (lender voice):** > The provisions of this ML may be implemented beginning September 04, 2024, and will remain in effect until HUD publishes future guidance regarding subordinate Secretary-held liens for nonjudicially foreclosed Properties. **Verbatim regulator text:** ``` The provisions of this ML may be implemented beginning September 04, 2024, and will remain in effect until HUD publishes future guidance regarding subordinate Secretary-held liens for nonjudicially foreclosed Properties. ``` _Authority_: FHA Mortgagee Letter 2024-17 — Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens _Source_: _Snapshot_: `f12a4dccdc7e69a3` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-17 — Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens — Affected Programs **Obligation ID:** `hud-ml-2024-17-s04` **Operative duty (lender voice):** > The provisions of this ML apply to all FHA Title II Single Family forward mortgage programs. **Verbatim regulator text:** ``` The provisions of this ML apply to all FHA Title II Single Family forward mortgage programs. ``` _Authority_: FHA Mortgagee Letter 2024-17 — Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens _Source_: _Snapshot_: `f12a4dccdc7e69a3` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-17 — Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens — Background **Obligation ID:** `hud-ml-2024-17-s05` **Operative duty (lender voice):** > The United States (U.S.) Congress has provided HUD with the statutory authority to provide subordinate liens in support of its programs as well as guidance on how these liens are to be foreclosed and released. Examples of these federal, subordinate, Secretary-held liens include Partial Claims, Good Neighbor Next Door (GNND) Subordinate Mortgages, and Emergency Homeowners’ Loan Program (EHLP) Subordinate Mortgages. 28 **Verbatim regulator text:** ``` The United States (U.S.) Congress has provided HUD with the statutory authority to provide subordinate liens in support of its programs as well as guidance on how these liens are to be foreclosed and released. Examples of these federal, subordinate, Secretary-held liens include Partial Claims, Good Neighbor Next Door (GNND) Subordinate Mortgages, and Emergency Homeowners’ Loan Program (EHLP) Subordinate Mortgages. 28 U.S.C. § 2410(c) states that an action to foreclose a mortgage or other lien naming the U.S. as a party must seek judicial sale and 28 U.S.C. § 2410(e) provides agencies with flexibilities regarding releasing liens in specific circumstances. In July 2023, the U.S. Court of Appeals for the Eighth Circuit held that a subordinate lien held by the U.S. cannot be extinguished by a nonjudicial foreclosure sale (Show Me State Premium Homes v. McDonnell, 74 F.4th 911 (8th Cir. 2023)). HUD recognizes immediate adverse financial and market impacts may result from proceeding with a judicial foreclosure in cases where a foreclosure sale was completed and resulted in no surplus funds that would have satisfied the subordinate Secretary-held lien. Therefore, HUD has determined that it is appropriate to establish optional, interim requirements for Mortgagees who completed a nonjudicial foreclosure sale where a Secretary-held lien exists and no surplus funds resulted from the foreclosure sale. This ML does not apply where a nonjudicial foreclosure sale results in surplus funds. HUD is developing permanent policy to provide clarity for Mortgagees proceeding with foreclosures, including for situations outside the scope of this ML. That policy will be posted to the Single Family Drafting Table for public feedback. HUD will continue to pay claims for reasonable and customary attorney fees associated with a foreclosure sale, including when Mortgagees complete a foreclosure through a judicial process in a nonjudicial state, as required. Optional Interim Exception for Nonjudicial Foreclosures Optional Interim Exception for Nonjudicial Foreclosures (a) Definitions Secretary-Held Liens covered by this optional interim procedure include the following Mortgages that are owed to the Secretary of HUD: • Partial Claim Subordinate Mortgage; • Section 235 Subordinate Mortgage; • Nehemiah Subordinate Mortgage; • Emergency Homeowners’ Loan Program (EHLP) Subordinate Mortgage; • Asset Control Area (ACA) Mortgage; • Hope for Homeowners (H4H) Subordinate Mortgage; and • Good Neighbor Next Door (GNND) Subordinate Mortgage. Preferred Method of Foreclosure refers to each state’s method identified in HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1) Appendix 6.0 – First Legal Actions to Initiate Foreclosure and Reasonable Diligence Time Frames. Judicial Foreclosure refers to a method of foreclosure that requires a Mortgagee to file suit with the judicial system to process the foreclosure. Nonjudicial Foreclosure, also known as a power of sale, refers to a method of foreclosure that allows the Mortgagee to proceed with the foreclosure process without filing suit with the judicial system. Surplus Funds refer to any amount included in the winning bid in excess of the amount required to complete the foreclosure sale, before additional proceeds are applied to any subordinate lien. (b) Standard Mortgagees may only request release of a subordinate Secretary-held lien where a nonjudicial foreclosure sale resulted in no Surplus Funds where nonjudicial is the Preferred Method of Foreclosure. If the Property is subject to federal non-Secretary-held liens, the Mortgagee must comply with applicable law for those federal liens, including proceeding with a judicial foreclosure if required. To request HUD release of the Secretary-held lien, the Mortgagee must log into HUD’s Single Family Mortgage Asset Recovery Technology (SMART) Integrated Portal (SIP), access the Foreclosure Dashboard, and submit the following for each Mortgage: • the FHA Case Number; • the date the foreclosure sale occurred; • the Mortgagee’s final bid amount; • the winning bid amount; • the foreclosure attorney’s name, address, phone number, and email; • whether the winning bidder was the Mortgagee or a third party; • the method of foreclosure; and • certification that there were no Surplus Funds from the foreclosure sale. (c) Required Documentation The Mortgagee must retain documentation of the information submitted to HUD through SIP in their claim file. ``` _Authority_: FHA Mortgagee Letter 2024-17 — Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens _Source_: _Snapshot_: `f12a4dccdc7e69a3` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- --- # FHA Mortgagee Letter 2024-24 — Modernization of Engagement with Borrowers in Default **Register slug:** `hud-ml-2024-24` **Obligation count:** 6 ## Register description HUD Mortgagee Letter 2024-24. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD ML 2024-24 — Alternative Interim Procedures: Early Default Intervention Interview Standard (III.A.2.h.xii(A)) **Obligation ID:** `hud-ml-2024-24-default-interview-by-61st-day` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-delinquent-loan **Operative duty (lender voice):** > Under the alternative interim procedures (January 1, 2025 through June > 30, 2025), [LENDER] must have an interview with the Borrower — or make > a reasonable effort to arrange an interview — no later than the 61st Day > of delinquency, unless the Borrower is exempt; [LENDER] may conduct the > interview face-to-face or using alternative communication methods > (phone, email, video calling services, or other conferencing technology). **Compliance obligation:** > For every FHA-insured Mortgage in default during the interim period (January 1, 2025 — June 30, 2025), can [LENDER] evidence either (a) an interview with the Borrower conducted by the 61st Day of delinquency or (b) a documented reasonable-effort attempt to arrange the interview, OR documentation of why the Borrower was exempt? **Verbatim regulator text:** ``` The Mortgagee must have an interview with the Borrower or make a reasonable effort to arrange an interview no later than the 61st Day of delinquency, unless exempt. ``` _Authority_: HUD ML 2024-24 — III.A.2.h.xii(A) _Source_: _Snapshot_: `62274c85d1f54c96` _Fetched_: 2026-05-22T19:54:54Z --- #### HUD ML 2024-24 — Early Default Intervention Interview Required Documentation (III.A.2.h.xii(B)) **Obligation ID:** `hud-ml-2024-24-servicing-file-documentation` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-delinquent-loan **Operative duty (lender voice):** > For each Borrower in default during the alternative-interim-procedure > period, [LENDER] must document in the servicing file (i) the reason the > meeting is not required, if exempt; (ii) the dates and methods of its > attempts at arranging an interview; and (iii) the date of its interview > with the Borrower. **Compliance obligation:** > For every FHA-insured Mortgage that became delinquent during the interim period, can [LENDER] retrieve from the servicing file (a) the exemption reason where applicable, (b) the dates and methods of arrangement attempts, and (c) the date of the actual interview with the Borrower? **Verbatim regulator text:** ``` The Mortgagee must document in the servicing file: • the reason the meeting is not required, if exempt; • the dates and methods of its attempts at arranging an interview; and • the date of its interview with the Borrower. ``` _Authority_: HUD ML 2024-24 — III.A.2.h.xii(B) _Source_: _Snapshot_: `62274c85d1f54c96` _Fetched_: 2026-05-22T19:54:54Z --- #### FHA Mortgagee Letter 2024-24 — Modernization of Engagement with Borrowers in Default — Purpose **Obligation ID:** `hud-ml-2024-24-s02` **Operative duty (lender voice):** > This Mortgagee Letter (ML) modernizes requirements for a Loss Mitigation Consultation with Borrowers in default. Effective Dates The provisions of this ML must be implemented on January 1, 2025. This ML includes alternative interim procedures for Engaging Borrowers in Default that may be utilized between January 1, 2025, through June 30, 2025. The permanent provisions of this ML will be incorporated into a forthcomin **Verbatim regulator text:** ``` This Mortgagee Letter (ML) modernizes requirements for a Loss Mitigation Consultation with Borrowers in default. Effective Dates The provisions of this ML must be implemented on January 1, 2025. This ML includes alternative interim procedures for Engaging Borrowers in Default that may be utilized between January 1, 2025, through June 30, 2025. The permanent provisions of this ML will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1). ``` _Authority_: FHA Mortgagee Letter 2024-24 — Modernization of Engagement with Borrowers in Default _Source_: _Snapshot_: `62274c85d1f54c96` _Fetched_: 2026-10-02T23:03:55.893328+00:00 --- #### FHA Mortgagee Letter 2024-24 — Modernization of Engagement with Borrowers in Default — Affected Programs **Obligation ID:** `hud-ml-2024-24-s03` **Operative duty (lender voice):** > The provisions of this ML apply to all FHA-insured Title II Single Family forward mortgage programs. **Verbatim regulator text:** ``` The provisions of this ML apply to all FHA-insured Title II Single Family forward mortgage programs. ``` _Authority_: FHA Mortgagee Letter 2024-24 — Modernization of Engagement with Borrowers in Default _Source_: _Snapshot_: `62274c85d1f54c96` _Fetched_: 2026-10-02T23:03:55.893328+00:00 --- #### FHA Mortgagee Letter 2024-24 — Modernization of Engagement with Borrowers in Default — Background **Obligation ID:** `hud-ml-2024-24-s04` **Operative duty (lender voice):** > HUD recognizes that substantial advancements have been made in communication technology, remote communication options have increased, and consumer preferences have shifted to favor greater flexibility and more options for engagement. HUD has reviewed options to leverage these changes to better assist delinquent Borrowers, including delinquent Borrowers with disabilities. On August 2, 2024, HUD published a final rule **Verbatim regulator text:** ``` HUD recognizes that substantial advancements have been made in communication technology, remote communication options have increased, and consumer preferences have shifted to favor greater flexibility and more options for engagement. HUD has reviewed options to leverage these changes to better assist delinquent Borrowers, including delinquent Borrowers with disabilities. On August 2, 2024, HUD published a final rule in the Federal Register (FR) entitled Modernization of Engagement with Mortgagors in Default [available at 89 FR 63082; Docket No. FR-6353-F-02] to modernize 24 CFR § 203.604. The final rule modernizes FHA’s requirements for meeting with delinquent Borrowers by allowing Mortgagees to utilize electronic and other remote communication methods, including telephone calls and video calling services, to meet with Borrowers in default. This rule also expands the meeting requirement to all Borrowers in default, including those who do not reside in the mortgaged Property and Borrowers with a mortgaged Property that is more than 200 miles from the Mortgagee or its branch office. While HUD’s revisions to 24 CFR § 203.604 update the acceptable methods that Mortgagees may use to arrange and meet with Borrowers in default, the purpose of the meeting remains the same. This meeting, known as a Loss Mitigation Consultation, is an opportunity for the Borrower to meet with trained Mortgagee employees who can provide information about FHA’s loss mitigation options and assist the Borrower in bringing the FHA-insured Mortgage current and avoiding foreclosure. By expanding the meeting requirement to all Borrowers in default, more Borrowers will have this opportunity to discuss their hardship and financial circumstances, learn about FHA’s loss mitigation options, and resolve the delinquency. This ML establishes HUD’s policy to align with the regulatory changes and provides further guidance on how to arrange, conduct, and follow up on the Loss Mitigation Consultation to improve Borrower engagement and meeting participation while maintaining consumer protections. These updates will allow Mortgagees to use a wider variety of communication options to schedule and meet at the Borrower’s convenience. This increased flexibility will particularly assist delinquent Borrowers with disabilities, including Borrowers who are immunocompromised, and Borrowers whose work or family obligations may otherwise prevent them from participating in an in- person meeting. Recognizing that some Mortgagees may need additional time to fully implement some of the new requirements of the Modernization of Engagement with Mortgagors in Default final rule, on November 21, 2024, FHA published in the Federal Register the “Modernization of Engagement with Mortgagors in Default: Partial Extension of Compliance Date,” available at FR-6353-N-03, which provides Mortgagees with additional time to comply with the final rule by allowing Mortgagees to continue to rely upon the exceptions to the meeting with the mortgagor requirements where the Borrower does not reside in the mortgaged Property and where the mortgaged Property is not within 200 miles of the Mortgagee, its servicer, or a branch office of either. This ML also provides alternative interim procedures for engaging Borrowers in default. These alternative interim procedures are intended to minimize disruption to Mortgagees by enabling them to maintain existing operations while working towards compliance with the new requirements. ``` _Authority_: FHA Mortgagee Letter 2024-24 — Modernization of Engagement with Borrowers in Default _Source_: _Snapshot_: `62274c85d1f54c96` _Fetched_: 2026-10-02T23:03:55.893328+00:00 --- #### FHA Mortgagee Letter 2024-24 — Modernization of Engagement with Borrowers in Default — Summary of Changes **Obligation ID:** `hud-ml-2024-24-s05` **Operative duty (lender voice):** > This ML: • provides alternative interim procedures to conduct a loss mitigation interview with a Borrower in Default; • updates Prohibited Fees and Charges (III.A.1.f.ii(B)); • updates Collection Communication Timeline – Standard (III.A.2.h.iii(B)); • updates Communication Methods (III.A.2.h.iv); • replaces Face-to-Face Interviews with Loss Mitigation Consultation (III.A.2.h.xii); • renames Section 247 Assignments (I **Verbatim regulator text:** ``` This ML: • provides alternative interim procedures to conduct a loss mitigation interview with a Borrower in Default; • updates Prohibited Fees and Charges (III.A.1.f.ii(B)); • updates Collection Communication Timeline – Standard (III.A.2.h.iii(B)); • updates Communication Methods (III.A.2.h.iv); • replaces Face-to-Face Interviews with Loss Mitigation Consultation (III.A.2.h.xii); • renames Section 247 Assignments (III.A.3.c.ii) and updates Standard (III.A.3.c.ii(A)); • updates Insured Mortgages on Indian Land (Section 248 Mortgages) (III.A.3.d); and • updates Submission of Claim Form Parts to HUD for Hawaiian Home Lands Mortgages (IV.A.2.b.i(C)). Alternative Interim Procedures for Engaging Borrowers in Default – Early Default Intervention Mortgagees may utilize these alternative interim procedures, except for Mortgages insured under Section 248, from January 1, 2025, through June 30, 2025. Early Default Intervention (III.A.2.h) xii. Interviews (A) Standard The Mortgagee must have an interview with the Borrower or make a reasonable effort to arrange an interview no later than the 61st Day of delinquency, unless exempt. The Mortgagee may conduct the interview face-to-face or using alternative communication methods, such as phone interviews, email, video calling services (e.g., Skype, Zoom, Webex, Microsoft Teams, FaceTime, GoTo Meeting), or other conferencing technology, etc. (1) Meeting Not Required The Mortgagee is not required to conduct an interview if: • the Borrower does not live in the mortgaged Property; • the holding Mortgagee, servicing Mortgagee, or branch office of either is not located within 200 miles of the mortgaged Property; • the Borrower has clearly indicated that they will not cooperate with an interview; • the Borrower’s payment is current due to an agreed-upon repayment plan or Forbearance Plan; or • a reasonable effort to arrange a meeting with the Borrower is unsuccessful. (2) Reasonable Effort in Arranging an Interview The Mortgagee must send to the Borrower via certificate of mailing or certified mail a letter providing information on: • the availability of interviews; and • how to schedule the interview. The Mortgagee must also attempt to contact the Borrower at the mortgaged Property to provide information on the availability of an interview or may use alternative methods, e.g., phone interviews, email, video calling services (e.g., Skype, Zoom, Webex, Microsoft Teams, FaceTime, GoTo Meeting), or other conferencing technology, etc. The Mortgagee may use a third-party vendor to establish this contact with the Borrower and to schedule the Borrower’s interview with a Mortgagee representative. (3) Mortgagee Representative Authority [Text was deleted in this section.] The Mortgagee must ensure that the employee representing the Mortgagee at interviews has the authority to propose and accept reasonable repayment plans. Where a Mortgagee’s representative exceeds their authority by agreeing to a repayment plan at the time of the interview, the Mortgagee must still accept the repayment plan agreed to by its representative, without regard as to whether the representative overstepped their authority. (B) Required Documentation The Mortgagee must document in the servicing file: • the reason the meeting is not required, if exempt; • the dates and methods of its attempts at arranging an interview; and • the date of its interview with the Borrower. Alternative Interim Procedures for Engaging Borrowers in Default – Section 247 Assignments Mortgagees may utilize these alternative interim procedures, for Assignment of Section 247 Assignments – Standard (III.A.3.c.ii(A from January 1, 2025, through June 30, 2025. Assignment of Section 247 Assignments (III.A.3.c.ii) (A) Standard [Text was deleted in this section.] The Mortgagee may assign the Delinquent insured Mortgage and Note to HUD if all of the following conditions are met: • the Mortgage has been in Default for 180 Days or more; • when the Mortgage is 90 Days Delinquent, the Mortgagee has notified DHHL of the Default in writing; • the Mortgagee has attempted an interview with the Borrower at least 30 Days before the application for assignment is submitted, unless exempt; and • the Mortgagee has evaluated the Borrower for loss mitigation in accordance with HUD guidance. The Mortgagee must not foreclose on or approve a Pre-Foreclosure Sale (PFS) or Deed-in-Lieu (DIL) transaction on Section 247 Mortgages; the only disposition option available to the Mortgagee is assignment. FHA Single Family Housing Policy Handbook 4000.1 Servicing and Loss Mitigation The policy changes will be incorporated into Handbook 4000.1 as follows: Servicing Fees and Charges – Standard (III.A.1.f.ii) (B) Prohibited Fees and Charges The Mortgagee must not charge the Borrower for the following services: • costs of telephone calls, certified mail, arranging and conducting the Loss Mitigation Consultation, or other activities that are normally considered a part of a prudent Mortgagee’s servicing activity; • preparing and providing evidence of Payoff, Reconveyance, or termination of the Mortgage; • providing information essential to the Payoff; • recording the Payoff of the Mortgage in states where recordation is the responsibility of the Mortgagee; • fees for services performed by attorneys or trustees who are salaried members of the Mortgagee’s staff; or • Mortgagee’s use of an independent contractor, such as services related to the Loss Mitigation Consultation or a tax service, to furnish tax data and information necessary to pay property taxes or make the payments on behalf of the Mortgagee. Collection Communication Timeline (III.A.2.h.iii) (B) Standard The Mortgagee must perform in a timely manner the servicing actions set forth in the following Collection Communication Timeline. Day Mortgagee Action 1 Payment due date; no action required until the Mortgage becomes Delinquent. 10 The Mortgagee must begin attempts to contact Borrowers with a Delinquent Mortgage at risk of Early Payment Default or Re- Default in accordance with Specialized Collection Techniques for Early Payment Defaults and Re-Defaults (III.A.2.h.v). 25 The Mortgagee must begin attempts to contact Borrowers with a Delinquent Mortgage in accordance with Contact Efforts for Delinquent Borrowers (III.A.2.h.vi). 30 The Mortgagee must report the delinquency to HUD (III.A.2.h.vii) via SFDMS. 32 The Mortgagee must send the following: • Notice of Homeownership Counseling Availability (III.A.2.h.ix(A)(1)); • Servicemembers Civil Relief Act (SCRA) Notice Disclosure (III.A.2.h.ix(A)(2)) (form HUD-92070); • Delinquency Notice Cover Letter (III.A.2.h.x(A)(1)); and • Save Your Home: Tips to Avoid Foreclosure (form HUD- 2008-5-FHA). 45 The Mortgagee should begin analysis to identify appropriate loss mitigation options, if any. If unable to reach the Borrower(s), the Mortgagee must perform an Occupancy Inspection (III.A.2.h.xi). 61 The Mortgagee must conduct or make a Reasonable Effort to arrange the Loss Mitigation Consultation with the Borrower no later than this date. 90 The Mortgagee must report the appropriate Default Reason Code (III.A.2.h.xiii) for the Default in SFDMS. The Mortgagee must have evaluated all loss mitigation options to determine whether any are appropriate. The Mortgagee must reevaluate the Borrower for loss mitigation each month thereafter. Early Default Intervention (III.A.2.h) iv. Communication Methods (A) Selecting Best Method of Communication The Mortgagee must use the method or methods of communication most likely to receive a response from each Borrower and consider the Borrower’s expressed preference for using certain methods of communication. The Mortgagee must effectively communicate with persons with hearing, visual, and other communications-related disabilities, including the use of auxiliary aids and services in accessible formats, and must take reasonable steps to provide meaningful access to persons with Limited English Proficiency (LEP), such as providing oral interpretation and/or written translation of vital documents. (B) Methods of Communication The Mortgagee may use mail, certified mail, in person, any acceptable method of electronic communication, or telephone contact attempts to establish contact with the Borrower. Acceptable methods of electronic communication that Mortgagees may use to contact the Borrower include: • Voice over Internet Protocol (VoIP) or other technology that allows voice calls; • interactive virtual communication methods; • email; • text messages; • secure web portals (such as online account management tools accessible by Borrowers); and • other reliable communication methods through which the Mortgagee has been able to effectively communicate with Borrowers in the past. The Mortgagee must ensure that their electronic signature technology complies with all requirements of the Electronic Signatures in Global and National Commerce (ESIGN) Act, 15 U.S.C. § 7001 et seq. The Mortgagee must include within the electronic communication the Mortgagee’s email address, telephone number, and/or website address. Early Default Intervention (III.A.2.h) xii. Loss Mitigation Consultation (A) Definitions The Loss Mitigation Consultation is a meeting that provides a delinquent Borrower the opportunity to meet with the Mortgagee to discuss their hardship, financial circumstances, the loss mitigation options available, and, when possible, to be evaluated for these options. A Verifiable Attempt is a solicitation that includes the information needed for a Borrower to arrange a Loss Mitigation Consultation where either the date the communication was sent or the date of delivery is documented by the Mortgagee. A Reasonable Effort consists of, at a minimum, two Verifiable Attempts to arrange the Loss Mitigation Consultation. (B) Standard The Mortgagee must conduct one Loss Mitigation Consultation with the Delinquent Borrower for each Default episode. The Mortgagee may use the following methods to conduct the Loss Mitigation Consultation: • in person; • telephone, VoIP, or other technology that allows voice calls; • interactive virtual communication methods; • video conference technology platforms; and • teleconference, virtual meeting, or a video conference hosted at a local Mortgagee branch, housing counselor’s office, or alternate location. The Mortgagee is not required to conduct a Loss Mitigation Consultation if: • the Borrower has communicated that they will not cooperate in a Loss Mitigation Consultation; • the required Reasonable Effort to arrange a Loss Mitigation Consultation was unsuccessful; or • the Borrower is on a repayment plan or TPP that provides specific terms to bring the Mortgage current and is meeting the terms of the plan. Forbearances do not meet this requirement. (1) When to Conduct the Loss Mitigation Consultation The Mortgagee must conduct, or make a Reasonable Effort to arrange, the Loss Mitigation Consultation: • before three full monthly installments are due and unpaid on the Mortgage (61 Days Delinquent); or • if a Borrower is on a repayment plan or TPP, no later than 30 Days after the date the Borrower fails to make a payment on the repayment plan or TPP. If the Mortgagee’s attempt to arrange the Loss Mitigation Consultation was not successful, the Mortgagee must make two additional Verifiable Attempts: • at least 30 Days prior to the first legal action to initiate foreclosure; or • at least 30 Days prior to requesting assignment for Mortgages insured on Hawaiian Home Lands. (2) Reasonable Effort to Arrange the Loss Mitigation Consultation The Mortgagee must make a Reasonable Effort to arrange the Loss Mitigation Consultation with the Borrower using methods described in Communication Methods. Telephone attempts that do not result in live contact with the Borrower do not meet this requirement. The Mortgagee must not include Verifiable Attempts to arrange the Loss Mitigation Consultation in any other communication applicable to mortgage servicing, unless required by law, except that one Verifiable Attempt may be included as part of, incorporated into, or as a separate document with, the Delinquency Notice Cover Letter (III.A.2.h.x(A)(1)) or a written early intervention notice required by the CFPB. The Mortgagee must send the first Verifiable Attempt by mail that utilizes a certificate of mailing or is evidenced by a tracking number. The Mortgagee may elect to substitute the first Verifiable Attempt by mail with an in-person attempt for Owner Occupant Borrowers. For subsequent Verifiable Attempts, the Mortgagee may use any of the methods as described in Communication Methods. When the Mortgagee is required to make additional Verifiable Attempts at least 30 Days prior to the first legal action to initiate foreclosure or requesting assignment, the first of the additional two Verifiable Attempts must be sent by mail. (3) Information Required in Verifiable Attempts The Mortgagee must ensure all Verifiable Attempts provide the following, at minimum: • the purpose of the Loss Mitigation Consultation; • at least two available methods the Mortgagee is offering to conduct the Loss Mitigation Consultation; • instructions that describe how to schedule the Loss Mitigation Consultation and select the Borrower’s preferred method; • the days and hours the Mortgagee is available to schedule and conduct the Loss Mitigation Consultation, including at least four hours per week when the Mortgagee will be available outside of the business hours of 9 a.m. - 5 p.m., in the Borrower’s time zone. For Borrowers in Alaska, Hawaii, Guam, American Samoa, and the Northern Mariana Islands, the Mortgagee may use the Pacific Time Zone as the Borrower’s time zone; • if applicable, a list of information or documentation the Mortgagee needs to evaluate the Borrower for loss mitigation; • contact information for the Mortgagee’s loss mitigation and/or customer assistance personnel to include, at minimum, a toll-free telephone number; • information about the availability of language access services offered by the Mortgagee for Borrowers with LEP (this information must be provided, at a minimum, in Spanish and must include an advisement to seek translation or other language assistance); • information on how to locate a HUD-approved Housing Counselor online or by calling HUD’s interactive voice system at (800) 569-4287 or (202) 708-1455 for Text Telephone (TTY); and • notice that the Borrower may invite a housing counselor or other third party to the Loss Mitigation Consultation. (4) Conducting the Loss Mitigation Consultation The Mortgagee must ensure that employees who conduct the Loss Mitigation Consultation are trained in FHA loss mitigation in accordance with the requirements in Staffing (I.A.6.i) and have the authority to evaluate and offer any loss mitigation option to eligible Borrowers, when possible. Mortgagees are not permitted to use any form of artificial intelligence, machine learning technology, or chatbots to conduct Loss Mitigation Consultations. During the Loss Mitigation Consultation, the Mortgagee must: • discuss the Borrower’s hardship; • explain the loss mitigation options available; • evaluate the Borrower for these options, when possible; • if applicable, request the information or documentation needed to complete the loss mitigation analysis; and • advise the Borrower that a notice will be provided in writing within five Days of the Loss Mitigation Consultation regarding next steps. (5) Notice to Borrower Upon Completion of the Loss Mitigation Consultation The Mortgagee must provide the following to the Borrower in writing no later than five Days from the date the Loss Mitigation Consultation is conducted: • the date the Loss Mitigation Consultation was conducted; • the loss mitigation option(s) discussed or offered to the Borrower; • if applicable, a list of information or documentation the Mortgagee needs to complete the loss mitigation analysis; • a reminder that if the Borrower’s financial situation changes at any point, the Borrower should contact the Mortgagee; • contact information for the Mortgagee’s loss mitigation and/or customer assistance personnel to include, at minimum, a toll-free telephone number; and • information on how to locate a HUD-approved Housing Counselor online or by calling HUD’s interactive voice system at (800) 569-4287 or (202) 708-1455 for TTY. (6) Exception for Borrowers in Bankruptcy The Mortgagee must attempt to arrange or conduct the Loss Mitigation Consultation in accordance with Loss Mitigation During Bankruptcy Proceedings (III.A.2.i.viii). The Mortgagee is not required to conduct or make a Reasonable Effort to arrange the Loss Mitigation Consultation if the Borrower has filed for bankruptcy and, in the opinion of the Mortgagee’s legal counsel, it would be a violation of bankruptcy law. (C) Required Documentation Mortgagees must document the following in the Servicing File, as applicable: • the dates and methods used to make a Reasonable Effort to arrange the Loss Mitigation Consultation; • the date the Loss Mitigation Consultation was conducted or the reason a Loss Mitigation Consultation was not conducted or required; • the method of communication used to conduct the Loss Mitigation Consultation, if applicable; and • a copy of the notice sent to the Borrower upon the completion of the Loss Mitigation Consultation, if applicable. Section 247 Assignments (III.A.3.c.ii) (A) Standard The Mortgagee may assign the Delinquent insured Mortgage and Note to HUD if all of the following conditions are met: • the Mortgage has been in Default for 180 Days or more; • when the Mortgage is 90 Days Delinquent, the Mortgagee has notified DHHL of the Default in writing; • the Mortgagee has conducted or made a Reasonable Effort to arrange the Loss Mitigation Consultation; and • the Mortgagee has evaluated the Borrower for loss mitigation in accordance with HUD guidance. The Mortgagee must not foreclose on or approve a Pre-Foreclosure Sale (PFS) or Deed-in-Lieu (DIL) transaction on Section 247 Mortgages; the only disposition option available to the Mortgagee is assignment. Programs and Products (III.A.3) d. Insured Mortgages on Indian Land (Section 248 Mortgages) i. Face-to-Face Interviews The Mortgagee must have a face-to-face interview with the Borrower or make a reasonable effort to arrange a face-to-face interview no later than the 61st Day of delinquency. (A) Face-to-Face Meetings Not Required The Mortgagee is not required to conduct a face-to-face interview if: • the Borrower has clearly indicated that they will not cooperate with a face-to-face interview; or • the Borrower’s payment is current due to an agreed-upon repayment plan or Forbearance Plan; and • a reasonable effort to arrange a meeting with the Borrower is unsuccessful. (B) Arranging a Face-to-Face Interview (1) Standard To arrange the face-to-face interview, the Mortgagee must: • make at least one telephone call to the Borrower; • send one letter certified by the U.S. Postal Service as having been dispatched; and • make one trip to visit the Borrower at the mortgaged Property. The Mortgagee must provide the following in each attempt to arrange the face-to-face interview: • the availability of face-to-face interviews; and • how to schedule the interview. (2) Required Documentation The Mortgagee must document in its Servicing File all attempts in contacting the Borrower to arrange a face-to-face interview, information about the interview, and any decisions or follow-up needed as a result of the interview. ii. Information Provided to the Borrower (A) Standard The Mortgagee must inform the Borrower of the following: • that information regarding the status and payment history of the Borrower’s Mortgage may be made available to credit bureaus and prospective creditors; • other available mortgage assistance, if any; and • contact information for the FHA Resource Center (1-800- CALLFHA (1-800-225-5342) and answers@hud.gov) and that the FHA Resource Center is prepared to accept calls from persons who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. (B) Required Documentation The Mortgagee must note in its Servicing File when and how the Borrower was informed of the information above. FHA Single Family Housing Policy Handbook 4000.1 Claims and Disposition Hawaiian Home Lands Mortgages (Section 247 Mortgages) Claims (IV.A.2.b.i) (C) Submission of Claim Form Parts to HUD for Hawaiian Home Lands Mortgages The Mortgagee may only file a claim after: • the Mortgagee has notified the Department of Hawaiian Home Lands (DHHL) of the Borrower’s Default by letter by the 90th Day of Delinquency; • the Borrower’s Default has remained uncured for 180 Days; • the Mortgagee has met all regulatory program requirements, including the Loss Mitigation Consultation and required loss mitigation evaluation; and • HUD has issued the assignment acceptance letter to the Mortgagee via P260. The Mortgagee must submit form HUD-27011 to HUD via EDI or FHA Catalyst. For EDI submissions, the Mortgagee must submit Parts A and B simultaneously. For FHA Catalyst submissions, the Mortgagee must submit Parts A, B, C, D, and E. The Mortgagee must retain copies of all Parts of the form HUD-27011 in the Claim Review File. ``` _Authority_: FHA Mortgagee Letter 2024-24 — Modernization of Engagement with Borrowers in Default _Source_: _Snapshot_: `62274c85d1f54c96` _Fetched_: 2026-10-02T23:03:55.893328+00:00 --- --- # FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 **Register slug:** `hud-ml-2024-25` **Obligation count:** 7 ## Register description HUD Mortgagee Letter 2024-25. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD ML 2024-25 — FHA-Insured Forward Mortgages: Extension of Foreclosure Moratorium for Hurricanes Helene and Milton **Obligation ID:** `hud-ml-2024-25-forward-mortgage-moratorium` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-affected-loan **Operative duty (lender voice):** > For FHA-insured Single Family forward mortgages secured by Properties > located in FEMA-designated disaster areas for Hurricanes Helene and > Milton (across Florida, Georgia, North Carolina, South Carolina, > Tennessee, and Virginia per the FEMA Declarations enumerated in ML > 2024-25), [LENDER] must observe a moratorium on foreclosure through > April 11, 2025, applying both to the initiation of new foreclosures and > to the completion of foreclosures already in process. **Compliance obligation:** > For every FHA-insured forward Mortgage with subject Property in any of the FEMA-Declaration areas listed in ML 2024-25 (Hurricanes Helene and Milton across FL, GA, NC, SC, TN, VA), can [LENDER] evidence that no foreclosure initiation or completion occurred during the moratorium period (through April 11, 2025) and that first-legal-action / Reasonable Diligence Time Frame deadlines were extended by 180 Days from April 11, 2025? **Verbatim regulator text:** ``` Properties secured by FHA-insured Single Family forward mortgages are subject to a moratorium on foreclosure through April 11, 2025. The moratorium applies to the initiation of foreclosures and to the completion of foreclosures in process for the following FEMA Declarations for Hurricanes Helene and Milton: FEMA Declaration Florida Hurricane Helene, September 28, 2024 DR-4828-FL North Carolina Tropical Storm Helene, September 28, 2024 DR-4827-NC South Carolina Hurricane Helene, September 29, 2024 DR-4829-SC Georgia Hurricane Helene, September 30, 2024 DR-4830-GA Virginia Tropical Storm Helene, October 1, 2024 DR-4831-VA Tennessee Tropical Storm Helene, October 2, 2024 DR-4832-TN Florida Hurricane Milton, October 11, 2024 DR-4834-FL Deadlines for the first legal action and Reasonable Diligence Time Frame are extended by 180 Days from April 11, 2025. ``` _Authority_: HUD ML 2024-25 — FHA-Insured Forward Mortgages _Source_: _Snapshot_: `8fbc60c48234b033` _Fetched_: 2026-05-22T19:54:56Z --- #### HUD ML 2024-25 — HECM Foreclosure Moratorium for Hurricanes Helene and Milton **Obligation ID:** `hud-ml-2024-25-hecm-moratorium` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-affected-loan **Operative duty (lender voice):** > For FHA-insured HECMs secured by Properties located in FEMA-designated > disaster areas for Hurricanes Helene and Milton, [LENDER] must observe > a moratorium on foreclosures through April 11, 2025 — but only where > the HECM is Due and Payable for reasons other than the death of the last > remaining Borrower and is not subject to a Deferral Period — applying > to both the initiation of foreclosures and foreclosures already in > process. **Compliance obligation:** > For every FHA-insured HECM with subject Property in any FEMA-Declaration area listed in ML 2024-25 that became Due and Payable for reasons other than death of the last remaining Borrower (and was not subject to a Deferral Period), can [LENDER] evidence that no foreclosure initiation or completion occurred during the moratorium period (through April 11, 2025)? **Verbatim regulator text:** ``` The Mortgagee must observe a moratorium on foreclosures of properties secured by FHA-insured HECMs through April 11, 2025, in the following FEMA Declarations for Hurricanes Helene and Milton: ``` _Authority_: HUD ML 2024-25 — HECM Foreclosure Moratorium _Source_: _Snapshot_: `8fbc60c48234b033` _Fetched_: 2026-05-22T19:54:56Z --- #### FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 — Purpose **Obligation ID:** `hud-ml-2024-25-s01` **Operative duty (lender voice):** > This Mortgagee Letter (ML) extends the foreclosure moratoriums in the areas impacted by Hurricanes Helene and Milton. **Verbatim regulator text:** ``` This Mortgagee Letter (ML) extends the foreclosure moratoriums in the areas impacted by Hurricanes Helene and Milton. ``` _Authority_: FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 _Source_: _Snapshot_: `8fbc60c48234b033` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 — Effective Date **Obligation ID:** `hud-ml-2024-25-s02` **Operative duty (lender voice):** > The provisions of this ML are effective immediately. The moratoriums will remain in effect through April 11, 2025. **Verbatim regulator text:** ``` The provisions of this ML are effective immediately. The moratoriums will remain in effect through April 11, 2025. ``` _Authority_: FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 _Source_: _Snapshot_: `8fbc60c48234b033` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 — Affected Programs **Obligation ID:** `hud-ml-2024-25-s03` **Operative duty (lender voice):** > The provisions of this ML apply to all FHA Title II Single Family forward and Home Equity Conversion Mortgage (HECM) programs. **Verbatim regulator text:** ``` The provisions of this ML apply to all FHA Title II Single Family forward and Home Equity Conversion Mortgage (HECM) programs. ``` _Authority_: FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 _Source_: _Snapshot_: `8fbc60c48234b033` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 — Background **Obligation ID:** `hud-ml-2024-25-s04` **Operative duty (lender voice):** > HUD provides an automatic 90-Day foreclosure moratorium beginning on the date of any Presidentially-Declared Major Disaster Area declaration. Between September 28, 2024, and October 11, 2024, President Joseph R. Biden declared Florida, Georgia, North Carolina, South Carolina, Tennessee and Virginia major disaster areas due to Hurricanes Helene and Milton that devastated the southeast region. Due to the extent of dama **Verbatim regulator text:** ``` HUD provides an automatic 90-Day foreclosure moratorium beginning on the date of any Presidentially-Declared Major Disaster Area declaration. Between September 28, 2024, and October 11, 2024, President Joseph R. Biden declared Florida, Georgia, North Carolina, South Carolina, Tennessee and Virginia major disaster areas due to Hurricanes Helene and Milton that devastated the southeast region. Due to the extent of damage from Hurricanes Helene and Milton, HUD is extending its foreclosure moratoriums. HUD believes that Borrowers need the additional time provided by the moratoriums to access federal, state, or local housing resources and consult with HUD-approved housing counselors. ``` _Authority_: FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 _Source_: _Snapshot_: `8fbc60c48234b033` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 — Summary of Changes **Obligation ID:** `hud-ml-2024-25-s05` **Operative duty (lender voice):** > This ML: • extends the automatic foreclosure moratorium in III.A.2.n.ii Moratorium on Foreclosures for Properties located in FEMA Designated Areas within the States of Florida, Georgia, North Carolina, South Carolina, Tennessee and Virgina; and • provides relief for FHA-insured HECMs. FHA-Insured Forward Mortgages - Extension of Foreclosure Moratorium for FEMA Declarations for Hurricanes Helene and Milton Properties **Verbatim regulator text:** ``` This ML: • extends the automatic foreclosure moratorium in III.A.2.n.ii Moratorium on Foreclosures for Properties located in FEMA Designated Areas within the States of Florida, Georgia, North Carolina, South Carolina, Tennessee and Virgina; and • provides relief for FHA-insured HECMs. FHA-Insured Forward Mortgages - Extension of Foreclosure Moratorium for FEMA Declarations for Hurricanes Helene and Milton Properties secured by FHA-insured Single Family forward mortgages are subject to a moratorium on foreclosure through April 11, 2025. The moratorium applies to the initiation of foreclosures and to the completion of foreclosures in process for the following FEMA Declarations for Hurricanes Helene and Milton: FEMA Declaration Florida Hurricane Helene, September 28, 2024 DR-4828-FL North Carolina Tropical Storm Helene, September 28, 2024 DR-4827-NC South Carolina Hurricane Helene, September 29, 2024 DR-4829-SC Georgia Hurricane Helene, September 30, 2024 DR-4830-GA Virginia Tropical Storm Helene, October 1, 2024 DR-4831-VA Tennessee Tropical Storm Helene, October 2, 2024 DR-4832-TN Florida Hurricane Milton, October 11, 2024 DR-4834-FL Deadlines for the first legal action and Reasonable Diligence Time Frame are extended by 180 Days from April 11, 2025. Home Equity Conversion Mortgages (HECM) - Foreclosure Moratorium for FEMA Declarations for Hurricanes Helene and Milton The Mortgagee must observe a moratorium on foreclosures of properties secured by FHA-insured HECMs through April 11, 2025, in the following FEMA Declarations for Hurricanes Helene and Milton: FEMA Declaration Florida Hurricane Helene, September 28, 2024 DR-4828-FL North Carolina Tropical Storm Helene, September 28, 2024 DR-4827-NC South Carolina Hurricane Helene, September 29, 2024 DR-4829-SC Georgia Hurricane Helene, September 30, 2024 DR-4830-GA Virginia Tropical Storm Helene, October 1, 2024 DR-4831-VA Tennessee Tropical Storm Helene, October 2, 2024 DR-4832-TN Florida Hurricane Milton, October 11, 2024 DR-4834-FL The foreclosure moratorium is applicable: • only if the HECM is Due and Payable for reasons other than the death of the last remaining Borrower and is not subject to a Deferral Period; and • to the initiation of foreclosures and foreclosures already in process. During the foreclosure moratorium, Mortgagees are granted an automatic 180-Day extension for all servicing deadlines, including the deadlines for requesting to call a HECM Due and Payable and providing notice to HUD of loans which have automatically become Due and Payable. Mortgagees are granted an automatic 180-Day extension from the date of the moratorium’s expiration date to commence or recommence foreclosure action or evaluate the Borrower for loss mitigation. Where foreclosure has not been initiated, the Mortgagee may submit a request for an extension to HUD’s foreclosure-related deadlines through Home Equity Reverse Mortgage Information Technology (HERMIT) when prohibited from performing a required activity due to the foreclosure moratorium. ``` _Authority_: FHA Mortgagee Letter 2024-25 — Mortgagee Letter 2024-25 _Source_: _Snapshot_: `8fbc60c48234b033` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- --- # HUD Mortgagee Letter 2025-06 **Register slug:** `hud-ml-2025-06` **Obligation count:** 3 ## Register description HUD Mortgagee Letter 2025-06. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD ML 2025-06 — Laws and Requirements Applicable to Mortgage Servicing (III.A.1.a.ii(A)) **Obligation ID:** `hud-ml-2025-06-servicing-laws-compliance` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** continuous **Operative duty (lender voice):** > [LENDER], as an FHA-approved Mortgagee servicing FHA-insured Mortgages, > must comply with all laws, rules, and requirements applicable to mortgage > servicing, including full compliance with the applicable requirements > under the purview of the Consumer Financial Protection Bureau (CFPB) > (including RESPA and TILA), and, if applicable, Ginnie Mae's > mortgage-backed securities requirements. **Compliance obligation:** > Can [LENDER] evidence that its FHA mortgage-servicing program operates in full compliance with CFPB-administered requirements (RESPA, TILA) and, where applicable, Ginnie Mae's mortgage-backed securities requirements? **Verbatim regulator text:** ``` Mortgagees must comply with all laws, rules, and requirements applicable to mortgage servicing, including full compliance with the applicable requirements under the purview of the Consumer Financial Protection Bureau (CFPB), including the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), and, if applicable, Ginnie Mae’s mortgage-backed securities requirements. ``` _Authority_: HUD ML 2025-06 — III.A.1.a.ii(A) _Source_: _Snapshot_: `a171c17f1f18edcd` _Fetched_: 2026-05-22T19:55:03Z --- #### HUD ML 2025-06 — Eligibility to Participate in HUD Programs (III.A.2.h.iii(A)) **Obligation ID:** `hud-ml-2025-06-loss-mit-eligibility-verification` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-defaulted-loan **Operative duty (lender voice):** > Before offering any FHA Loss Mitigation Option under the framework > established by ML 2025-06, [LENDER] must verify that the Borrowers are > eligible to participate in HUD's Loss Mitigation Program (no other FHA- > insured real estate beyond stated exceptions; no FHA-claim-paid prior > loan in past 3 years; no debarment/suspension/LDP for relevant > home-retention options; no unresolved delinquent Federal Debt for > Partial Claim / Combination / Payment Supplement). **Compliance obligation:** > For every FHA-insured Mortgage in Default for which [LENDER] offered a Loss Mitigation Option under ML 2025-06, can [LENDER] evidence the Borrower-eligibility verification (no other FHA-insured real estate beyond stated exceptions, no FHA-claim-paid prior loan in past 3 years, no debarment/suspension/LDP for relevant options, no unresolved delinquent Federal Debt for Partial Claim / Combination / Payment Supplement)? **Verbatim regulator text:** ``` The Mortgagee must verify that the Borrowers are eligible to participate in HUD’s Loss Mitigation Program. ``` _Authority_: HUD ML 2025-06 — III.A.2.h.iii(A) _Source_: _Snapshot_: `a171c17f1f18edcd` _Fetched_: 2026-05-22T19:55:03Z --- #### HUD Mortgagee Letter 2025-06 — Background (whole section) **Obligation ID:** `hud-ml-2025-06-s-background` **Operative duty (lender voice):** > Starting in April 2020, and throughout the course of the COVID-19 pandemic, HUD established and expanded new streamlined loss mitigation options to provide Mortgagees tools to quickly address the financial impacts on Borrowers and mitigate the impact to the Mutual Mortgage Insurance Fund (MMIF) by reducing delinquencies and preventing foreclosures. The COVID-19 loss mitigation options allowed more than 2.3 million fa **Verbatim regulator text:** ``` Starting in April 2020, and throughout the course of the COVID-19 pandemic, HUD established and expanded new streamlined loss mitigation options to provide Mortgagees tools to quickly address the financial impacts on Borrowers and mitigate the impact to the Mutual Mortgage Insurance Fund (MMIF) by reducing delinquencies and preventing foreclosures. The COVID-19 loss mitigation options allowed more than 2.3 million families the opportunity to avoid foreclosure and sustain homeownership. These actions resulted in cumulative savings to the MMIF of over $420 billion. Building on the success of, and the lessons learned from, the COVID-19 Recovery Options, HUD has developed a new permanent set of loss mitigation tools that are intended to maintain streamlined processes that minimize burdens on Mortgagees, provide sustainable loss mitigation solutions to Borrowers to address delinquency and prevent foreclosure, and mitigate risks to the MMIF. Additionally, to allow Mortgagees to maintain current operations while working toward implementing the policies in this ML, HUD is further extending the availability of the COVID-19 Recovery Options. ``` _Authority_: HUD Mortgagee Letter 2025-06 _Source_: _Snapshot_: `a171c17f1f18edcd` _Fetched_: 2026-05-22T19:55:03Z --- --- # FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options **Register slug:** `hud-ml-2025-12` **Obligation count:** 8 ## Register description HUD Mortgagee Letter 2025-12. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD ML 2025-12 — Eligibility to Participate in HUD Programs (III.A.2.h.iii(A)) **Obligation ID:** `hud-ml-2025-12-loss-mit-eligibility-verification` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-defaulted-loan **Operative duty (lender voice):** > Before offering any FHA Loss Mitigation Option, [LENDER] must verify > that the Borrowers are eligible to participate in HUD's Loss Mitigation > Program. To be eligible, the Borrower may not own other FHA-insured > real estate (except under the stated exceptions); has not been the > Borrower (except through inheritance or as co-signer only) on prior > loans on which an FHA claim has been paid within the past three years; > must not be debarred, suspended, or subject to a HUD LDP for the > relevant home-retention options; and may not have unresolved delinquent > Federal Debt for Partial Claim / Combination / Payment Supplement > options. **Compliance obligation:** > For every FHA-insured Mortgage in Default for which [LENDER] offered a Loss Mitigation Option, can [LENDER] evidence the Borrower-eligibility verification (no other FHA-insured real estate beyond stated exceptions; no FHA-claim-paid prior loan in past 3 years; no debarment/suspension/LDP for relevant options; no unresolved delinquent Federal Debt for Partial Claim / Combination / Payment Supplement)? **Verbatim regulator text:** ``` The Mortgagee must verify that the Borrowers are eligible to participate in HUD’s Loss Mitigation Program. ``` _Authority_: HUD ML 2025-12 — III.A.2.h.iii(A) _Source_: _Snapshot_: `0f501d1c63d66287` _Fetched_: 2026-05-22T11:23:07Z --- #### HUD ML 2025-12 — Loss Mitigation Program 90-Day Review (III.A.2.h.iii(B)) **Obligation ID:** `hud-ml-2025-12-loss-mit-90-day-evaluation` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-defaulted-loan **Operative duty (lender voice):** > For each FHA-insured forward Mortgage in Default, [LENDER] must complete > an evaluation of the Defaulted Mortgage for appropriate Loss Mitigation > Options before four monthly installments are due and unpaid, and send > a written Notice to Borrower with the determination of eligibility. **Compliance obligation:** > For every FHA-insured forward Mortgage in Default, can [LENDER] evidence completion of the loss-mit evaluation before four monthly installments became due and unpaid, and delivery of the written Notice to Borrower with the determination of eligibility? **Verbatim regulator text:** ``` A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower with the determination of eligibility. ``` _Authority_: HUD ML 2025-12 — III.A.2.h.iii(B) 90-Day Review _Source_: _Snapshot_: `0f501d1c63d66287` _Fetched_: 2026-05-22T11:23:07Z --- #### HUD ML 2025-12 — Execution of Permanent Home Retention Option Documents (III.A.2.i.iii(D)) **Obligation ID:** `hud-ml-2025-12-permanent-home-retention-documents-15-days` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-workout **Operative duty (lender voice):** > For each Borrower who successfully completes a Trial Payment Plan (TPP) > on a Permanent Home Retention Option (Standalone Partial Claim, > Standalone Loan Modification, Combination Loan Modification and Partial > Claim, or Payment Supplement), [LENDER] must send the Permanent Home > Retention documents to the Borrower within 15 Days from the successful > completion of the TPP. **Compliance obligation:** > For every Borrower who successfully completed a TPP on a Permanent Home Retention Option under the ML 2025-12 framework, can [LENDER] evidence delivery of the Permanent Home Retention documents to the Borrower within 15 Days of TPP completion? **Verbatim regulator text:** ``` The Mortgagee must send the Permanent Home Retention documents to the Borrower within 15 Days from the successful completion of a TPP. ``` _Authority_: HUD ML 2025-12 — III.A.2.i.iii(D) _Source_: _Snapshot_: `0f501d1c63d66287` _Fetched_: 2026-05-22T11:23:07Z --- #### FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options — Purpose **Obligation ID:** `hud-ml-2025-12-s02` **Operative duty (lender voice):** > This Mortgagee Letter (ML) updates and replaces ML 2025-06, Updates to Servicing, Loss Mitigation, and Claims (ML 2025-06). This ML reestablishes FHA’s requirements for the servicing of FHA-insured Mortgages, including those in Default, and the filing of associated claims. **Verbatim regulator text:** ``` This Mortgagee Letter (ML) updates and replaces ML 2025-06, Updates to Servicing, Loss Mitigation, and Claims (ML 2025-06). This ML reestablishes FHA’s requirements for the servicing of FHA-insured Mortgages, including those in Default, and the filing of associated claims. ``` _Authority_: FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options _Source_: _Snapshot_: `0f501d1c63d66287` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options — Effective Date **Obligation ID:** `hud-ml-2025-12-s03` **Operative duty (lender voice):** > FHA-Home Affordable Modification Program Options (FHA-HAMP) and the currently published Standard Pre-Foreclosure Sale (PFS) and Standard Deed-in-Lieu of Foreclosure (DIL) will remain suspended through September 30, 2025, except for non-borrowers who acquired title through an exempted transfer. These options will expire on September 30, 2025. The COVID-19 Recovery Loss Mitigation Options are extended through and will **Verbatim regulator text:** ``` FHA-Home Affordable Modification Program Options (FHA-HAMP) and the currently published Standard Pre-Foreclosure Sale (PFS) and Standard Deed-in-Lieu of Foreclosure (DIL) will remain suspended through September 30, 2025, except for non-borrowers who acquired title through an exempted transfer. These options will expire on September 30, 2025. The COVID-19 Recovery Loss Mitigation Options are extended through and will expire on September 30, 2025. The remaining provisions of this ML are now effective on October 1, 2025. All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1). ``` _Authority_: FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options _Source_: _Snapshot_: `0f501d1c63d66287` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options — Affected Programs **Obligation ID:** `hud-ml-2025-12-s04` **Operative duty (lender voice):** > The provisions of this ML apply to all FHA Title II Single Family forward mortgage programs. **Verbatim regulator text:** ``` The provisions of this ML apply to all FHA Title II Single Family forward mortgage programs. ``` _Authority_: FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options _Source_: _Snapshot_: `0f501d1c63d66287` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options — Background **Obligation ID:** `hud-ml-2025-12-s05` **Operative duty (lender voice):** > In January 2025, HUD published a new permanent set of loss mitigation tools intended to maintain streamlined processes that minimize burdens on Mortgagees, provide sustainable loss mitigation solutions to Borrowers to address delinquency, prevent foreclosure, and mitigate risks to the Mutual Mortgage Insurance Fund (MMIF). Upon further review of the policies, HUD has determined additional changes are necessary to pro **Verbatim regulator text:** ``` In January 2025, HUD published a new permanent set of loss mitigation tools intended to maintain streamlined processes that minimize burdens on Mortgagees, provide sustainable loss mitigation solutions to Borrowers to address delinquency, prevent foreclosure, and mitigate risks to the Mutual Mortgage Insurance Fund (MMIF). Upon further review of the policies, HUD has determined additional changes are necessary to protect the MMIF. HUD continues to see increased default rates on the COVID-19 Recovery Options, as well as the use of the COVID-19 Recovery Options in a manner inconsistent with prudent management of the MMIF. To help address both issues, HUD has determined that Borrowers should be limited to one permanent Loss Mitigation Option every 24 months versus every 18 months. HUD has also determined that certain language access provisions are unnecessarily burdensome. Accordingly, they should be removed. HUD has also found that some compensations that would be paid to Borrowers under the new set of permanent Loss Mitigation Home Disposition Options and Cash for Keys are not cost effective and will be maintained at the existing amounts. The Trump Administration will continue its review of the entire FHA permanent loss mitigation waterfall to ensure the policy prevents foreclosures while protecting taxpayers and mitigating financial risks to the MMIF. FHA will continue to review how the available home retention options could be improved to better incent reperformance and ensure borrower ability-to-repay. HUD will also conduct an overall evaluation of the Payment Supplement tool, including an assessment of its performance and function, to determine if it should remain a part of HUD's loss mitigation program. Lastly, to swiftly address potential risks to the MMIF and taxpayers, HUD is moving the effective date of the new permanent Loss Mitigation Options to October 1, 2025. ``` _Authority_: FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options _Source_: _Snapshot_: `0f501d1c63d66287` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options — Summary of Changes **Obligation ID:** `hud-ml-2025-12-s06` **Operative duty (lender voice):** > This ML updates and replaces ML 2025-06. The highlighted bullets identify the changes from ML 2025-06. This ML: • deletes Language Accessibility (III.A.1.a.ii(D)); • updates Responsibility for Servicing Actions (III.A.1.b); • updates Responsibility during Transfers of Servicing Rights – Standard (III.A.1.b.i(B)); • updates Responsibility for Servicing when the Mortgage is Sold – Required Documentation (III.A.1.b.ii(C **Verbatim regulator text:** ``` This ML updates and replaces ML 2025-06. The highlighted bullets identify the changes from ML 2025-06. This ML: • deletes Language Accessibility (III.A.1.a.ii(D)); • updates Responsibility for Servicing Actions (III.A.1.b); • updates Responsibility during Transfers of Servicing Rights – Standard (III.A.1.b.i(B)); • updates Responsibility for Servicing when the Mortgage is Sold – Required Documentation (III.A.1.b.ii(C)); • updates Providing Information to HUD and HUD-Approved Counseling Agencies (III.A.1.c); • updates Application of Payments (III.A.1.e.ii); • updates Items to be Escrowed (III.A.1.g.ii(C)); • updates Timeliness of Payments from Escrow Accounts – Standard (III.A.1.g.iv(A)(1)); • updates Long-Term Policies (III.A.1.g.iv(B)(1)); • updates Hazard Insurance – Payment of Renewal Premium (III.A.1.h.i(A)); • deletes HUD Default Servicing Contact (III.A.2.b) and renumbers subsequent sections; • updates Late Charges – Standard (III.A.2.c.ii); • updates Application of Partial Payments Totaling a Full Monthly Payment – Standard (III.A.2.d.ii(A)); • updates Return of Partial Payments for Mortgages in Default – Standard (III.A.2.d.iii(A)); • updates Lien Status (III.A.2.e); • updates Imminent Default (III.A.2.f); • updates Delinquent Mortgage Identification (III.A.2.g.i); • updates Collection Communication Timeline – Standard (III.A.2.g.ii(B)); • deletes Loss Mitigation Options that are Applicable for Borrowers Facing Imminent Default (III.A.2.g.iv) and renumbers subsequent sections; • updates Delinquency Notice Cover Letter (III.A.2.g.viii(A)(1)); • adds Use of Early Default Intervention Tools (III.A.2.g.xii); • deletes Loss Mitigation Review Process (III.A.2.i), moves requirements under Loss Mitigation Program (III.A.2.h), and renumbers subsequent sections; • updates Loss Mitigation Program – Definitions (III.A.2.h.i); • updates Eligibility to Participate in HUD Programs (III.A.2.h.iii(A)); • updates Occupancy (III.A.2.h.iii(A)(1)); • updates Non-Borrowers Who Acquired Title through an Exempted Transfer (III.A.2.h.iii(A)(2)); • replaces Complete Loss Mitigation Requests (III.A.2.i.iii) and Evaluation of Borrower’s Financial Condition (III.A.2.i.iv) with Evaluation of Borrower for Loss Mitigation Assistance (III.A.2.h.iv); • updates HUD’s Loss Mitigation Option Waterfall (III.A.2.h.v); • updates Notice to Borrower after Loss Mitigation Review (III.A.2.h.vi); • updates Loss Mitigation Agreements (III.A.2.h.vii); • adds a consolidated Loss Mitigation Program – Required Documentation (III.A.2.h.x); • updates the transition date for the new loss mitigation options under Loss Mitigation Home Retention Options (III.A.2.i) and provides for the expiration of FHA-HAMP and COVID-19 Recovery Options; • updates Loss Mitigation Home Retention Options – Definitions (III.A.2.i.i); • adds Early Default Intervention Tools (III.A.2.i.ii); • adds Repayment Plans (III.A.2.i.ii(A)); • updates Borrower Qualifications (III.A.2.i.ii(A)(3)) to align with the updated requirement for availability of Permanent Home Retention Options to one in 24 months instead of one in 18 months; • updates Forbearance (III.A.2.i.ii(B)); • adds Permanent Home Retention Options (III.A.2.i.iii); • updates Permanent Home Retention Options (III.A.2.i.iii) to change the Borrower eligibility to receive no more than one Permanent Home Retention Options in 24 months instead of one in 18 months; • adds Permanent Home Retention Options – Standard Eligibility (III.A.2.i.iii(A)); • updates Borrower Qualifications (III.A.2.i.iii(A)(2)) to change the requirement for availability of Permanent Home Retention Options to one in 24 months instead of one in 18 months; • adds Borrower Affordability Attestation (III.A.2.i.iii(B)); • updates Borrower Affordability Attestation (III.A.2.i.iii(B)) to align with the updated requirement for availability of Permanent Home Retention Options to one in 24 months instead of one in 18 months; • updates Trial Payment Plans (III.A.2.i.iii(C)); • updates Execution of Permanent Home Retention Option Documents (III.A.2.i.iii(D)); • adds Partial Claims (III.A.2.i.iv); • adds Loan Modifications (III.A.2.i.v); • moves Payment Supplement (III.A.2.i.vi); • adds Outside of the Waterfall Loan Modification (III.A.2.i.vii); • updates Outside of the Waterfall Loan Modification – Eligibility (III.A.2.i.vii(B)) to align with the updated requirement for availability of Permanent Home Retention Options to one in 24 months instead of one in 18 months; • updates Permanent Home Retention Option Failure Is New Default (III.A.2.i.viii); • updates Home Disposition Options – Standard (III.A.2.j.i); • updates Pre-Foreclosure Sales (III.A.2.j.ii); • reverts increase of Borrower compensation in Owner-Occupant Borrower Compensation (III.A.2.j.ii(G)); • reverts increase in Borrower compensation in Allowable Settlement Costs (III.A.2.j.ii(K)(3)(c)(i)); • reverts increase of Borrower compensation in Discharge of Junior Liens (III.A.2.j.ii(K)(5)); • updates Deed-in-Lieu of Foreclosure (III.A.2.j.iii); • reverts increase of Borrower compensation in Amount of Relocation Assistance (III.A.2.j.iii(D)(1)); • reverts increase of Borrower compensation in DIL Agreement Terms (III.A.2.j.iii(E)(2)); • updates Loss Mitigation Incentives and Title Reimbursement (III.A.2.k); • deletes Forbearance Plans (III.A.2.k.iii); • deletes Special Forbearance-Unemployment (III.A.2.k.iv); • deletes FHA-HAMP (III.A.2.k.v); • updates Presidentially-Declared Major Disaster Areas – Moratorium on Foreclosures – Standard (III.A.2.l.ii(A)); • updates Loss Mitigation for Borrowers in PDMDAs (III.A.2.l.iv); • updates Disaster Forbearance for Borrowers in PDMDAs (III.A.2.l.iv(A)); • adds Disaster Forbearance Time Frames (III.A.2.l.iv(B)); • adds Disaster Repayment Plan (III.A.2.l.iv(C)); • adds Permanent Home Retention Options (III.A.2.l.iv(D)); • updates Permanent Home Retention Options (III.A.2.l.iv(D)) to align with the updated requirement for availability of Permanent Home Retention Options to one in 24 months instead of one in 18 months; • updates Home Disposition Options (III.A.2.l.iv(F)); • updates Suspension of Reporting to Consumer Reporting Agencies (III.A.2.l.iv(G)); • sunsets Presidentially-Declared COVID-19 National Emergency (III.A.2.m); • deletes Borrowers Impacted by a PDMDA during COVID-19 (III.A.2.n.iv(A)); • deletes PDMDA Loss Mitigation Owner-Occupant Requirement (III.A.2.n.iv(B)); • updates Time Frame for Utilization of Loss Mitigation or Initiation of Foreclosure (III.A.2.q.i(B)); • updates Automatic Extensions for Foreclosure Initiation Time Frame for Loss Mitigation Option (III.A.2.q.i(D)(2)); • updates Delay due to Use of Loss Mitigation Home Retention Option (III.A.2.q.ii(E)(2)(a)); • reverts increase of Cash for Keys for Property occupants in Cash for Keys Consideration – Standard (III.A.2.r.vii(B)); • adds consolidated Single Family Default Monitoring System Default Reporting and Non-Incentivized Loan Modification Report (III.A.4); • replaces Single Family Default Monitoring System Default Reporting (III.A.2.h.ii) with updated Single Family Default Monitoring System Default Reporting (III.A.4.a); • updates Non-Incentivized Loan Modification Reporting (III.A.4.b); • adds the following claim types: • Claim Type 32 ** – Loan Modification (IV.A.2.h); • Claim Type 32 – Disaster Loan Modification (IV.A.2.i); • Claim Type 33 ** – Partial Claim (IV.A.2.k); • Claim Type 33 – Standalone Partial Claim during Payment Supplement Period (IV.A.2.m); and • Claim Type 33 – Disaster Payment Supplement (IV.A.2.q); • updates Claim Type 33 – Disaster Partial Claim (IV.A.2.l); • updates Claim Type 33 – Payment Supplement (IV.A.2.p); and • replaces Appendix 4.0 – FHA-Home Affordable Modification Program (FHA-HAMP) Calculations (Applies to Servicing Only) with Appendix 4.0 – FHA Home Retention Options Calculations (Applies to Servicing Only). FHA Single Family Housing Policy Handbook 4000.1 The policy changes will be incorporated into Handbook 4000.1 as follows: See Attachment 1. ``` _Authority_: FHA Mortgagee Letter 2025-12 — Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options _Source_: _Snapshot_: `0f501d1c63d66287` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- --- # FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 **Register slug:** `hud-ml-2025-13` **Obligation count:** 8 ## Register description HUD Mortgagee Letter 2025-13. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD ML 2025-13 — CWCOT Post-Foreclosure Sales Period (III.A.2.s.iii(F)(1)) **Obligation ID:** `hud-ml-2025-13-cwcot-60-day-listing` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-cwcot-sale **Operative duty (lender voice):** > Where [LENDER] (as Mortgagee) utilizes CWCOT post-foreclosure sales > efforts on FHA-insured Mortgages with post-foreclosure sales scheduled > to occur on or after May 30, 2025, [LENDER] must list the Property for > sale to all third parties for a 60-Day period. **Compliance obligation:** > For every CWCOT post-foreclosure sales effort [LENDER] conducted with sale scheduled on or after May 30, 2025, can [LENDER] evidence that the Property was listed for sale to all third parties for a 60-Day period? **Verbatim regulator text:** ``` Mortgagees that utilize the post-foreclosure sales efforts must list theProperty for sale to all third parties for a 60-Day period. ``` _Authority_: HUD ML 2025-13 — III.A.2.s.iii(F)(1) _Source_: _Snapshot_: `d8075a1d1fa0ca0f` _Fetched_: 2026-05-22T19:55:07Z --- #### HUD ML 2025-13 — Conveyance Time Frame if Property Does Not Sell (III.A.2.s.iii(F)(2)(a)) **Obligation ID:** `hud-ml-2025-13-conveyance-30-day` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-cwcot-sale **Operative duty (lender voice):** > Where [LENDER] conducted a CWCOT post-foreclosure sales effort and the > Property did not sell through the post-foreclosure sales efforts, > [LENDER] must convey the Property to HUD within 30 Days of the end of > the post-foreclosure sales period. **Compliance obligation:** > For every CWCOT post-foreclosure sales effort where the Property did not sell, can [LENDER] evidence conveyance of the Property to HUD within 30 Days of the end of the post-foreclosure sales period? **Verbatim regulator text:** ``` If the Property does not sell through the post-foreclosure sales efforts, the Mortgagee must convey the Property to HUD within 30 Days of the end of the post-foreclosure sales period. ``` _Authority_: HUD ML 2025-13 — III.A.2.s.iii(F)(2)(a) _Source_: _Snapshot_: `d8075a1d1fa0ca0f` _Fetched_: 2026-05-22T19:55:07Z --- #### HUD ML 2025-13 — Submission of Claim Form Parts to HUD for CWCOT (IV.A.2.d.iii) **Obligation ID:** `hud-ml-2025-13-claim-form-parts-submission` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-cwcot-claim **Operative duty (lender voice):** > For every Claim Type 06 (CWCOT) claim, [LENDER] must submit Parts A and > B of form HUD-27011 to HUD simultaneously no later than 30 Days after > the earliest of (a) the date [LENDER] acquired good and marketable > title; (b) the date a third party acquired good and marketable title; > (c) the date the Borrower or other party redeemed the Property; (d) the > date the redemption period expires; or (e) such other date as required > by the FHA Commissioner. **Compliance obligation:** > For every Claim Type 06 CWCOT claim, can [LENDER] evidence simultaneous submission of Parts A and B of HUD-27011 within 30 Days of the earliest trigger event (good-and-marketable-title acquisition by Mortgagee or third party, Borrower redemption, redemption-period expiration, or FHA Commissioner deadline)? **Verbatim regulator text:** ``` The Mortgagee must submit Parts A and B simultaneously no later than 30 Days after: • the date the Mortgagee acquired good and marketable title; • the date a third party acquired good and marketable title; • the date the Borrower or other party redeemed the Property; • the date the redemption period expires; or • such other date as required by the FHA Commissioner. ``` _Authority_: HUD ML 2025-13 — IV.A.2.d.iii _Source_: _Snapshot_: `d8075a1d1fa0ca0f` _Fetched_: 2026-05-22T19:55:07Z --- #### FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 — Purpose **Obligation ID:** `hud-ml-2025-13-s01` **Operative duty (lender voice):** > This Mortgagee Letter (ML) replaces policies established in ML 2022-01, Expansion of the Exclusive Listing Period for HUD Real Estate Owned Properties, and ML 2022-08, Expanding Affordable Housing Supply Through FHA’s Claims Without Conveyance of Title (CWCOT) Process. **Verbatim regulator text:** ``` This Mortgagee Letter (ML) replaces policies established in ML 2022-01, Expansion of the Exclusive Listing Period for HUD Real Estate Owned Properties, and ML 2022-08, Expanding Affordable Housing Supply Through FHA’s Claims Without Conveyance of Title (CWCOT) Process. ``` _Authority_: FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 _Source_: _Snapshot_: `d8075a1d1fa0ca0f` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 — Effective Date **Obligation ID:** `hud-ml-2025-13-s02` **Operative duty (lender voice):** > The CWCOT provisions of this ML may be implemented immediately but must be implemented for all post-foreclosure sales associated with defaulted FHA-insured Mortgages scheduled to occur on or after May 30, 2025. The REO provisions of this ML must be implemented for all HUD REO Properties listed for sale on or after May 30, 2025. All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA **Verbatim regulator text:** ``` The CWCOT provisions of this ML may be implemented immediately but must be implemented for all post-foreclosure sales associated with defaulted FHA-insured Mortgages scheduled to occur on or after May 30, 2025. The REO provisions of this ML must be implemented for all HUD REO Properties listed for sale on or after May 30, 2025. All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1). ``` _Authority_: FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 _Source_: _Snapshot_: `d8075a1d1fa0ca0f` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 — Affected Programs **Obligation ID:** `hud-ml-2025-13-s03` **Operative duty (lender voice):** > The provisions of this ML apply to CWCOT post-foreclosure sales efforts and HUD’s Single Family (one- to four-unit) REO Properties. **Verbatim regulator text:** ``` The provisions of this ML apply to CWCOT post-foreclosure sales efforts and HUD’s Single Family (one- to four-unit) REO Properties. ``` _Authority_: FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 _Source_: _Snapshot_: `d8075a1d1fa0ca0f` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 — Background **Obligation ID:** `hud-ml-2025-13-s04` **Operative duty (lender voice):** > On January 13, 2022, HUD published ML 2022-01, Expansion of the Exclusive Listing Period for HUD Real Estate Owned Properties, which expanded the exclusive listing period for HUD REO Properties for Owner- Occupant Buyers, HUD-approved Nonprofits, and Government Entities from 15 to 30 Days. On May 5, 2022, HUD published ML 2022-08, Expanding Affordable Housing Supply Through FHA’s Claims Without Conveyance of Title (C **Verbatim regulator text:** ``` On January 13, 2022, HUD published ML 2022-01, Expansion of the Exclusive Listing Period for HUD Real Estate Owned Properties, which expanded the exclusive listing period for HUD REO Properties for Owner- Occupant Buyers, HUD-approved Nonprofits, and Government Entities from 15 to 30 Days. On May 5, 2022, HUD published ML 2022-08, Expanding Affordable Housing Supply Through FHA’s Claims Without Conveyance of Title (CWCOT) Process, which established an exclusive 30-Day sales period for Owner-Occupant Buyers, HUD-approved Nonprofits, and Government Entities as part of the CWCOT post-foreclosure sale process. These two MLs intended to make more Properties available directly to future homeowners or to future homeowners via programs run by HUD- approved Nonprofits or Government Entities. MLs 2022-01 and 2022-08 were subsequently incorporated into Handbook 4000.1. HUD data over the past several years show, at best, mixed results from these efforts (see Tables below). During the new CWCOT exclusive listing period, very few Properties have sold to Owner-Occupant Buyers and even fewer were purchased by HUD-approved Nonprofits and Government Entities. For REO, it’s unclear whether the longer exclusive listing period resulted in higher overall REO sales to owner-occupants or shifted sales from the original listing period (Days 1-15) and/or the regular listing period. Further, REO sales to HUD-approved Nonprofits and Government Entities remain at near-zero levels. Low sales during exclusive listing periods leads to continued deterioration of the Properties, as well as additional holding costs, which leads to lower sales prices, greater losses to HUD, and an increase in time before Properties are returned to the market. As a result, HUD has determined it is appropriate to update the relevant sections of Handbook 4000.1. ``` _Authority_: FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 _Source_: _Snapshot_: `d8075a1d1fa0ca0f` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 — Summary of Changes **Obligation ID:** `hud-ml-2025-13-s05` **Operative duty (lender voice):** > This ML: • updates CWCOT Post-Foreclosure Sales Efforts (III.A.2.s.iii(F)); o updates and renames CWCOT Post-Foreclosure Sales Period (III.A.2.s.iii(F)(1)); o eliminates Exclusive Post-Foreclosure Sales Period (III.A.2.s.iii(F)(1)(a)); and o eliminates Extended Post-Foreclosure Sales Period (III.A.2.s.iii(F)(1)(b)); • updates Single Family Default Reporting Requirements for CWCOT (III.A.2.s.iii(G)); • updates Submiss **Verbatim regulator text:** ``` This ML: • updates CWCOT Post-Foreclosure Sales Efforts (III.A.2.s.iii(F)); o updates and renames CWCOT Post-Foreclosure Sales Period (III.A.2.s.iii(F)(1)); o eliminates Exclusive Post-Foreclosure Sales Period (III.A.2.s.iii(F)(1)(a)); and o eliminates Extended Post-Foreclosure Sales Period (III.A.2.s.iii(F)(1)(b)); • updates Single Family Default Reporting Requirements for CWCOT (III.A.2.s.iii(G)); • updates Submission of Claim Form Parts to HUD for CWCOT (IV.A.2.d.iii); • rescinds current language and restores previous language in Exclusive Listing Period (IV.B.2.f.v); and • rescinds current language and restores previous language in Extended Listing Period (IV.B.2.f.vi). FHA Single Family Housing Policy Handbook 4000.1 Servicing and Loss Mitigation The policy changes will be incorporated into Handbook 4000.1 as follows: Claims Without Conveyance of Title (III.A.2.s.iii) (F) CWCOT Post-Foreclosure Sales Efforts If the Property does not sell to a third party at the foreclosure sale, the Mortgagee may pursue post-foreclosure sales efforts and may utilize independent third-party providers to conduct such sales prior to making a final decision to convey a Property to HUD. The Mortgagee’s third-party provider must indicate that the Property is being sold in an “as is” condition, and the condition is unknown and may include defects, possible health or safety hazards, or debris, or be located in a Special Flood Hazard Area (SFHA). Where the Property is occupied, based on the appraisal or property inspection, the Mortgagee’s third-party provider must clearly indicate that the Property is occupied in the auction information. (1) CWCOT Post-Foreclosure Sales Period Mortgagees that utilize the post-foreclosure sales efforts must list theProperty for sale to all third parties for a 60-Day period. (2) Extensions of Time Frames to Engage in Post-Foreclosure Sales Efforts HUD will provide the Mortgagee with an automatic extension of the conveyance time frames to attempt post-foreclosure sales efforts and commence possessory action, where applicable, for 60 Days from the date the foreclosure deed is filed for recording or the expiration of the redemption period, if applicable, in circumstances where the Mortgagee complied with all foreclosure time frames. (a) Conveyance Time Frame if Property Does Not Sell If the Property does not sell through the post-foreclosure sales efforts, the Mortgagee must convey the Property to HUD within 30 Days of the end of the post-foreclosure sales period. (b) Extension of Conveyance Time Frame to Allow for Closing Where a sales contract has been ratified before the expiration of the 60-Day period, HUD will provide the Mortgagee with an additional, automatic 60-Day extension to the deadline for conveyance, from the date the sales contract has been ratified, to allow for closing of the sale. (3) Preservation and Protection during Post-Foreclosure Sales Period The Mortgagee must preserve and protect the Property in accordance with HUD requirements during the post-foreclosure sales period and throughout any approved extensions to deadlines for conveyance. HUD will reimburse the Mortgagee through the FHA insurance claim for all reasonable preservation, protection, and eviction expenses incurred prior to the expiration of any extension of the deadlines for conveyance, as listed in Property Preservation Allowances (III.A.2.v.iii(B)(5)). Claims Without Conveyance of Title (III.A.2.s.iii) (G) Single Family Default Reporting Requirements for CWCOT Mortgagees must report the Delinquency/Default Status (DDS) Codes that apply to the foreclosure sale, CWCOT, or CWCOT post-foreclosure sale outcomes at the end of each reporting cycle. For Properties marketed post- foreclosure sale, the applicable DDS Code indicating the marketing period must be reported. For all Properties sold, Mortgagees must report the buyer type. Mortgagees must report the DDS Codes as follows: • Status Code 1J – Post-Foreclosure Sales Period • Status Code 2U – Owner-Occupant Buyer Successful Bidder • Status Code 2N – Nonprofit Successful Bidder • Status Code 2G – Governmental Entity Successful Bidder • Status Code 2I – Investor/Other Successful Bidder • Status Code 2R – Borrower Successful Bidder • Status Code 2S – Servicer Successful Bidder Mortgagees must report one of the existing termination DDS codes at the conclusion of the default episode: • Status Code 46 – Property Conveyed to Insurer; expected to follow 2S, 1J, or 1E when a conveyance claim will be filed with HUD. • Status Code 48 – Claim without Conveyance of Title; expected to follow 2U, 2N, 2G, 2I, 2R, or 2S when a CWCOT claim will be filed with HUD. • Status Code 29 – Charge-off; expected after a 2S when a Mortgagee cannot pursue HUD disposition options and will not file any termination claim with HUD. • Status Code 30 – Third-Party Sale; expected to follow 2U, 2N, 2G, or 2I when no claim will be filed with HUD. • Status Code 73 – Property Redeemed; expected to follow 2S when a borrower redeems the property, and no claim will be filed with HUD. (H) Reporting CWCOT If a third party purchased the Property at foreclosure through CWCOT procedures, the Mortgagee must report in SFDMS the appropriate Claim Termination of Insurance Code. FHA Single Family Housing Policy Handbook 4000.1 Claims and Disposition Claim Type 06 - Claims Without Conveyance of Title (IV.A.2.d) iii. Submission of Claim Form Parts to HUD for CWCOT The Mortgagee must submit Parts A and B simultaneously no later than 30 Days after: • the date the Mortgagee acquired good and marketable title; • the date a third party acquired good and marketable title; • the date the Borrower or other party redeemed the Property; • the date the redemption period expires; or • such other date as required by the FHA Commissioner. When filing via EDI, FHA Catalyst, or FHAC, the Mortgagee must submit Parts A and B no later than two Days after the date the form was prepared. When submitting via FHA Catalyst, the Mortgagee must also submit Parts C, D, and E. In all cases, the Mortgagee must also upload into P260: • all Parts of form HUD-27011; • the Closing Disclosure or similar legal document for post- foreclosure sales; • the appraisal; • appraisal invoices; • a worksheet reflecting the Mortgagee’s application of the CAFMV. The worksheet must include the CAFMV adjustment percentage provided in the instructions on FHAC, and where applicable, the state-mandated foreclosure price; and • a third-party service fee invoice for auction services, if applicable. Exclusive Listing Period (IV.B.2.f.v) (A) Definition The Exclusive Listing Period is a competitive listing period in which only eligible Governmental Entities, HUD-approved Nonprofits, and Owner- Occupant Buyers may submit bids on HUD REO Properties. (B) Standard Governmental Entities, HUD-approved Nonprofits, and Owner-Occupant Buyers may submit bids during the exclusive listing period. HUD will choose the winning bid, which produces the greatest net return to HUD and meets HUD’s terms of offering of the Property. (1) Length of Exclusive Listing Period For Properties marketed as “insured” or “insured with escrow,” the exclusive listing period is 15 Days. For Properties marketed as “uninsured,” the exclusive listing period is five Days. (2) Review of Bids during Exclusive Listing Period (a) Bid Opening for “Insured” and “Insured with Escrow” HUD REO Properties (i) Bids Received from Days 1 through 10 For Properties marketed as “insured” or “insured with escrow,” the AM will open all bids received from the 1st through the 10th Day of the exclusive listing period on the next business day after the 10th Day of the exclusive listing period. The AM opening the bids will treat all bids as having been received simultaneously. (ii) Bids Received from Days 11 through 15 If none of the bids received by the 10th Day are accepted, the AM will open and review bids received during the 11th Day up to the 15th Day daily on the next business day. If a bid is not accepted during the 15-Day exclusive listing period, the AM will extend the listing to all buyers by listing the Property in the extended listing period. (b) Bid Opening for “Uninsured” HUD REO Properties For Properties that are marketed as “uninsured,” AMs will open and review all bids received from the 1st through the 5th Day on the next business day after the 5th Day of the exclusive listing period. The AM will treat all bids as having been received simultaneously. If a bid is not accepted in the five-Day exclusive listing period for Properties listed as “uninsured,” the AM will extend the listing to all buyers by listing the Property in the extended listing period. (c) Bid Opening on Weekends and Federal Holidays HUD considers bids received on Fridays, Saturdays, and Sundays in the same bid period as being received simultaneously during that period. The AM will open those bids on: • the following Monday; or • the next business day if Monday is a federal holiday. HUD considers bids received on a federal holiday in the same bid period as being received on the previous Day. The AM will open those bids on the next business day. Extended Listing Period (IV.B.2.f.vi) (A) Definition The Extended Listing Period is a competitive listing period during which all buyers may submit bids on HUD REO Properties. (B) Standard If a Property remains unsold for 15 Days, HUD will extend the listing to all buyers by listing the Property in the extended listing period. All buyers, including Investors, may submit bids on HUD REO Properties during the extended listing period. (C) Review of Bids during Extended Listing Period The AM will open bids at the end of each business day, subject to the policies in Bid Opening on Weekends and Federal Holidays. ``` _Authority_: FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13 _Source_: _Snapshot_: `d8075a1d1fa0ca0f` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- --- # FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 **Register slug:** `hud-ml-2025-21` **Obligation count:** 8 ## Register description HUD Mortgagee Letter 2025-21. See obligation entries for operative requirements and verbatim primary-source citations. ## Obligations #### HUD ML 2025-21 — Loss Mitigation Program 90-Day Review (III.A.2.h.iii(B)) **Obligation ID:** `hud-ml-2025-21-90-day-loss-mit-evaluation` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-defaulted-loan **Operative duty (lender voice):** > For each FHA-insured forward Mortgage in Default, [LENDER] must complete > an evaluation of the Defaulted Mortgage for appropriate Loss Mitigation > Options before four monthly installments are due and unpaid, and send a > written Notice to Borrower (III.A.2.h.vi) with the determination of > eligibility. **Compliance obligation:** > For every FHA-insured forward Mortgage in Default, can [LENDER] evidence completion of the loss-mit evaluation before four monthly installments became due and unpaid, and delivery of the written Notice to Borrower with the determination of eligibility? **Verbatim regulator text:** ``` A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower (III.A.2.h.vi) with the determination of eligibility. ``` _Authority_: HUD ML 2025-21 — III.A.2.h.iii(B) 90-Day Review _Source_: _Snapshot_: `5a4f6f742dde4b35` _Fetched_: 2026-05-22T19:55:08Z --- #### HUD ML 2025-21 — Execution of Permanent Home Retention Option Documents (III.A.2.i.iii(D)) **Obligation ID:** `hud-ml-2025-21-permanent-home-retention-documents-15-days` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-workout **Operative duty (lender voice):** > For each Borrower who successfully completes a Trial Payment Plan (TPP) > on a Permanent Home Retention Option, [LENDER] must send the Permanent > Home Retention documents to the Borrower within 15 Days from the > successful completion of the TPP. [LENDER] must also cease all > foreclosure related activities upon acceptance of the executed Permanent > Home Retention Option Documents. **Compliance obligation:** > For every Borrower who successfully completed a TPP on a Permanent Home Retention Option, can [LENDER] evidence (a) delivery of the Permanent Home Retention documents to the Borrower within 15 Days of TPP completion and (b) cessation of foreclosure-related activities upon acceptance of the executed documents? **Verbatim regulator text:** ``` The Mortgagee must send the Permanent Home Retention documents to the Borrower within 15 Days from the successful completion of a TPP. ``` _Authority_: HUD ML 2025-21 — III.A.2.i.iii(D) _Source_: _Snapshot_: `5a4f6f742dde4b35` _Fetched_: 2026-05-22T19:55:08Z --- #### HUD ML 2025-21 — Assumability of FHA-Insured Mortgages (III.A.3.b.i) **Obligation ID:** `hud-ml-2025-21-assumability-no-restrictions` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** continuous **Operative duty (lender voice):** > All FHA-insured Mortgages serviced by [LENDER] are assumable. [LENDER] > must not impose, agree to, or enforce legal restrictions on conveyances > or assumptions after closing except when (a) specifically permitted by > HUD regulations or (b) the restriction had been specified in a junior > lien granted to [LENDER] after settlement. **Compliance obligation:** > For every FHA-insured Mortgage in [LENDER]'s servicing portfolio, can [LENDER] demonstrate that no legal restriction on conveyance or assumption is being imposed, agreed to, or enforced, except where specifically permitted by HUD regulations or specified in a post-settlement junior lien granted to [LENDER]? **Verbatim regulator text:** ``` All FHA-insured Mortgages are assumable. The Mortgagee must not impose, agree to, or enforce legal restrictions on conveyances or assumptions after closing except when: • specifically permitted by HUD regulations; or • the restriction had been specified in a junior lien granted to the Mortgagee after settlement. ``` _Authority_: HUD ML 2025-21 — III.A.3.b.i Assumability _Source_: _Snapshot_: `5a4f6f742dde4b35` _Fetched_: 2026-05-22T19:55:08Z --- #### FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 — Purpose **Obligation ID:** `hud-ml-2025-21-s01` **Operative duty (lender voice):** > This Mortgagee Letter (ML) updates the requirements for servicing FHA- insured forward Mortgages. **Verbatim regulator text:** ``` This Mortgagee Letter (ML) updates the requirements for servicing FHA- insured forward Mortgages. ``` _Authority_: FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 _Source_: _Snapshot_: `5a4f6f742dde4b35` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 — Effective Date **Obligation ID:** `hud-ml-2025-21-s02` **Operative duty (lender voice):** > The provisions of this ML may be implemented on October 1, 2025, but must be implemented no later than December 30, 2025. All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1). **Verbatim regulator text:** ``` The provisions of this ML may be implemented on October 1, 2025, but must be implemented no later than December 30, 2025. All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1). ``` _Authority_: FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 _Source_: _Snapshot_: `5a4f6f742dde4b35` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 — Affected Programs **Obligation ID:** `hud-ml-2025-21-s03` **Operative duty (lender voice):** > The provisions of this ML apply to all FHA-insured Title II Single Family forward mortgage programs. **Verbatim regulator text:** ``` The provisions of this ML apply to all FHA-insured Title II Single Family forward mortgage programs. ``` _Authority_: FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 _Source_: _Snapshot_: `5a4f6f742dde4b35` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 — Background **Obligation ID:** `hud-ml-2025-21-s04` **Operative duty (lender voice):** > Through this ML, HUD is publishing minor changes to facilitate implementation of servicing and loss mitigation requirements announced in ML 2025-12, Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options, and ML 2025-14, Updates to Modernization of Engagement with Borrowers in Default and Loss Mitigation. This ML also updates FHA’s requirements in accordance with Executive Order 14218 “ **Verbatim regulator text:** ``` Through this ML, HUD is publishing minor changes to facilitate implementation of servicing and loss mitigation requirements announced in ML 2025-12, Tightening and Expediting Implementation of the New Permanent Loss Mitigation Options, and ML 2025-14, Updates to Modernization of Engagement with Borrowers in Default and Loss Mitigation. This ML also updates FHA’s requirements in accordance with Executive Order 14218 “Ending Taxpayer Subsidization of Open Borders” to ensure FHA’s programs are administered in accordance with the Administration’s priorities. This ML aligns with FHA’s broader goals of supporting homeownership and safeguarding HUD’s Mutual Mortgage Insurance Fund (MMIF) to protect taxpayer dollars. ``` _Authority_: FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 _Source_: _Snapshot_: `5a4f6f742dde4b35` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- #### FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 — Summary of Changes **Obligation ID:** `hud-ml-2025-21-s05` **Operative duty (lender voice):** > This ML: • adds Adding Borrowers to a Mortgage (III.A.1.j.v); • updates Eligibility to Participate in HUD Programs (III.A.2.h.iii(A)); • updates Financial Hardship Documentation (III.A.2.h.iv(C)); • updates Loss Mitigation Home Retention Options – Definitions (III.A.2.i.i); • updates Borrower Qualifications (III.A.2.i.iii(A)(2)); • updates Borrower Affordability Attestation – Standard (III.A.2.i.iii(B)(2)); • updates **Verbatim regulator text:** ``` This ML: • adds Adding Borrowers to a Mortgage (III.A.1.j.v); • updates Eligibility to Participate in HUD Programs (III.A.2.h.iii(A)); • updates Financial Hardship Documentation (III.A.2.h.iv(C)); • updates Loss Mitigation Home Retention Options – Definitions (III.A.2.i.i); • updates Borrower Qualifications (III.A.2.i.iii(A)(2)); • updates Borrower Affordability Attestation – Standard (III.A.2.i.iii(B)(2)); • updates Trial Payment Terms (III.A.2.i.iii(C)(2)(b)); • updates Reconsideration for Permanent Home Retention Options After TPP Failure (III.A.2.i.iii(C)(5)(b)); • updates Execution of Permanent Home Retention Option Documents (III.A.2.i.iii(D)); • updates Partial Claims – Standard (III.A.2.i.iv(B)); • updates Statutory Maximum for Partial Claims (including Payment Supplement) (III.A.2.i.iv(C)); • updates Payment of Partial Claim (III.A.2.i.iv(I)); • updates Combination Loan Modification and Partial Claim (III.A.2.i.v(G)); • updates Mortgage Reinstatement with Other Permanent Loss Mitigation Option – MoPR Terminates (III.A.2.i.vi(J)(3)); • updates Outside of the Waterfall Loan Modification – Eligibility (III.A.2.i.vii(B)); • updates Loss Mitigation Assumption (III.A.2.i.ix); • updates DIL Exceptions for Borrowers with More than One FHA- Insured Mortgage (III.A.2.j.iii(C)(3)); • updated Loss Mitigation Denial (III.A.2.q.i(D)(3)); • updates Assumability of FHA-Insured Mortgages (III.A.3.b.i); and • updates Appendix 4.0, Part A: Arrearages. FHA Single Family Housing Policy Handbook 4000.1 Servicing and Loss Mitigation The policy changes will be incorporated into Handbook 4000.1 as follows: Post-endorsement Mortgage Amendments (III.A.1.j) v. Adding Borrowers to a Mortgage Any Borrower added to a Mortgage must have a valid SSN or EIN or meet the eligibility requirement exception regarding social security numbers as stated in II.A.1.b.ii(A)(1)(a). Loss Mitigation Program – Standard (III.A.2.h.iii) (A) Eligibility to Participate in HUD Programs The Mortgagee must verify that the Borrowers are eligible to participate in HUD’s Loss Mitigation Program. To be eligible to participate in HUD’s Loss Mitigation Program, the Borrower: • may not own other real estate subject to FHA insurance, except within the stated exceptions (II.A.1.b.iii(A)(2)(c)); • has not been the Borrower, except through inheritance or as a co- signer only, on prior loans on which an FHA claim has been paid within the past three years; and • for purposes of a Loan Modification, Partial Claim, Combination Loan Modification and Partial Claim, or Payment Supplement, must not be debarred, suspended or subject to a HUD Limited Denial of Participation (LDP) as determined in accordance with Excluded Parties (II.A.1.b.ii(B)) requirements; and • for purposes of a Partial Claim, Combination Loan Modification and Partial Claim, or Payment Supplement, may not have unresolved delinquent Federal Debt as determined in accordance with Borrower Ineligibility Due to Delinquent Federal Non-Tax Debt (II.A.1.b.ii(A)(10)) requirements. The Delinquent FHA-insured Mortgage associated with the Loss Mitigation does not constitute a disqualifying delinquent Federal Debt. (1) Occupancy (a) Definitions An Owner-Occupant Borrower refers to a Borrower residing in the Property secured by the FHA-insured Mortgage as a Principal Residence. A Non-Occupant Borrower refers to a Borrower on a Mortgage securing a Property that is not occupied by any Borrower or is not the Principal Residence. (b) Standard The Mortgagee must consider Owner-Occupant Borrowers and Non- Occupant Borrowers for all Loss Mitigation Options. (2) Non-Borrowers Who Acquired Title through an Exempted Transfer The Mortgagee may consider Repayment Plans, Forbearances, Permanent Home Retention Options, and Home Disposition Options for a non-borrower who acquires title to a Property securing an FHA- insured Mortgage if the Mortgage is not due and payable pursuant to the Garn-St. Germain Depository Institutions Act, (i.e., an Exempted Transfer), and the non-borrower: • is willing to assume personal liability for repayment of the Mortgage in accordance with the agreed loss mitigation terms; • will occupy the home as a Principal Residence; • meets the criteria for loss mitigation assistance; • for a Permanent Home Retention Option, successfully completes a six-month TPP; and • for a Permanent Home Retention Option, has a valid SSN or EIN or meets the eligibility requirement exception regarding social security numbers as stated in II.A.1.b.ii(A)(1). (B) 90-Day Review A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower (III.A.2.h.vi) with the determination of eligibility. (C) Required Documentation The Mortgagee must retain in the Servicing File and the Claim File, if applicable, documentation evidencing that the Borrower is eligible to participate in an FHA transaction, and a copy of the Notice to Borrower, and document efforts to reach the Borrower in Default in advance of the 90-Day Review deadline. The Mortgage may obtain confirmation from the Borrower, verbally or in writing, that the Borrower does not own any other FHA-insured Property or meets one of the stated exceptions. Evaluation of Borrower for Loss Mitigation Assistance (III.A.2.h.iv) (C) Financial Hardship Documentation Mortgagees must obtain the Borrower’s reason for Financial Hardship and documentation, as required in the table below. The Mortgagee may obtain the reason for Financial Hardship verbally, electronically, or in writing. Type of Hardship Required Hardship Documentation Unemployment Not required Reduction in income: a hardship that has caused a decrease in your income due to circumstances outside your control (e.g., elimination of overtime, reduction in regular working hours, a reduction in base pay) Not required Increase in housing-related expenses: a hardship that has caused an increase in your housing expenses due to circumstances outside your control (e.g., uninsured losses, increased property taxes, HOA special assessment) Not required Disaster (natural or man-made) impacting the Property or Borrower's place of employment Not required Long-term or permanent disability, or serious illness of a Borrower/co- Borrower or dependent Family Member Not required Divorce or legal separation Final divorce decree or final separation agreement OR Recorded quitclaim deed Separation of Borrowers unrelated by marriage, civil union, or similar domestic partnership under applicable law Recorded quitclaim deed OR Legally binding agreement evidencing that the non-occupying Borrower or co-Borrower has relinquished all rights to the Property Death of Borrower or death of either the primary or secondary wage earner Death certificate OR Obituary or newspaper article reporting the death Active duty servicemember employment transfer/relocation For active duty servicemembers: Permanent Change of Station (PCS) orders or letter showing transfer Other hardship not listed above Not required unless needed to evidence legal ownership due to the hardship The Mortgagee must review the required documents to identify if the documents indicate that Borrowers or non-borrowers: • have or will have legal ownership of the Property; and • will be included on Loss Mitigation documents for the Permanent Home Retention Option. Loss Mitigation Home Retention Options (III.A.2.i) i. Definitions The Loss Mitigation Home Retention Options are: • Repayment Plans; • Forbearances; • Standalone Partial Claims; • Standalone Loan Modifications; • Combination Loan Modifications and Partial Claims; • Payment Supplements; and • Outside of the Waterfall Loan Modifications (OWLs). Early Default Intervention Tools refer to Repayment Plans and Forbearances. Permanent Home Retention Options refer to Standalone Partial Claims, Standalone Loan Modifications, Combination Loan Modifications and Partial Claims, and Payment Supplements. Arrearages refer to amounts needed to bring the Mortgage current and must only include: • for Repayment Plans, Standalone Partial Claims, and Payment Supplements, principal amounts that are past due; • unpaid accrued interest; • past due escrow amounts and/or Mortgagee advances for escrow items; • projected escrow shortage amount, except for Repayment Plans; and • allowable legal fees and foreclosure and bankruptcy costs for work performed for the current Default episode as of the date of the foreclosure cancellation and not higher than the fees and costs HUD has identified as customary and reasonable. Permanent Home Retention Options – Standard Eligibility (III.A.2.i.iii(A)) (2) Borrower Qualifications The Mortgagee must ensure that the Borrower: • attests that the Default or Imminent Default is due to a Financial Hardship; • attests that they can resume making their current Mortgage Payment or indicates they require payment reduction; • has not executed an agreement for a Permanent Home Retention Option or OWL, where the date of execution on a previous Permanent Home Retention Option occurred in the past 24 months, at the time the Permanent Home Retention Option is executed, except: o a Borrower who received a PDMDA Home Retention Option or a COVID-19 Home Retention Option in the past 24 months remains eligible for a Permanent Home Retention Option or OWL; and o a Borrower who received a Permanent Home Retention Option, OWL, or PDMDA Home Retention Option within the past 24 months remains eligible for a PDMDA Home Retention Option if impacted by a disaster associated with a PDMDA; • completes the Borrower Affordability Attestation for the Permanent Home Retention Option; and • has successfully completed a TPP. Borrower Affordability Attestation (III.A.2.i.iii(B)) (2) Standard The Mortgagee must obtain the Borrower Affordability Attestation either electronically, by hard copy, or verbally for all Permanent Home Retention Options prior to issuing the final documents for the Permanent Home Retention Option. The Mortgagee must ensure: • the Borrower affirms the monthly Mortgage Payment amount offered is affordable; and • the Borrower acknowledges they will not be eligible for another Permanent Home Retention Option, which may provide additional payment reduction, in the 24 months following the execution of the offered Permanent Home Retention Option, except for a PDMDA. If the Mortgagee receives the Borrower Affordability Attestation verbally, the Mortgagee must certify that they have verbally received the Borrower’s attestation and note the name and the phone number of the Borrower that provided the attestation. If the Mortgagee requires an electronic or hard copy of the Borrower Affordability Attestation, the Mortgagee must provide the Borrower 30 Days to return it. If it has not been returned, the Mortgagee must contact the Borrower, at a minimum, twice within the 30-Day period to notify the Borrower that the Borrower Affordability Attestation must be returned within 30 Days. The Mortgagee must receive the Borrower Affordability Attestation from at least one Borrower. If the Borrower Affordability Attestation is not obtained, the Mortgagee must consider the Borrower to be unresponsive, evaluate the Borrower for an OWL, and commence, recommence, or resume foreclosure within 90 Days if the Borrower is ineligible for the OWL. Trial Payment Plan – Standard (III.A.2.i.iii(C)(2)) (b) Trial Payment Terms The Mortgagee must ensure the following terms of the TPP are met: • the TPP does not exceed a period of three consecutive months, four consecutive months for Borrowers in Imminent Default, or six consecutive months for Non-Borrowers Who Acquired Title through an Exempted Transfer; • the payments must be made in, or no more than 15 Days before, the month they are due; • for any Loss Mitigation Option that includes a Loan Modification, the interest rate for the TPP and the permanent Loan Modification is not greater than the Market Rate; o the Market Rate must be established when the TPP is offered; • the monthly payment under the TPP must be the projected monthly Mortgage Payment, after an escrow analysis, for the Permanent Home Retention Option or OWL; and • Late Charges must be waived during the trial payment period if the Borrower is paying as agreed on the TPP. For Borrowers completing a TPP after a default during a Payment Supplement Period, the Mortgagee must: • ensure the amount of the monthly payment during the TPP is the projected monthly Mortgage Payment for the Permanent Home Retention Option or OWL; • for Standalone Partial Claims, continue to apply the Monthly Principal Reduction (MoPR) during the TPP when the Mortgagee has received and accepted, at a minimum, the Borrower’s portion of the Mortgage Payment under the Payment Supplement; and • for Loan Modifications or Combination Loan Modifications and Partial Claims: o not reduce the TPP payment amount by the MoPR; and o apply the MoPR when the Borrower’s portion of the Mortgage Payment due under the Payment Supplement has been received and accepted, including partial payments accumulated during the TPP. Trial Payment Plan Failure (III.A.2.i.iii(C)(5)) (b) Reconsideration for Permanent Home Retention Options After TPP Failure Borrowers who fail an initial TPP for the following Home Retention Options, due to not making a scheduled TPP payment by the last Day of the month the payment was due, are eligible for re-evaluation for a Permanent Home Retention Option: • a Standalone Partial Claim; • a Standalone Loan Modification in lieu of a Partial Claim (calculated using Appendix 4.0, Part C: Borrower Attests They Can Resume Mortgage Payments); or • an OWL. All other Borrowers are ineligible for re-evaluation for a second TPP, but remain eligible to be reviewed for Home Disposition Options. For an eligible Borrower, the Mortgagee must: • re-evaluate the Borrower for a Permanent Home Retention Option, in order, using Appendix 4.0, Part D through Part F; and • if the Permanent Home Retention Option provides at least a $1.00 reduction in the P&I payment from the initial TPP, offer the Borrower one additional TPP for the Permanent Home Retention Option. If the Borrower receives a second TPP, the Mortgagee must report the use of a TPP in SFDMS after the TPP failure for the initial TPP is reported. If a second Permanent Home Retention Option is unable to provide the required P&I reduction or if the Borrower fails a second TPP, the Mortgagee must evaluate the Borrower for Home Disposition Options. Permanent Home Retention Options (III.A.2.i.iii) (D) Execution of Permanent Home Retention Option Documents The Mortgagee must send the Permanent Home Retention documents to the Borrower within 15 Days from the successful completion of a TPP. The Mortgagee must cease all foreclosure related activities upon acceptance of the executed Permanent Home Retention Option Documents. The Mortgagee must ensure that Permanent Home Retention Option documents are executed by all parties necessary to ensure: • HUD’s first lien position is preserved; and • the Agreement is enforceable under state and local law. The Mortgagee must accept the executed Permanent Home Retention Option documents returned within the month of the effective date of the Permanent Home Retention Option, provided the Borrower continues to make Mortgage Payments. The Mortgagee must include a written notification with the Permanent Home Retention Option documents that advises the Borrower: • the Permanent Home Retention Option will be denied if the documents are not returned within the month of the effective date of the Permanent Home Retention Option; • the Permanent Home Retention Option will be denied if the Borrower does not continue to make Mortgage Payments; and • the Permanent Home Retention Option must fully reinstate the Mortgage within the month of the effective date even if the Mortgagee accepts the executed documents after the effective date. If the Borrower fails to return the executed Permanent Home Retention Option documents within the month of the effective date of the Permanent Home Retention Option, the Mortgagee must deny the option. If the Permanent Home Retention Option is denied, the Mortgagee must evaluate the Borrower for the Home Disposition Options. If the Borrower is denied for a Home Disposition Option, the Mortgagee must commence, recommence, or resume foreclosure no later than 90 Days after denial of the Loss Mitigation Option. The Mortgagee must provide a fully executed copy of the Loss Mitigation Agreement documents to the Borrower no later than 15 Days after the documents are accepted by the Mortgagee. Partial Claims (III.A.2.i.iv) (B) Standard The Partial Claim must be secured by a zero interest subordinate promissory Note and Mortgage executed by the Borrower in favor of HUD. The Mortgagee must ensure that any Partial Claim, whether a Standalone Partial Claim or in combination with a Loan Modification, fully reinstates the Mortgage. A Partial Claim offered in combination with a Loan Modification may include an amount used for principal deferment, when required. Mortgagees must perform an escrow analysis to ensure that the delinquent payments to be included in the Partial Claim reflect the actual escrow funds required for those months and adequate funds to pay escrow bills when due to avoid a future escrow shortage without creating a surplus. The minimum Partial Claim amount must be no less than $1,000, except for Partial Claims for Home Retention Options associated with a PDMDA. The Mortgagee must advance funds for the Partial Claim prior to filing a claim for reimbursement. Mortgagees may include an additional monthly payment to the Arrearage amount to allow time for the Borrower to return the executed documents, and to ensure the Partial Claim includes all Arrearages accrued prior to the Borrower resuming Mortgage Payments. No other fees or costs may be included in the Partial Claim. Partial Claims (III.A.2.i.iv) (C) Statutory Maximum for Partial Claims (including Payment Supplement) Statutory Maximum for Partial Claims refers to the total outstanding balance of all Partial Claims and Payment Supplements and must not exceed 30 percent of the Mortgage’s unpaid principal balance, as of the date of Default at the time of payment of the initial Partial Claim and will remain constant for the life of the Mortgage. The total funds available for a Partial Claim must be calculated per Determining the Maximum Funds Available for a Partial Claim (III.A.2.i.iv(E)). When reviewing Borrowers for a Partial Claim, a Streamline Refinance on the same Property and by the same Borrower is not considered a new Mortgage for determining the statutory maximum value for all Partial Claims. Partial Claims (III.A.2.i.iv) (I) Payment of Partial Claim HUD will not require payment on the Partial Claim until the first of the following events occurs: • the maturity of the Mortgage; • the sale or transfer of the Property; except for non-borrowers who acquired title through an exempted transfer; • the assumption of the Mortgage except for non-borrowers who acquired title through an exempted transfer; • the Payoff of the Mortgage, except that HUD will agree to subordinate the Partial Claim Note to a Streamline Refinance; or • if provided for under the Partial Claim Note, the termination of FHA insurance. HUD does not prohibit partial or total payment on the Partial Claim at any time prior to the due date for the Partial Claim. Loan Modifications (III.A.2.i.v) (G) Combination Loan Modification and Partial Claim The Mortgagee must use the calculations in Appendix 4.0 FHA Home Retention Options Calculations, Part E, to determine the loan amount and Partial Claim funds required for a Combination Loan Modification and Partial Claim. The P&I reduction for a Combination Loan Modification and Partial Claim may exceed 25 percent, if required to meet the minimum $1,000 Partial Claim amount. (1) 30-Year Combination Loan Modification and Partial Claim The Mortgagee must determine if a 30-year Combination Loan Modification and Partial Claim can achieve a 25 percent reduction to the P&I portion of the Mortgage Payment. The Mortgagee must ensure the Partial Claim is no more than what is needed to achieve a 25 percent reduction to the P&I and may include principal deferment if required to achieve a 25 percent reduction. If the 25 percent reduction is achieved, the Mortgagee must offer the Borrower a 30-year Combination Loan Modification and Partial Claim. If the 25 percent reduction cannot be achieved, the Mortgagee must review the Borrower for a 40-year Combination Loan Modification and Partial Claim. (2) 40-Year Combination Loan Modification and Partial Claim The Mortgagee must determine if a 40-year Combination Loan Modification and Partial Claim can achieve a 25 percent reduction to the P&I portion of the Mortgage Payment. The Mortgagee must ensure the Partial Claim is no more than what is needed to achieve a 25 percent reduction to the P&I and may include principal deferment if required to achieve a 25 percent reduction. The Mortgagee must offer the 40-year Combination Loan Modification and Partial Claim with the maximum reduction to the P&I portion of the Mortgage Payment that can be achieved up to 25 percent and not less than 15 percent. If a minimum 15 percent reduction to the P&I portion of the Mortgage Payment cannot be achieved, the Mortgagee must review the Borrower for the Payment Supplement. Subsequent Default during Payment Supplement Period (III.A.2.i.vi(J)) (3) Mortgage Reinstatement with Other Permanent Loss Mitigation Option – MoPR Terminates If the Borrower cannot bring the Mortgage current through an additional Standalone Partial Claim, the Mortgagee must: • evaluate the Borrower for the available Permanent Home Retention Options or OWL; • terminate the Payment Supplement and application of the MoPR upon receipt of the new executed loss mitigation documents; • send the Borrower documentation that the Payment Supplement has been terminated and a detailed account of how the Payment Supplement funds were applied; • no later than 30 Days after the date the Payment Supplement was terminated, remit any remaining funds from the Payment Supplement Account to HUD via Pay.gov; and • report the termination of the Payment Supplement through SFDMS. Outside of the Waterfall Loan Modification (III.A.2.i.vii) (B) Eligibility The Mortgagee must ensure that: • the Borrower has been unresponsive to outreach by the Mortgagee during the Default episode; • final documents to complete a Loss Mitigation Option have not been sent to the Borrower during the Default episode; • the Borrower has not executed an agreement for a Permanent Home Retention Option or OWL in the past 24 months at the time the Permanent Home Retention Option is executed, except: o a Borrower who received a PDMDA Home Retention Option or a COVID-19 Home Retention Option in the past 24 months remains eligible for an OWL; and • the OWL at the Market Rate will provide at least a $1.00 reduction to the P&I portion of the Borrower’s monthly Mortgage Payment as of the date the OWL begins; and • the Borrower receives at least one offer for an OWL per Default episode, if eligible. Non-Borrowers Who Acquired Title through an Exempted Transfer are not eligible for the OWL and must be evaluated for the other Permanent Home Retention Options. (1) Mortgage Status The Mortgagee must ensure that: • the Mortgage is 90 or more Days Delinquent; • a minimum of four Mortgage Payments have been paid by the Borrower on the Mortgage, except for Disaster Home Retention Options; • the first legal action to initiate foreclosure has not been completed; and • the Arrearages do not exceed the equivalent of 12 months PITI. (2) Property Condition The Mortgagee must conduct any review it deems necessary, including a property inspection, when: • the Mortgagee receives notice from the Borrower, local government, or other third parties regarding adverse property condition; or • the Property may be affected by a disaster event. If the Mortgagee determines the property condition will adversely impact the long-term use of the Property or ability to support the debt, the Mortgagee is not required to review the Borrower for the OWL. Loss Mitigation Home Retention Options (III.A.2.i) ix. Loss Mitigation Assumption (A) Definition Loss Mitigation Assumption refers to the assumption of personal liability for repayment of the Mortgage in accordance with agreed loss mitigation terms by an occupying non-borrower who will be added to the Mortgage or who has acquired a title interest in a Property securing an FHA-insured Mortgage. (B) Standard The Mortgagee must ensure that the assumptor meets the criteria for approval of a Loss Mitigation Home Retention Option. All assumptors must have a valid SSN or EIN or meet the eligibility requirement exception regarding social security numbers as stated in II.A.1.b.ii(A)(1)(a). The Mortgagee must obtain the signature of each non-borrower assumptor on: • all associated written agreements for the approved Loss Mitigation Option; and • an assumption agreement that conforms with applicable state law for assumption of personal liability for repayment of the Mortgage in accordance with agreed loss mitigation terms. (C) Reporting a Loss Mitigation Assumption The Mortgagee must report Reinstated by Assumptor, Code 21, in SFDMS. DIL Options (III.A.2.j.iii(C)) (3) DIL Exceptions for Borrowers with More than One FHA-Insured Mortgage The Mortgage must obtain a certification from the Borrower that the Borrower does not own any other FHA-insured Property. If the Borrower owns more than one FHA-insured Property, the Mortgagee must submit a request for HUD approval via EVARS to offer a DIL Option to a Borrower who owns more than one FHA-insured Property. Exceptions to Foreclosure Initiation Time Frame (III.A.2.q.i(D)) (3) Loss Mitigation Denial If the Permanent Home Retention Option or OWL is denied, the Mortgagee must evaluate the Borrower for a Home Disposition Option. If the Borrower is denied for a Home Disposition Option, the Mortgagee must commence, recommence, or resume foreclosure no later than 90 Days after denial of the Loss Mitigation Option. HUD provides an automatic 90-Day extension to the initiation of foreclosure timeline in any case in which the Mortgagee needs additional time to comply with the appeals process required by the CFPB Loss Mitigation regulations under RESPA (Regulation X) at 12 CFR § 1024.41. The 90-Day extension begins on the date the Mortgagee denies loss mitigation and sends the Borrower the notice required under CFPB regulations. Assumptions (III.A.3.b) i. Assumability of FHA-Insured Mortgages All FHA-insured Mortgages are assumable. The Mortgagee must not impose, agree to, or enforce legal restrictions on conveyances or assumptions after closing except when: • specifically permitted by HUD regulations; or • the restriction had been specified in a junior lien granted to the Mortgagee after settlement. The Mortgagee must review the mortgage documents to determine what restrictions have been placed on the Mortgage. Anyone assuming an FHA-insured Mortgage must have a valid SSN or EIN or meet the eligibility requirement exception regarding social security numbers as stated in II.A.1.b.ii(A)(1)(a). APPENDIX 4.0 – FHA HOME RETENTION OPTIONS CALCULATIONS (APPLIES TO SERVICING ONLY) (10/01/2025) Part A: Arrearages Step 1 – Calculate the Items to Include in Arrearages Result a. Only applicable for Repayment Plans, Partial Claims, and Payment Supplements, calculate the principal amounts that are past due. $ b. Calculate accrued interest amounts that are past due. $ c. Calculate past due escrow amounts and/or Mortgagee advances for escrow items $ d. Calculate projected escrow shortage amount after completion of an escrow analysis, except for Repayment Plans. $ e. Calculate allowable legal fees and foreclosure and bankruptcy costs for work performed for the current Default episode as of the date of the foreclosure cancellation and not higher than the fees and costs HUD has identified as customary and reasonable. $ Step 2 – Calculate Total Arrearages for Repayment Plans, Partial Claims, and Payment Supplements Result Add amounts in Steps 1.a-e. $ Step 3 – Calculate Total Arrearages for Loan Modifications or Combination Loan Modifications and Partial Claims Result Add amounts in Steps 1.b-e. $ ``` _Authority_: FHA Mortgagee Letter 2025-21 — Mortgagee Letter 2025-21 _Source_: _Snapshot_: `5a4f6f742dde4b35` _Fetched_: 2026-08-29T22:59:34.299262+00:00 --- --- # FNMA Servicing Guide D1-1 — Requests for the Release of Property and/or Charge-Off of a Mortgage Loan **Register slug:** `fnma-svc-d1-1` **Obligation count:** 3 ## Register description Servicing Guide Chapter D1-1 governs borrower requests for release/partial release of property securing a Fannie Mae mortgage loan. ## Obligations #### FNMA Servicing Guide D1-1-01 — Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan **Obligation ID:** `fnma-svc-d1-1-form-236-required-for-release-request` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-event **Operative duty (lender voice):** > To request a review for a release, or partial release, of property > securing a Fannie Mae mortgage loan, the borrower must submit an > Application for Release of Security (Form 236) to [LENDER]. An > application is considered complete when all required documentation and > information, as outlined within the Servicing Guide and Form 236, has > been obtained. When [LENDER] receives a complete application, [LENDER] > must counsel the borrower to consider the costs and benefits of any > action covered by this policy prior to evaluating the request and must > then evaluate each request in accordance with the Guide. **Compliance obligation:** > For every borrower request to release or partially release property securing a Fannie Mae mortgage loan, can [LENDER] evidence receipt of a complete Form 236, pre-evaluation borrower counseling on costs/benefits, and Guide-conforming evaluation? **Verbatim regulator text:** ``` To request a review for a release, or partial release, of property securing a mortgage loan, the borrower must submit an Application for Release of Security (Form 236) to the servicer. ``` _Authority_: FNMA Servicing Guide D1-1-01 _Source_: _Snapshot_: `cf63a82bbb4adfba` _Fetched_: 2026-05-22T23:53:19Z --- #### FNMA Servicing Guide D1-1-01 — Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan **Obligation ID:** `fnma-svc-d1-1-texas-50-a-6-escalation` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-event **Operative duty (lender voice):** > With the exception of eminent domain actions that fall within the > policies in the Servicing Guide, all requests related to Texas Section > 50(a)(6) loans must be escalated to Fannie Mae for review and > decisioning; [LENDER] must submit the complete application and all > required documentation to Fannie Mae's SF CPM division. **Compliance obligation:** > For every borrower release-of-security request on a Texas Section 50(a)(6) Fannie Mae mortgage loan (other than an eminent domain action covered by the Guide), can [LENDER] evidence escalation to Fannie Mae's SF CPM division for non-delegated review? **Verbatim regulator text:** ``` that extenuating circumstances exist, the servicer must submit the request to Fannie Mae for a non-delegated review. ``` _Authority_: FNMA Servicing Guide D1-1-01 _Source_: _Snapshot_: `cf63a82bbb4adfba` _Fetched_: 2026-05-22T23:53:19Z --- #### Fannie Mae Servicing Guide Chapter D1-1 — Requests for the Release of Property and/or Charge-Off of a Mortgage Loan (introduction) **Obligation ID:** `fnma-svc-d1-1-intro` **Verbatim regulator text:** ``` Chapter D1-1, Requests for the Release of Property and/or Charge-Off of a Mortgage Loan Introduction This chapter contains information on requests for the release, of property and/or charge-off of a mortgage loan. ``` _Authority_: Fannie Mae Servicing Guide Chapter D1-1 — Requests for the Release of Property and/or Charge-Off of a Mortgage Loan (introduction) _Source_: _Snapshot_: `cf63a82bbb4adfba` _Fetched_: 2026-05-22T23:53:19Z --- --- # FNMA Servicing Guide D1-4 — Transfers of Ownership **Register slug:** `fnma-svc-d1-4` **Obligation count:** 2 ## Register description Servicing Guide Chapter D1-4 governs enforcement of the due-on-sale/due-on-transfer provision and exempt transactions. ## Obligations #### FNMA Servicing Guide D1-4.1-01 — Determining Whether a Transfer of Ownership Is Permitted **Obligation ID:** `fnma-svc-d1-4-due-on-sale-investigation` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-event **Operative duty (lender voice):** > When [LENDER] receives a request for a statement of account in > connection with a possible transfer of ownership of a property, or if > [LENDER] learns after the fact that a transfer has occurred, [LENDER] > must review the mortgage loan instruments to determine whether the > mortgage loan is subject to enforcement of the due-on-sale (or > due-on-transfer) provision, investigate any questionable changes to > determine whether a transfer of ownership has occurred, and determine > whether any action needs to be taken to enforce the due-on-sale (or > due-on-transfer) provision. **Compliance obligation:** > For every statement-of-account request or after-the-fact transfer discovery on a Fannie Mae mortgage loan, can [LENDER] evidence review of the loan instruments, investigation of any questionable changes, and a documented enforcement determination for the due-on-sale (or due-on-transfer) provision? **Verbatim regulator text:** ``` Review the mortgage loan instruments to determine whether the mortgage loan is subject to enforcement of the due-on-sale (or due-on-transfer) provision. ``` _Authority_: FNMA Servicing Guide D1-4.1-01 _Source_: _Snapshot_: `cf63a82bbb4adfba` _Fetched_: 2026-05-22T23:53:19Z --- #### FNMA Servicing Guide D1-4.1-02 — Allowable Exemptions Due to the Type of Transfer **Obligation ID:** `fnma-svc-d1-4-exempt-transactions-no-approval` **Workflow phase:** servicing **Owner role:** default_servicing_analyst **Cadence:** per-event **Operative duty (lender voice):** > Unless the previous borrower requests a release of liability, [LENDER] > must process exempt transactions (the categories enumerated in > D1-4.1-02, including specified joint-tenant survivorships, junior- > lienholder foreclosures, certain co-borrower transfers, occupant > natural-person transfers, qualifying leasehold interests, certain > subordinate-lien creations, and listed family-member / divorce-decree > / inter vivos trust transfers) without reviewing or approving the > terms of the transfer. **Compliance obligation:** > For every D1-4.1-02 exempt transfer event on a Fannie Mae mortgage loan, can [LENDER] evidence processing without unilateral review/approval of the transfer terms (absent a prior-borrower release-of-liability request)? **Verbatim regulator text:** ``` Unless the previous borrower requests a release of liability, the servicer must process the following exempt ``` _Authority_: FNMA Servicing Guide D1-4.1-02 _Source_: _Snapshot_: `cf63a82bbb4adfba` _Fetched_: 2026-05-22T23:53:19Z --- --- # FNMA Servicing Guide D2-1 — Working with a Borrower Who is Facing Default **Register slug:** `fnma-svc-d2-1` **Obligation count:** 2 ## Register description Servicing Guide Chapter D2-1 governs imminent-default evaluation and the prohibition on soliciting current/<30-day-delinquent borrowers. ## Obligations #### FNMA Servicing Guide D2-1-01 — Determining if the Borrower's Mortgage Payment is in Imminent Default **Obligation ID:** `fnma-svc-d2-1-evaluate-imminent-default` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-event **Operative duty (lender voice):** > [LENDER] must consider available workout options when [LENDER] is > notified or otherwise becomes aware of events or factors that are > expected to cause the borrower's monthly payment to be in default > within the next 90 days ("imminent default"). **Compliance obligation:** > For every Fannie Mae mortgage loan where [LENDER] is notified or aware of factors expected to cause default within 90 days, can [LENDER] evidence consideration of available workout options consistent with D2-1-01? **Verbatim regulator text:** ``` The servicer must consider available workout options when the servicer is notified or otherwise becomes aware of events or factors that are expected to cause the borrower’s monthly payment to be in default within the next 90 days (“imminent default”). ``` _Authority_: FNMA Servicing Guide D2-1-01 _Source_: _Snapshot_: `cf63a82bbb4adfba` _Fetched_: 2026-05-22T23:53:19Z --- #### FNMA Servicing Guide D2-1-01 — Evaluating a Borrower Facing Imminent Default **Obligation ID:** `fnma-svc-d2-1-no-solicit-current-borrowers` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** continuous **Operative duty (lender voice):** > [LENDER] must not solicit borrowers who are current or less than 30 > days delinquent for a workout option. **Compliance obligation:** > Can [LENDER] evidence that no workout-option solicitation was sent to any Fannie Mae borrower who was current or less than 30 days delinquent at the time of the solicitation? **Verbatim regulator text:** ``` The servicer must not solicit borrowers who are current or less than 30 days delinquent for a workout option. ``` _Authority_: FNMA Servicing Guide D2-1-01 _Source_: _Snapshot_: `cf63a82bbb4adfba` _Fetched_: 2026-05-22T23:53:19Z --- --- # FNMA Servicing Guide D2-2 — Requirements for Contacting a Borrower **Register slug:** `fnma-svc-d2-2` **Obligation count:** 5 ## Register description FNMA Servicing Guide D2-2-01 through D2-2-03 govern delinquent- borrower outreach: Quality Right Party Contact (QRPC) achievement requirement, outbound contact timing (begin no later than day 36 of delinquency; every 7 days continuing thereafter), 60-day judicial / 30-day non-judicial pre-foreclosure-sale outbound-contact stop rule, day-20 payment reminder notice rule, and message content requirements for outbound contacts. Fills FNMA Servicing D2-2 gap. ## Obligations #### FNMA Servicing Guide D2-2-01 — Servicer must make every attempt to achieve QRPC **Obligation ID:** `fnma-svc-d2-2-01-must-attempt-qrpc` **Workflow phase:** default_collections **Owner role:** loss_mitigation_specialist **Cadence:** per-delinquency **Operative duty (lender voice):** > [LENDER] (servicer) shall make every attempt to achieve Quality > Right Party Contact (QRPC) with the borrower, co-borrower, or > trusted advisor. The purpose of QRPC is to determine the > delinquency reason, occupancy status, ability to repay, educate > the borrower on workout options, and obtain a commitment to > resolve the delinquency. **Compliance obligation:** > For every delinquent FNMA-owned loan, can [LENDER] evidence (via call logs, outreach records, QRPC achievement flag in servicing system) that every attempt was made to achieve QRPC, and document each QRPC achievement with the 5 required purpose elements covered? **Verbatim regulator text:** ``` The servicer must make every attempt to achieve QRPC. ``` _Authority_: FNMA Servicing Guide D2-2-01 — Achieving Quality Right Party Contact _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Failure to attempt QRPC is a FNMA Servicing Guide breach; reduces workout-option uptake and increases foreclosure risk. --- #### FNMA Servicing Guide D2-2-02 — Begin outbound contact by day 36, continue every 7 days **Obligation ID:** `fnma-svc-d2-2-02-outbound-contact-day-36-every-7-days` **Workflow phase:** default_collections **Owner role:** loss_mitigation_specialist **Cadence:** per-delinquency **Operative duty (lender voice):** > [LENDER] (servicer) shall begin outbound contact attempts no > later than the 36th day of delinquency and shall continue > outbound contact attempts every 7 days until QRPC is achieved > (and/or borrower adheres to a workout agreement), the delinquency > is resolved, a complete Borrower Response Package (BRP) is > received, the borrower has provided a promise to pay (≤30 days), > or QRPC is achieved and the borrower indicates no interest in a > workout option. [LENDER] is authorized but not required to begin > earlier than day 36 (e.g., using behavioral models). **Compliance obligation:** > For every delinquent FNMA loan, can [LENDER] evidence (via servicing-system contact-attempt logs) (a) first outbound contact attempt by day 36 of delinquency, and (b) continued outbound attempts every 7 days until one of the 5 stopping conditions was reached? **Verbatim regulator text:** ``` The servicer must begin outbound contact attempts no later than the 36th day of delinquency and must continue every 7 days until one of the following outcomes is attained: • QRPC is achieved and/or the borrower adheres to any workout option agreement made with the servicer, • the delinquency is resolved, • a complete BRP is received (see D2-2-05, Receiving a Borrower Response Package for information on the requirements for a complete BRP), • the borrower has provided a promise to pay the delinquent amount by a specified date (not to exceed 30 days), or • QRPC is achieved and the borrower indicates that they are not interested in a workout option. ``` _Authority_: FNMA Servicing Guide D2-2-02 — Outbound Contact Attempt Requirements _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Failure to attempt timely outbound contact is a FNMA Servicing Guide breach + state-law early-default-contact exposure. --- #### FNMA Servicing Guide D2-2-02 — Discontinue outbound contact 60/30 days before foreclosure sale **Obligation ID:** `fnma-svc-d2-2-02-discontinue-outbound-before-foreclosure-sale` **Workflow phase:** default_collections **Owner role:** loss_mitigation_specialist **Cadence:** per-foreclosure **Operative duty (lender voice):** > Unless required by applicable law to continue outbound contact > attempts to the delinquent borrower, [LENDER] (servicer) shall > discontinue all outbound contact attempts: (a) 60 days prior to > the judicial foreclosure sale date, or (b) 30 days prior to a > non-judicial foreclosure sale date. The pre-sale outbound-stop > rule prevents harassment-pattern claims while foreclosure > proceedings finalize. **Compliance obligation:** > For every FNMA loan that advanced to foreclosure sale, can [LENDER] evidence (via outbound-contact logs) the last outbound contact attempt occurred at least 60 days before judicial sale or 30 days before non-judicial sale — UNLESS applicable law required continued contact? **Verbatim regulator text:** ``` the servicer must discontinue all outbound contact attempts ``` _Authority_: FNMA Servicing Guide D2-2-02 — Outbound Contact Attempt Requirements _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Continued outbound contact during the no-contact pre-sale window can support harassment / unfair-practices claims. --- #### FNMA Servicing Guide D2-2-02 — Emphasize importance of timely payment during outbound contact **Obligation ID:** `fnma-svc-d2-2-02-emphasize-payment-importance-during-contact` **Workflow phase:** default_collections **Owner role:** loss_mitigation_specialist **Cadence:** per-outbound-attempt **Operative duty (lender voice):** > When [LENDER] (servicer) communicates with the borrower during > outbound contact attempts, [LENDER] shall emphasize the > importance of making payments on or prior to their due dates. > The messaging requirement reinforces FNMA's preference for > payment-current resolution before workout-option escalation. **Compliance obligation:** > Can [LENDER] evidence (via call-script approvals, QA samples of recorded calls, training materials) that outbound-contact messaging consistently emphasizes payment-on-time importance to the borrower? **Verbatim regulator text:** ``` the servicer must emphasize the importance of making payments on or prior to their due dates. ``` _Authority_: FNMA Servicing Guide D2-2-02 — Outbound Contact Attempt Requirements _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Off-message outbound contact scripts undercut FNMA payment-current preference and weaken servicing-performance metrics. --- #### FNMA Servicing Guide D2-2-03 — Send payment reminder notice no later than day 20 **Obligation ID:** `fnma-svc-d2-2-03-payment-reminder-by-day-20` **Workflow phase:** default_collections **Owner role:** chief_servicing_officer **Cadence:** per-late-payment-month **Operative duty (lender voice):** > [LENDER] (servicer) shall send a payment reminder notice to the > borrower no later than the 20th day of the month if the payment > has not been received. Exceptions apply when (a) the mortgage > loan is a second lien mortgage loan (see D2-2-09) or (b) the > borrower is subject to an active forbearance plan (without regard > to whether the plan provides for reduced or suspended payments). > The notice must address the borrower by name, state a desire to > work with the borrower to preserve homeownership, state the > amount of late charges due (if applicable), and explain late- > payment-credit-reporting consequences. **Compliance obligation:** > For every loan where payment was not received in the current month, can [LENDER] evidence a payment-reminder notice was sent by the 20th day of the month? Are exception flags (second lien, active forbearance) recorded for any non-sent notices? **Verbatim regulator text:** ``` The servicer must send a payment reminder notice to the borrower no later than the 20th day of the month if the payment has not been received with the following exceptions: the mortgage loan is a second lien mortgage loan (see D2-2-09, Additional Borrower Contact Requirements for the Servicer of a Second Lien Mortgage Loan), or the borrower is subject to an active forbearance plan (without regard to whether the forbearance plan provides for reduced or suspended payments). ``` _Authority_: FNMA Servicing Guide D2-2-03 — Sending a Payment Reminder Notice _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Missing payment-reminder notice is a FNMA Servicing Guide breach and reduces borrower opportunity to cure before later-stage collection. --- --- # FNMA Servicing Guide D2-3 — Fannie Mae's Home Retention and Liquidation Workout Options **Register slug:** `fnma-svc-d2-3` **Obligation count:** 2 ## Register description Servicing Guide Chapter D2-3 covers the FNMA workout menu and workout-selection governance. ## Obligations #### FNMA Servicing Guide D2-3.1-01 — Determining the Appropriate Workout Option **Obligation ID:** `fnma-svc-d2-3-no-upfront-cash-contribution` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-event **Operative duty (lender voice):** > [LENDER] must not require the borrower to make an upfront cash > contribution to be considered for a workout option on a Fannie Mae > mortgage loan. **Compliance obligation:** > Can [LENDER] evidence that no upfront cash contribution was required from any borrower as a condition of being considered for a Fannie Mae workout option? **Verbatim regulator text:** ``` The servicer must not require the borrower to make an upfront cash contribution to be considered for a workout option. ``` _Authority_: FNMA Servicing Guide D2-3.1-01 _Source_: _Snapshot_: `cf63a82bbb4adfba` _Fetched_: 2026-05-22T23:53:19Z --- #### FNMA Servicing Guide D2-3.1-02 — Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage Loan **Obligation ID:** `fnma-svc-d2-3-no-modify-loan-in-mbs-pool` **Workflow phase:** servicing **Owner role:** loss_mitigation_specialist **Cadence:** per-loss-mit-event **Operative duty (lender voice):** > [LENDER] must not modify a mortgage loan while it is in an MBS pool > (including PFP mortgage loans); performing MBS mortgage loans are > ineligible for purchase from the related MBS pool for the purpose of > modifying the mortgage loan term, interest rate, UPB, or other major > characteristic(s) of the mortgage loan. **Compliance obligation:** > Can [LENDER] evidence that no mortgage loan was modified while still in an MBS pool, and that no performing MBS mortgage loan was purchased from its pool for the purpose of modifying its term, rate, UPB, or other major characteristic? **Verbatim regulator text:** ``` The servicer must not modify a mortgage loan while it is in an MBS pool (including PFP mortgage loans). ``` _Authority_: FNMA Servicing Guide D2-3.1-02 _Source_: _Snapshot_: `cf63a82bbb4adfba` _Fetched_: 2026-05-22T23:53:19Z --- --- # FNMA Servicing Guide D2-3.1 — Determining the Appropriate Workout Option / Conditions for MBS Pool Modification / Group Home Servicing **Register slug:** `fnma-svc-d2-3-1` **Obligation count:** 5 ## Register description FNMA Servicing Guide D2-3.1-02 and D2-3.1-03 govern operational rules for workout options on MBS-pool mortgage loans and group home mortgage loans: no-modify-while-in-MBS-pool rule, 4- consecutive-month delinquency precondition for special-servicing MBS removal, Trial Period Plan payment precondition for modification implementation, modification-effective-only-after- MBS-removal rule, and group-home foreclosure-prevention duty requiring work with the funding agency. Fills FNMA Servicing D2- 3.1 chapter gap. ## Obligations #### FNMA Servicing Guide D2-3.1-02 — No mortgage modification while loan is in an MBS pool **Obligation ID:** `fnma-svc-d2-3-1-02-no-modify-while-in-mbs-pool` **Workflow phase:** loss_mitigation **Owner role:** loss_mitigation_specialist **Cadence:** per-mbs-modification **Operative duty (lender voice):** > [LENDER] (servicer) shall NOT modify a mortgage loan while it is > in an MBS pool (including PFP mortgage loans). Performing MBS > mortgage loans are ineligible for purchase from the related MBS > pool for the purpose of modifying the mortgage loan term, > interest rate, UPB, or other major characteristics. The MBS- > structural constraint prevents pool-level investor interest > dilution via loan-level modifications. **Compliance obligation:** > For every FNMA-MBS mortgage loan modification [LENDER] executed, can [LENDER] evidence that the loan was REMOVED from the MBS pool before the modification was executed? **Verbatim regulator text:** ``` The servicer must not modify a mortgage loan while it is in an MBS pool (including PFP mortgage loans). ``` _Authority_: FNMA Servicing Guide D2-3.1-02 — Conditions of MBS Mortgage Loan Modification _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Modification of an in-pool MBS mortgage loan is a foundational MBS-structural breach; may trigger pool-level investor claims and FNMA enforcement. --- #### FNMA Servicing Guide D2-3.1-02 — 4-consecutive-month delinquency precondition for special-servicing MBS removal **Obligation ID:** `fnma-svc-d2-3-1-02-mbs-removal-4-consecutive-month-delinquency` **Workflow phase:** loss_mitigation **Owner role:** investor_reporting_manager **Cadence:** per-mbs-removal **Operative duty (lender voice):** > [LENDER] (servicer) may remove a special-servicing-option > mortgage loan from its MBS pool for modification only if the > mortgage loan has been in a continuous state of delinquency for > four consecutive monthly payment due dates (or at least eight > consecutive payment due dates in the case of a biweekly mortgage > loan) without a full cure of the delinquency during that period. > The bright-line delinquency-duration threshold prevents premature > pool removal. **Compliance obligation:** > For every special-servicing-option MBS loan [LENDER] removed from its pool for modification, can [LENDER] evidence (a) 4 consecutive monthly delinquency due dates (or 8 biweekly) and (b) no full cure during that period? **Verbatim regulator text:** ``` if a special servicing option mortgage loan has been in a continuous state of delinquency for four consecutive monthly payment due dates (or at least eight consecutive payment due dates in the case of a biweekly mortgage loan) without a full cure of the delinquency during that period, then the mortgage loan may be modified after it is removed from the MBS pool. ``` _Authority_: FNMA Servicing Guide D2-3.1-02 — Conditions of MBS Mortgage Loan Modification _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Pool removal without the 4-consecutive-delinquency precondition is a FNMA Servicing Guide breach. --- #### FNMA Servicing Guide D2-3.1-02 — Modification not implemented if Trial Period Plan payments not made **Obligation ID:** `fnma-svc-d2-3-1-02-trial-period-payments-precondition` **Workflow phase:** loss_mitigation **Owner role:** loss_mitigation_specialist **Cadence:** per-modification **Operative duty (lender voice):** > [LENDER] (servicer) shall ensure that the mortgage loan > modification is NOT implemented if the required Trial Period > Plan payments are not made in accordance with the applicable > mortgage loan modification workout option, because the > preconditions to make the modification effective have not been > satisfied. The Trial Period Plan payment record is the operative > gate for permanent modification. **Compliance obligation:** > For every mortgage loan modification [LENDER] implemented, can [LENDER] evidence that all required Trial Period Plan payments were made per the workout-option terms before modification documents were executed? **Verbatim regulator text:** ``` The servicer must ensure that the mortgage loan modification is not implemented if the required Trial Period Plan payments are not made in accordance with the applicable mortgage loan modification workout option, since the preconditions to make the mortgage loan modification effective have not been satisfied. ``` _Authority_: FNMA Servicing Guide D2-3.1-02 — Conditions of MBS Mortgage Loan Modification _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Implementing a modification on a borrower who did not complete Trial Period Plan payments is a FNMA Servicing Guide breach. --- #### FNMA Servicing Guide D2-3.1-02 — Mortgage loan modification not effective while in MBS pool **Obligation ID:** `fnma-svc-d2-3-1-02-modification-not-effective-while-in-pool` **Workflow phase:** loss_mitigation **Owner role:** investor_reporting_manager **Cadence:** per-modification **Operative duty (lender voice):** > [LENDER] (servicer) shall ensure that a mortgage loan > modification does NOT become effective while it remains in an > MBS pool. The modification agreement must be executed after the > mortgage loan has been removed from any MBS pool and reclassified > as a Fannie Mae portfolio mortgage loan, and must reflect the > actual date of [LENDER]'s execution. **Compliance obligation:** > For every mortgage loan modification, can [LENDER] evidence (a) the loan was removed from any MBS pool and reclassified as a portfolio loan BEFORE the modification agreement was executed, and (b) the agreement reflects the actual execution date? **Verbatim regulator text:** ``` The servicer must ensure that a mortgage loan modification does not become effective while it remains in an MBS pool. ``` _Authority_: FNMA Servicing Guide D2-3.1-02 — Conditions of MBS Mortgage Loan Modification _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Effecting a modification while loan is still in an MBS pool is a foundational MBS-structural breach. --- #### FNMA Servicing Guide D2-3.1-03 — Group home delinquency: work with funding agency to resolve **Obligation ID:** `fnma-svc-d2-3-1-03-group-home-work-with-funding-agency` **Workflow phase:** loss_mitigation **Owner role:** loss_mitigation_specialist **Cadence:** per-group-home-delinquency **Operative duty (lender voice):** > For mortgage loans where the property securing the mortgage loan > serves as a group home, [LENDER] (servicer) shall work with the > borrower AND the funding agency to resolve a serious delinquency. > [LENDER] shall devote additional resources to foreclosure > prevention efforts when the group home is still occupied by > disabled tenants and, if appropriate, delay the initiation of > foreclosure. The group-home rule recognizes the vulnerable- > population housing-protection context. **Compliance obligation:** > For every group-home mortgage loan delinquency, can [LENDER] evidence (a) outreach to BOTH the borrower and the funding agency, (b) additional foreclosure-prevention resources devoted, and (c) any foreclosure-initiation delays when disabled tenants still occupy? **Verbatim regulator text:** ``` must work with the borrower and the funding agency to resolve a serious delinquency; and devote additional resources to foreclosure prevention efforts when the group home that secures a delinquent mortgage loan is still being occupied by disabled tenants and, if appropriate, delay the initiation of foreclosure. ``` _Authority_: FNMA Servicing Guide D2-3.1-03 — Working with a Borrower that has a Group Home Mortgage Loan _Source_: _Snapshot_: `f662f911b3ddaf1d` _Fetched_: 2026-05-25T14:09:40Z **Consequence of non-compliance:** Standard-track foreclosure on a group home with disabled occupants creates fair-housing and FNMA-program-specific exposure. --- --- # 12 CFR §1024.41 — Loss mitigation procedures **Register slug:** `reg-x-1024.41` **Obligation count:** 18 ## Register description Regulation X §1024.41 sets the loss-mitigation procedural framework for mortgage servicers: acknowledgment of receipt, 30-day evaluation of complete applications, denial-reason disclosures, 14-day appeal rights, the 120-day pre-foreclosure-referral hold, and the prohibition on foreclosure judgment/sale during evaluation (the anti-dual-tracking rules). ## Obligations #### 12 CFR §1024.41(a) **Obligation ID:** `reg-x-1024.41-a` **Operative duty (lender voice):** > (a): (a) Enforcement and limitations. A borrower may enforce the provisions of this section pursuant to section 6(f) of RESPA (12 U.S.C. 2605(f)). Nothing in § 1024.41 imposes a duty on a servicer to provide any borrower with any specific loss mitigation option. Nothing in § 1024.41 should be construed t… **Verbatim regulator text:** ``` (a) Enforcement and limitations. A borrower may enforce the provisions of this section pursuant to section 6(f) of RESPA (12 U.S.C. 2605(f)). Nothing in § 1024.41 imposes a duty on a servicer to provide any borrower with any specific loss mitigation option. Nothing in § 1024.41 should be construed to create a right for a borrower to enforce the terms of any agreement between a servicer and the owner or assignee of a mortgage loan, including with respect to the evaluation for, or offer of, any loss mitigation option or to eliminate any such right that may exist pursuant to applicable law. ``` _Authority_: 12 CFR §1024.41(a) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(b) **Obligation ID:** `reg-x-1024.41-b` **Operative duty (lender voice):** > (b): (b) Receipt of a loss mitigation application—(1) Complete loss mitigation application. A complete loss mitigation application means an application in connection with which a servicer has received all the information that the servicer requires from a borrower in evaluating applications for the loss m… **Verbatim regulator text:** ``` (b) Receipt of a loss mitigation application—(1) Complete loss mitigation application. A complete loss mitigation application means an application in connection with which a servicer has received all the information that the servicer requires from a borrower in evaluating applications for the loss mitigation options available to the borrower. A servicer shall exercise reasonable diligence in obtaining documents and information to complete a loss mitigation application. (2) Review of loss mitigation application submission—(i) Requirements. If a servicer receives a loss mitigation application 45 days or more before a foreclosure sale, a servicer shall: (A) Promptly upon receipt of a loss mitigation application, review the loss mitigation application to determine if the loss mitigation application is complete; and (B) Notify the borrower in writing within 5 days (excluding legal public holidays, Saturdays, and Sundays) after receiving the loss mitigation application that the servicer acknowledges receipt of the loss mitigation application and that the servicer has determined that the loss mitigation application is either complete or incomplete. If a loss mitigation application is incomplete, the notice shall state the additional documents and information the borrower must submit to make the loss mitigation application complete and the applicable date pursuant to paragraph (b)(2)(ii) of this section. The notice to the borrower shall include a statement that the borrower should consider contacting servicers of any other mortgage loans secured by the same property to discuss available loss mitigation options. (ii) Time period disclosure. The notice required pursuant to paragraph (b)(2)(i)(B) of this section must include a reasonable date by which the borrower should submit the documents and information necessary to make the loss mitigation application complete. (3) Determining protections. To the extent a determination of whether protections under this section apply to a borrower is made on the basis of the number of days between when a complete loss mitigation application is received and when a foreclosure sale occurs, such determination shall be made as of the date a complete loss mitigation application is received. ``` _Authority_: 12 CFR §1024.41(b) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(c)(1) **Obligation ID:** `reg-x-1024.41-c-1` **Operative duty (lender voice):** > (c)(1): (c) Evaluation of loss mitigation applications—(1) Complete loss mitigation application. Except as provided in paragraph (c)(4)(ii) of this section, if a servicer receives a complete loss mitigation application more than 37 days before a foreclosure sale, then, within 30 days of receiving the comple… **Verbatim regulator text:** ``` (c) Evaluation of loss mitigation applications—(1) Complete loss mitigation application. Except as provided in paragraph (c)(4)(ii) of this section, if a servicer receives a complete loss mitigation application more than 37 days before a foreclosure sale, then, within 30 days of receiving the complete loss mitigation application, a servicer shall: (i) Evaluate the borrower for all loss mitigation options available to the borrower; and (ii) Provide the borrower with a notice in writing stating the servicer's determination of which loss mitigation options, if any, it will offer to the borrower on behalf of the owner or assignee of the mortgage. The servicer shall include in this notice the amount of time the borrower has to accept or reject an offer of a loss mitigation program as provided for in paragraph (e) of this section, if applicable, and a notification, if applicable, that the borrower has the right to appeal the denial of any loan modification option as well as the amount of time the borrower has to file such an appeal and any requirements for making an appeal, as provided for in paragraph (h) of this section. ``` _Authority_: 12 CFR §1024.41(c)(1) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(c)(2)(i) **Obligation ID:** `reg-x-1024.41-c-2-i` **Operative duty (lender voice):** > (c)(2)(i): (2) Incomplete loss mitigation application evaluation—(i) In general. Except as set forth in paragraphs (c)(2)(ii), (iii), and (v) of this section, a servicer shall not evade the requirement to evaluate a complete loss mitigation application for all loss mitigation options available to the borrower… **Verbatim regulator text:** ``` (2) Incomplete loss mitigation application evaluation—(i) In general. Except as set forth in paragraphs (c)(2)(ii), (iii), and (v) of this section, a servicer shall not evade the requirement to evaluate a complete loss mitigation application for all loss mitigation options available to the borrower by offering a loss mitigation option based upon an evaluation of any information provided by a borrower in connection with an incomplete loss mitigation application. ``` _Authority_: 12 CFR §1024.41(c)(2)(i) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(c)(2)(ii) **Obligation ID:** `reg-x-1024.41-c-2-ii` **Operative duty (lender voice):** > (c)(2)(ii): (ii) Reasonable time. Notwithstanding paragraph (c)(2)(i) of this section, if a servicer has exercised reasonable diligence in obtaining documents and information to complete a loss mitigation application, but a loss mitigation application remains incomplete for a significant period of time under th… **Verbatim regulator text:** ``` (ii) Reasonable time. Notwithstanding paragraph (c)(2)(i) of this section, if a servicer has exercised reasonable diligence in obtaining documents and information to complete a loss mitigation application, but a loss mitigation application remains incomplete for a significant period of time under the circumstances without further progress by a borrower to make the loss mitigation application complete, a servicer may, in its discretion, evaluate an incomplete loss mitigation application and offer a borrower a loss mitigation option. Any such evaluation and offer is not subject to the requirements of this section and shall not constitute an evaluation of a single complete loss mitigation application for purposes of paragraph (i) of this section. ``` _Authority_: 12 CFR §1024.41(c)(2)(ii) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(c)(2)(iii) **Obligation ID:** `reg-x-1024.41-c-2-iii` **Operative duty (lender voice):** > (c)(2)(iii): (iii) Short-term loss mitigation options. Notwithstanding paragraph (c)(2)(i) of this section, a servicer may offer a short-term payment forbearance program or a short-term repayment plan to a borrower based upon an evaluation of an incomplete loss mitigation application. Promptly after offering a p… **Verbatim regulator text:** ``` (iii) Short-term loss mitigation options. Notwithstanding paragraph (c)(2)(i) of this section, a servicer may offer a short-term payment forbearance program or a short-term repayment plan to a borrower based upon an evaluation of an incomplete loss mitigation application. Promptly after offering a payment forbearance program or a repayment plan under this paragraph (c)(2)(iii), unless the borrower has rejected the offer, the servicer must provide the borrower a written notice stating the specific payment terms and duration of the program or plan, that the servicer offered the program or plan based on an evaluation of an incomplete application, that other loss mitigation options may be available, and that the borrower has the option to submit a complete loss mitigation application to receive an evaluation for all loss mitigation options available to the borrower regardless of whether the borrower accepts the program or plan. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, and shall not move for foreclosure judgment or order of sale or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of a payment forbearance program or repayment plan offered pursuant to this paragraph (c)(2)(iii). A servicer may offer a short-term payment forbearance program in conjunction with a short-term repayment plan pursuant to this paragraph (c)(2)(iii). ``` _Authority_: 12 CFR §1024.41(c)(2)(iii) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(c)(2)(iv) **Obligation ID:** `reg-x-1024.41-c-2-iv` **Operative duty (lender voice):** > (c)(2)(iv): (iv) Facially complete application. A loss mitigation application shall be considered facially complete when a borrower submits all the missing documents and information as stated in the notice required under paragraph (b)(2)(i)(B) of this section, when no additional information is requested in such… **Verbatim regulator text:** ``` (iv) Facially complete application. A loss mitigation application shall be considered facially complete when a borrower submits all the missing documents and information as stated in the notice required under paragraph (b)(2)(i)(B) of this section, when no additional information is requested in such notice, or once the servicer is required to provide the borrower a written notice pursuant to paragraph (c)(3)(i) of this section. If the servicer later discovers that additional information or corrections to a previously submitted document are required to complete the application, the servicer must promptly request the missing information or corrected documents and treat the application as complete for the purposes of paragraphs (f)(2) and (g) of this section until the borrower is given a reasonable opportunity to complete the application. If the borrower completes the application within this period, the application shall be considered complete as of the date it first became facially complete, for the purposes of paragraphs (d), (e), (f)(2), (g), and (h) of this section, and as of the date the application was actually complete for the purposes of this paragraph (c). A servicer that complies with this paragraph (c)(2)(iv) will be deemed to have fulfilled its obligation to provide an accurate notice under paragraph (b)(2)(i)(B) of this section. ``` _Authority_: 12 CFR §1024.41(c)(2)(iv) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(c)(2)(v) **Obligation ID:** `reg-x-1024.41-c-2-v` **Operative duty (lender voice):** > (c)(2)(v): (v) Certain COVID-19-related loss mitigation options. (A) Notwithstanding paragraph (c)(2)(i) of this section, a servicer may offer a borrower a loss mitigation option based upon evaluation of an incomplete application, provided that all of the following criteria are met: (1) The loss mitigation opt… **Verbatim regulator text:** ``` (v) Certain COVID-19-related loss mitigation options. (A) Notwithstanding paragraph (c)(2)(i) of this section, a servicer may offer a borrower a loss mitigation option based upon evaluation of an incomplete application, provided that all of the following criteria are met: (1) The loss mitigation option permits the borrower to delay paying covered amounts until the mortgage loan is refinanced, the mortgaged property is sold, the term of the mortgage loan ends, or, for a mortgage loan insured by the Federal Housing Administration, the mortgage insurance terminates. For purposes of this paragraph (c)(2)(v)(A)(1), “covered amounts” includes, without limitation, all principal and interest payments forborne under a payment forbearance program made available to borrowers experiencing a COVID-19-related hardship, including a payment forbearance program made pursuant to the Coronavirus Economic Stabilization Act, section 4022 (15 U.S.C. 9056); it also includes, without limitation, all other principal and interest payments that are due and unpaid by a borrower experiencing COVID-19-related hardship. For purposes of this paragraph (c)(2)(v)(A)(1), “the term of the mortgage loan” means the term of the mortgage loan according to the obligation between the parties in effect when the borrower is offered the loss mitigation option. (2) Any amounts that the borrower may delay paying as described in paragraph (c)(2)(v)(A)(1) of this section do not accrue interest; the servicer does not charge any fee in connection with the loss mitigation option; and the servicer waives all existing late charges, penalties, stop payment fees, or similar charges promptly upon the borrower's acceptance of the loss mitigation option. (3) The borrower's acceptance of an offer made pursuant to paragraph (c)(2)(v)(A) of this section ends any pre-existing delinquency on the mortgage loan. (B) Once the borrower accepts an offer made pursuant to paragraph (c)(2)(v)(A) of this section, the servicer is not required to comply with paragraph (b)(1) or (2) of this section with regard to any loss mitigation application the borrower submitted prior to the servicer's offer of the loss mitigation option described in paragraph (c)(2)(v)(A) of this section. ``` _Authority_: 12 CFR §1024.41(c)(2)(v) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(c)(3) **Obligation ID:** `reg-x-1024.41-c-3` **Operative duty (lender voice):** > (c)(3): (3) Notice of complete application. (i) Except as provided in paragraph (c)(3)(ii) of this section, within 5 days (excluding legal public holidays, Saturdays, and Sundays) after receiving a borrower's complete loss mitigation application, a servicer shall provide the borrower a written notice that s… **Verbatim regulator text:** ``` (3) Notice of complete application. (i) Except as provided in paragraph (c)(3)(ii) of this section, within 5 days (excluding legal public holidays, Saturdays, and Sundays) after receiving a borrower's complete loss mitigation application, a servicer shall provide the borrower a written notice that sets forth the following information: (A) That the loss mitigation application is complete; (B) The date the servicer received the complete application; (C) That the servicer expects to complete its evaluation within 30 days of the date it received the complete application; (D) That the borrower is entitled to certain foreclosure protections because the servicer has received the complete application, and, as applicable, either: (1) If the servicer has not made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, that the servicer cannot make the first notice or filing required to commence or initiate the foreclosure process under applicable law before evaluating the borrower's complete application; or (2) If the servicer has made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, that the servicer has begun the foreclosure process, and that the servicer cannot conduct a foreclosure sale before evaluating the borrower's complete application; (E) That the servicer may need additional information at a later date to evaluate the application, in which case the servicer will request that information from the borrower and give the borrower a reasonable opportunity to submit it, the evaluation process may take longer, and the foreclosure protections could end if the servicer does not receive the information as requested; and (F) That the borrower may be entitled to additional protections under State or Federal law. (ii) A servicer is not required to provide a notice pursuant to paragraph (c)(3)(i) of this section if: (A) The servicer has already provided the borrower a notice under paragraph (b)(2)(i)(B) of this section informing the borrower that the application is complete and the servicer has not subsequently requested additional information or a corrected version of a previously submitted document from the borrower pursuant to paragraph (c)(2)(iv) of this section; (B) The application was not complete or facially complete more than 37 days before a foreclosure sale; or (C) The servicer has already provided the borrower a notice regarding the application under paragraph (c)(1)(ii) of this section. ``` _Authority_: 12 CFR §1024.41(c)(3) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(c)(4) **Obligation ID:** `reg-x-1024.41-c-4` **Operative duty (lender voice):** > (c)(4): (4) Information not in the borrower's control—(i) Reasonable diligence. If a servicer requires documents or information not in the borrower's control to determine which loss mitigation options, if any, it will offer to the borrower, the servicer must exercise reasonable diligence in obtaining such d… **Verbatim regulator text:** ``` (4) Information not in the borrower's control—(i) Reasonable diligence. If a servicer requires documents or information not in the borrower's control to determine which loss mitigation options, if any, it will offer to the borrower, the servicer must exercise reasonable diligence in obtaining such documents or information. (ii) Effect in case of delay. (A)(1) Except as provided in paragraph (c)(4)(ii)(A)(2) of this section, a servicer must not deny a complete loss mitigation application solely because the servicer lacks required documents or information not in the borrower's control. (2) If a servicer has exercised reasonable diligence to obtain required documents or information from a party other than the borrower or the servicer, but the servicer has been unable to obtain such documents or information for a significant period of time following the 30-day period identified in paragraph (c)(1) of this section, and the servicer, in accordance with applicable requirements established by the owner or assignee of the borrower's mortgage loan, is unable to determine which loss mitigation options, if any, it will offer the borrower without such documents or information, the servicer may deny the application and provide the borrower with a written notice in accordance with paragraph (c)(1)(ii) of this section. When providing the written notice in accordance with paragraph (c)(1)(ii) of this section, the servicer must also provide the borrower with a copy of the written notice required by paragraph (c)(4)(ii)(B) of this section. (B) If a servicer is unable to make a determination within the 30-day period identified in paragraph (c)(1) of this section as to which loss mitigation options, if any, it will offer to the borrower because the servicer lacks required documents or information from a party other than the borrower or the servicer, the servicer must, within such 30-day period or promptly thereafter, provide the borrower a written notice, informing the borrower: (1) That the servicer has not received documents or information not in the borrower's control that the servicer requires to determine which loss mitigation options, if any, it will offer to the borrower on behalf of the owner or assignee of the mortgage; (2) Of the specific documents or information that the servicer lacks; (3) That the servicer has requested such documents or information; and (4) That the servicer will complete its evaluation of the borrower for all available loss mitigation options promptly upon receiving the documents or information. (C) If a servicer must provide a notice required by paragraph (c)(4)(ii)(B) of this section, the servicer must not provide the borrower a written notice pursuant to paragraph (c)(1)(ii) of this section until the servicer receives the required documents or information referenced in paragraph (c)(4)(ii)(B)(2) of this section, except as provided in paragraph (c)(4)(ii)(A)(2) of this section. Upon receiving such required documents or information, the servicer must promptly provide the borrower with the written notice pursuant to paragraph (c)(1)(ii) of this section. ``` _Authority_: 12 CFR §1024.41(c)(4) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(d) **Obligation ID:** `reg-x-1024.41-d` **Operative duty (lender voice):** > (d): (d) Denial of loan modification options. If a borrower's complete loss mitigation application is denied for any trial or permanent loan modification option available to the borrower pursuant to paragraph (c) of this section, a servicer shall state in the notice sent to the borrower pursuant to parag… **Verbatim regulator text:** ``` (d) Denial of loan modification options. If a borrower's complete loss mitigation application is denied for any trial or permanent loan modification option available to the borrower pursuant to paragraph (c) of this section, a servicer shall state in the notice sent to the borrower pursuant to paragraph (c)(1)(ii) of this section the specific reason or reasons for the servicer's determination for each such trial or permanent loan modification option and, if applicable, that the borrower was not evaluated on other criteria. ``` _Authority_: 12 CFR §1024.41(d) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(e) **Obligation ID:** `reg-x-1024.41-e` **Operative duty (lender voice):** > (e): (e) Borrower response—(1) In general. Subject to paragraphs (e)(2)(ii) and (iii) of this section, if a complete loss mitigation application is received 90 days or more before a foreclosure sale, a servicer may require that a borrower accept or reject an offer of a loss mitigation option no earlier t… **Verbatim regulator text:** ``` (e) Borrower response—(1) In general. Subject to paragraphs (e)(2)(ii) and (iii) of this section, if a complete loss mitigation application is received 90 days or more before a foreclosure sale, a servicer may require that a borrower accept or reject an offer of a loss mitigation option no earlier than 14 days after the servicer provides the offer of a loss mitigation option to the borrower. If a complete loss mitigation application is received less than 90 days before a foreclosure sale, but more than 37 days before a foreclosure sale, a servicer may require that a borrower accept or reject an offer of a loss mitigation option no earlier than 7 days after the servicer provides the offer of a loss mitigation option to the borrower. (2) Rejection—(i) In general. Except as set forth in paragraphs (e)(2)(ii) and (iii) of this section, a servicer may deem a borrower that has not accepted an offer of a loss mitigation option within the deadline established pursuant to paragraph (e)(1) of this section to have rejected the offer of a loss mitigation option. (ii) Trial Loan Modification Plan. A borrower who does not satisfy the servicer's requirements for accepting a trial loan modification plan, but submits the payments that would be owed pursuant to any such plan within the deadline established pursuant to paragraph (e)(1) of this section, shall be provided a reasonable period of time to fulfill any remaining requirements of the servicer for acceptance of the trial loan modification plan beyond the deadline established pursuant to paragraph (e)(1) of this section. (iii) Interaction with appeal process. If a borrower makes an appeal pursuant to paragraph (h) of this section, the borrower's deadline for accepting a loss mitigation option offered pursuant to paragraph (c)(1)(ii) of this section shall be extended until 14 days after the servicer provides the notice required pursuant to paragraph (h)(4) of this section. ``` _Authority_: 12 CFR §1024.41(e) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(f) **Obligation ID:** `reg-x-1024.41-f` **Operative duty (lender voice):** > (f): (f) Prohibition on foreclosure referral—(1) Pre-foreclosure review period. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless: (i) A borrower's mortgage loan obligation is more than 120 days delinquent; (ii) The… **Verbatim regulator text:** ``` (f) Prohibition on foreclosure referral—(1) Pre-foreclosure review period. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless: (i) A borrower's mortgage loan obligation is more than 120 days delinquent; (ii) The foreclosure is based on a borrower's violation of a due-on-sale clause; or (iii) The servicer is joining the foreclosure action of a superior or subordinate lienholder. (2) Application received before foreclosure referral. If a borrower submits a complete loss mitigation application during the pre-foreclosure review period set forth in paragraph (f)(1) of this section or before a servicer has made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process, a servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless: (i) The servicer has sent the borrower a notice pursuant to paragraph (c)(1)(ii) of this section that the borrower is not eligible for any loss mitigation option and the appeal process in paragraph (h) of this section is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower's appeal has been denied; (ii) The borrower rejects all loss mitigation options offered by the servicer; or (iii) The borrower fails to perform under an agreement on a loss mitigation option. ``` _Authority_: 12 CFR §1024.41(f) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(g) **Obligation ID:** `reg-x-1024.41-g` **Operative duty (lender voice):** > (g): (g) Prohibition on foreclosure sale. If a borrower submits a complete loss mitigation application after a servicer has made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process but more than 37 days before a foreclosure sale, a servicer shall not… **Verbatim regulator text:** ``` (g) Prohibition on foreclosure sale. If a borrower submits a complete loss mitigation application after a servicer has made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process but more than 37 days before a foreclosure sale, a servicer shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, unless: (1) The servicer has sent the borrower a notice pursuant to paragraph (c)(1)(ii) of this section that the borrower is not eligible for any loss mitigation option and the appeal process in paragraph (h) of this section is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower's appeal has been denied; (2) The borrower rejects all loss mitigation options offered by the servicer; or (3) The borrower fails to perform under an agreement on a loss mitigation option. ``` _Authority_: 12 CFR §1024.41(g) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(h) **Obligation ID:** `reg-x-1024.41-h` **Operative duty (lender voice):** > (h): (h) Appeal process—(1) Appeal process required for loan modification denials. If a servicer receives a complete loss mitigation application 90 days or more before a foreclosure sale or during the period set forth in paragraph (f) of this section, a servicer shall permit a borrower to appeal the serv… **Verbatim regulator text:** ``` (h) Appeal process—(1) Appeal process required for loan modification denials. If a servicer receives a complete loss mitigation application 90 days or more before a foreclosure sale or during the period set forth in paragraph (f) of this section, a servicer shall permit a borrower to appeal the servicer's determination to deny a borrower's loss mitigation application for any trial or permanent loan modification program available to the borrower. (2) Deadlines. A servicer shall permit a borrower to make an appeal within 14 days after the servicer provides the offer of a loss mitigation option to the borrower pursuant to paragraph (c)(1)(ii) of this section. (3) Independent evaluation. An appeal shall be reviewed by different personnel than those responsible for evaluating the borrower's complete loss mitigation application. (4) Appeal determination. Within 30 days of a borrower making an appeal, the servicer shall provide a notice to the borrower stating the servicer's determination of whether the servicer will offer the borrower a loss mitigation option based upon the appeal and, if applicable, how long the borrower has to accept or reject such an offer or a prior offer of a loss mitigation option. A servicer may require that a borrower accept or reject an offer of a loss mitigation option after an appeal no earlier than 14 days after the servicer provides the notice to a borrower. A servicer's determination under this paragraph is not subject to any further appeal. ``` _Authority_: 12 CFR §1024.41(h) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(i) **Obligation ID:** `reg-x-1024.41-i` **Operative duty (lender voice):** > (i): (i) Duplicative requests. A servicer must comply with the requirements of this section for a borrower's loss mitigation application, unless the servicer has previously complied with the requirements of this section for a complete loss mitigation application submitted by the borrower and the borrower… **Verbatim regulator text:** ``` (i) Duplicative requests. A servicer must comply with the requirements of this section for a borrower's loss mitigation application, unless the servicer has previously complied with the requirements of this section for a complete loss mitigation application submitted by the borrower and the borrower has been delinquent at all times since submitting the prior complete application. ``` _Authority_: 12 CFR §1024.41(i) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(j) **Obligation ID:** `reg-x-1024.41-j` **Operative duty (lender voice):** > (j): (j) Small servicer requirements. A small servicer shall be subject to the prohibition on foreclosure referral in paragraph (f)(1) of this section. A small servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process and shall not… **Verbatim regulator text:** ``` (j) Small servicer requirements. A small servicer shall be subject to the prohibition on foreclosure referral in paragraph (f)(1) of this section. A small servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process and shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of an agreement on a loss mitigation option. ``` _Authority_: 12 CFR §1024.41(j) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- #### 12 CFR §1024.41(k) **Obligation ID:** `reg-x-1024.41-k` **Operative duty (lender voice):** > (k): (k) Servicing transfers—(1) In general—(i) Timing of compliance. Except as provided in paragraphs (k)(2) through (4) of this section, if a transferee servicer acquires the servicing of a mortgage loan for which a loss mitigation application is pending as of the transfer date, the transferee servicer… **Verbatim regulator text:** ``` (k) Servicing transfers—(1) In general—(i) Timing of compliance. Except as provided in paragraphs (k)(2) through (4) of this section, if a transferee servicer acquires the servicing of a mortgage loan for which a loss mitigation application is pending as of the transfer date, the transferee servicer must comply with the requirements of this section for that loss mitigation application within the timeframes that were applicable to the transferor servicer based on the date the transferor servicer received the loss mitigation application. All rights and protections under paragraphs (c) through (h) of this section to which a borrower was entitled before a transfer continue to apply notwithstanding the transfer. (ii) Transfer date defined. For purposes of this paragraph (k), the transfer date is the date on which the transferee servicer will begin accepting payments relating to the mortgage loan, as disclosed on the notice of transfer of loan servicing pursuant to § 1024.33(b)(4)(iv). (2) Acknowledgment notices—(i) Transferee servicer timeframes. If a transferee servicer acquires the servicing of a mortgage loan for which the period to provide the notice required by paragraph (b)(2)(i)(B) of this section has not expired as of the transfer date and the transferor servicer has not provided such notice, the transferee servicer must provide the notice within 10 days (excluding legal public holidays, Saturdays, and Sundays) of the transfer date. (ii) Prohibitions. A transferee servicer that must provide the notice required by paragraph (b)(2)(i)(B) of this section under this paragraph (k)(2): (A) Shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process until a date that is after the reasonable date disclosed to the borrower pursuant to paragraph (b)(2)(ii) of this section, notwithstanding paragraph (f)(1) of this section. For purposes of paragraph (f)(2) of this section, a borrower who submits a complete loss mitigation application on or before the reasonable date disclosed to the borrower pursuant to paragraph (b)(2)(ii) of this section shall be treated as having done so during the pre-foreclosure review period set forth in paragraph (f)(1) of this section. (B) Shall comply with paragraphs (c), (d), and (g) of this section if the borrower submits a complete loss mitigation application to the transferee or transferor servicer 37 or fewer days before the foreclosure sale but on or before the reasonable date disclosed to the borrower pursuant to paragraph (b)(2)(ii) of this section. (3) Complete loss mitigation applications pending at transfer. If a transferee servicer acquires the servicing of a mortgage loan for which a complete loss mitigation application is pending as of the transfer date, the transferee servicer must comply with the applicable requirements of paragraphs (c)(1) and (4) of this section within 30 days of the transfer date. (4) Applications subject to appeal process. If a transferee servicer acquires the servicing of a mortgage loan for which an appeal of a transferor servicer's determination pursuant to paragraph (h) of this section has not been resolved by the transferor servicer as of the transfer date or is timely filed after the transfer date, the transferee servicer must make a determination on the appeal if it is able to do so or, if it is unable to do so, must treat the appeal as a pending complete loss mitigation application. (i) Determining appeal. If a transferee servicer is required under this paragraph (k)(4) to make a determination on an appeal, the transferee servicer must complete the determination and provide the notice required by paragraph (h)(4) of this section within 30 days of the transfer date or 30 days of the date the borrower made the appeal, whichever is later. (ii) Servicer unable to determine appeal. A transferee servicer that is required to treat a borrower's appeal as a pending complete loss mitigation application under this paragraph (k)(4) must comply with the requirements of this section for such application, including evaluating the borrower for all loss mitigation options available to the borrower from the transferee servicer. For purposes of paragraph (c) or (k)(3) of this section, as applicable, such a pending complete loss mitigation application shall be considered complete as of the date the appeal was received by the transferor servicer or the transferee servicer, whichever occurs first. For purposes of paragraphs (e) through (h) of this section, the transferee servicer must treat such a pending complete loss mitigation application as facially complete under paragraph (c)(2)(iv) as of the date it was first facially complete or complete, as applicable, with respect to the transferor servicer. (5) Pending loss mitigation offers. A transfer does not affect a borrower's ability to accept or reject a loss mitigation option offered under paragraph (c) or (h) of this section. If a transferee servicer acquires the servicing of a mortgage loan for which the borrower's time period under paragraph (e) or (h) of this section for accepting or rejecting a loss mitigation option offered by the transferor servicer has not expired as of the transfer date, the transferee servicer must allow the borrower to accept or reject the offer during the unexpired balance of the applicable time period. ``` _Authority_: 12 CFR §1024.41(k) _Source_: _Snapshot_: `c70df1b06fa8d166` _Fetched_: 2026-09-26T20:35:11Z --- --- # 12 CFR §1024.40 — Continuity of contact **Register slug:** `reg-x-1024.40` **Obligation count:** 2 ## Register description Regulation X §1024.40 requires servicers to maintain policies and procedures reasonably designed to assign personnel to delinquent borrowers, make those personnel available to respond to inquiries and assist with loss mitigation, and ensure those personnel can perform enumerated information-delivery and record-retrieval functions. ## Obligations #### 12 CFR §1024.40(a) **Obligation ID:** `reg-x-1024.40-a` **Operative duty (lender voice):** > (a): (a) In general. A servicer shall maintain policies and procedures that are reasonably designed to achieve the following objectives: (1) Assign personnel to a delinquent borrower by the time the servicer provides the borrower with the written notice required by § 1024.39(b), but in any event, not lat… **Verbatim regulator text:** ``` (a) In general. A servicer shall maintain policies and procedures that are reasonably designed to achieve the following objectives: (1) Assign personnel to a delinquent borrower by the time the servicer provides the borrower with the written notice required by § 1024.39(b), but in any event, not later than the 45th day of the borrower's delinquency. (2) Make available to a delinquent borrower, via telephone, personnel assigned to the borrower as described in paragraph (a)(1) of this section to respond to the borrower's inquiries, and as applicable, assist the borrower with available loss mitigation options until the borrower has made, without incurring a late charge, two consecutive mortgage payments in accordance with the terms of a permanent loss mitigation agreement. (3) If a borrower contacts the personnel assigned to the borrower as described in paragraph (a)(1) of this section and does not immediately receive a live response from such personnel, ensure that the servicer can provide a live response in a timely manner. ``` _Authority_: 12 CFR §1024.40(a) _Source_: _Snapshot_: `e6a0eb2397659f3b` _Fetched_: 2026-09-26T20:35:10Z --- #### 12 CFR §1024.40(b) **Obligation ID:** `reg-x-1024.40-b` **Operative duty (lender voice):** > (b): (b) Functions of servicer personnel. A servicer shall maintain policies and procedures reasonably designed to ensure that servicer personnel assigned to a delinquent borrower as described in paragraph (a) of this section perform the following functions: (1) Provide the borrower with accurate informa… **Verbatim regulator text:** ``` (b) Functions of servicer personnel. A servicer shall maintain policies and procedures reasonably designed to ensure that servicer personnel assigned to a delinquent borrower as described in paragraph (a) of this section perform the following functions: (1) Provide the borrower with accurate information about: (i) Loss mitigation options available to the borrower from the owner or assignee of the borrower's mortgage loan; (ii) Actions the borrower must take to be evaluated for such loss mitigation options, including actions the borrower must take to submit a complete loss mitigation application, as defined in § 1024.41, and, if applicable, actions the borrower must take to appeal the servicer's determination to deny a borrower's loss mitigation application for any trial or permanent loan modification program offered by the servicer; (iii) The status of any loss mitigation application that the borrower has submitted to the servicer; (iv) The circumstances under which the servicer may make a referral to foreclosure; and (v) Applicable loss mitigation deadlines established by an owner or assignee of the borrower's mortgage loan or § 1024.41. (2) Retrieve, in a timely manner: (i) A complete record of the borrower's payment history; and (ii) All written information the borrower has provided to the servicer, and if applicable, to prior servicers, in connection with a loss mitigation application; (3) Provide the documents and information identified in paragraph (b)(2) of this section to other persons required to evaluate a borrower for loss mitigation options made available by the servicer, if applicable; and (4) Provide a delinquent borrower with information about the procedures for submitting a notice of error pursuant to § 1024.35 or an information request pursuant to § 1024.36. ``` _Authority_: 12 CFR §1024.40(b) _Source_: _Snapshot_: `e6a0eb2397659f3b` _Fetched_: 2026-09-26T20:35:10Z --- --- # 12 CFR §1024.39 — Early intervention requirements for certain borrowers **Register slug:** `reg-x-1024.39` **Obligation count:** 4 ## Register description Regulation X §1024.39 requires servicers to make live contact with delinquent borrowers by the 36th day of delinquency and to provide a written early-intervention notice no later than the 45th day; it also sets partial exemptions for borrowers in bankruptcy and borrowers who have invoked FDCPA §805(c) cease-communication. ## Obligations #### 12 CFR §1024.39(a) **Obligation ID:** `reg-x-1024.39-a` **Operative duty (lender voice):** > (a): (a) Live contact. Except as otherwise provided in this section, a servicer shall establish or make good faith efforts to establish live contact with a delinquent borrower no later than the 36th day of a borrower's delinquency and again no later than 36 days after each payment due date so long as the… **Verbatim regulator text:** ``` (a) Live contact. Except as otherwise provided in this section, a servicer shall establish or make good faith efforts to establish live contact with a delinquent borrower no later than the 36th day of a borrower's delinquency and again no later than 36 days after each payment due date so long as the borrower remains delinquent. Promptly after establishing live contact with a borrower, the servicer shall inform the borrower about the availability of loss mitigation options, if appropriate. ``` _Authority_: 12 CFR §1024.39(a) _Source_: _Snapshot_: `949b7002d0a50547` _Fetched_: 2026-09-26T20:35:05Z --- #### 12 CFR §1024.39(b) **Obligation ID:** `reg-x-1024.39-b` **Operative duty (lender voice):** > (b): (b) Written notice—(1) Notice required. Except as otherwise provided in this section, a servicer shall provide to a delinquent borrower a written notice with the information set forth in paragraph (b)(2) of this section no later than the 45th day of the borrower's delinquency and again no later than… **Verbatim regulator text:** ``` (b) Written notice—(1) Notice required. Except as otherwise provided in this section, a servicer shall provide to a delinquent borrower a written notice with the information set forth in paragraph (b)(2) of this section no later than the 45th day of the borrower's delinquency and again no later than 45 days after each payment due date so long as the borrower remains delinquent. A servicer is not required to provide the written notice, however, more than once during any 180-day period. If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 180 days after the provision of the prior written notice. If a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent. (2) Content of the written notice. The notice required by paragraph (b)(1) of this section shall include: (i) A statement encouraging the borrower to contact the servicer; (ii) The telephone number to access servicer personnel assigned pursuant to § 1024.40(a) and the servicer's mailing address; (iii) If applicable, a statement providing a brief description of examples of loss mitigation options that may be available from the servicer; (iv) If applicable, either application instructions or a statement informing the borrower how to obtain more information about loss mitigation options from the servicer; and (v) The Web site to access either the Bureau list or the HUD list of homeownership counselors or counseling organizations, and the HUD toll-free telephone number to access homeownership counselors or counseling organizations. (3) Model clauses. Model clauses MS-4(A), MS-4(B), and MS-4(C), in appendix MS-4 to this part may be used to comply with the requirements of this paragraph (b). ``` _Authority_: 12 CFR §1024.39(b) _Source_: _Snapshot_: `949b7002d0a50547` _Fetched_: 2026-09-26T20:35:05Z --- #### 12 CFR §1024.39(c) **Obligation ID:** `reg-x-1024.39-c` **Operative duty (lender voice):** > (c): (c) Borrowers in bankruptcy—(1) Partial exemption. While any borrower on a mortgage loan is a debtor in bankruptcy under title 11 of the United States Code, a servicer, with regard to that mortgage loan: (i) Is exempt from the requirements of paragraph (a) of this section; (ii) Is exempt from the re… **Verbatim regulator text:** ``` (c) Borrowers in bankruptcy—(1) Partial exemption. While any borrower on a mortgage loan is a debtor in bankruptcy under title 11 of the United States Code, a servicer, with regard to that mortgage loan: (i) Is exempt from the requirements of paragraph (a) of this section; (ii) Is exempt from the requirements of paragraph (b) of this section if no loss mitigation option is available, or if any borrower on the mortgage loan has provided a notification pursuant to the Fair Debt Collection Practices Act (FDCPA) section 805(c) (15 U.S.C. 1692c(c)) with respect to that mortgage loan as referenced in paragraph (d) of this section; and (iii) If the conditions of paragraph (c)(1)(ii) of this section are not met, must comply with the requirements of paragraph (b) of this section, as modified by this paragraph (c)(1)(iii): (A) If a borrower is delinquent when the borrower becomes a debtor in bankruptcy, a servicer must provide the written notice required by paragraph (b) of this section not later than the 45th day after the borrower files a bankruptcy petition under title 11 of the United States Code. If the borrower is not delinquent when the borrower files a bankruptcy petition, but subsequently becomes delinquent while a debtor in bankruptcy, the servicer must provide the written notice not later than the 45th day of the borrower's delinquency. A servicer must comply with these timing requirements regardless of whether the servicer provided the written notice in the preceding 180-day period. (B) The written notice required by paragraph (b) of this section may not contain a request for payment. (C) A servicer is not required to provide the written notice required by paragraph (b) of this section more than once during a single bankruptcy case. (2) Resuming compliance. (i) Except as provided in paragraph (c)(2)(ii) of this section, a servicer that was exempt from paragraphs (a) and (b) of this section pursuant to paragraph (c)(1) of this section must resume compliance with paragraphs (a) and (b) of this section after the next payment due date that follows the earliest of the following events: (A) The bankruptcy case is dismissed; (B) The bankruptcy case is closed; and (C) The borrower reaffirms personal liability for the mortgage loan. (ii) With respect to a mortgage loan for which the borrower has discharged personal liability pursuant to 11 U.S.C. 727, 1141, 1228, or 1328, a servicer: (A) Is not required to resume compliance with paragraph (a) of this section; and (B) Must resume compliance with paragraph (b) of this section if the borrower has made any partial or periodic payment on the mortgage loan after the commencement of the borrower's bankruptcy case. ``` _Authority_: 12 CFR §1024.39(c) _Source_: _Snapshot_: `949b7002d0a50547` _Fetched_: 2026-09-26T20:35:05Z --- #### 12 CFR §1024.39(d) **Obligation ID:** `reg-x-1024.39-d` **Operative duty (lender voice):** > (d): (d) Fair Debt Collection Practices Act—partial exemption. With regard to a mortgage loan for which any borrower has provided a notification pursuant to the Fair Debt Collection Practices Act (FDCPA) section 805(c) (15 U.S.C. 1692c(c)), a servicer subject to the FDCPA with respect to that borrower's… **Verbatim regulator text:** ``` (d) Fair Debt Collection Practices Act—partial exemption. With regard to a mortgage loan for which any borrower has provided a notification pursuant to the Fair Debt Collection Practices Act (FDCPA) section 805(c) (15 U.S.C. 1692c(c)), a servicer subject to the FDCPA with respect to that borrower's loan: (1) Is exempt from the requirements of paragraph (a) of this section; (2) Is exempt from the requirements of paragraph (b) of this section if no loss mitigation option is available, or while any borrower on that mortgage loan is a debtor in bankruptcy under title 11 of the United States Code as referenced in paragraph (c) of this section; and (3) If the conditions of paragraph (d)(2) of this section are not met, must comply with the requirements of paragraph (b) of this section, as modified by this paragraph (d)(3): (i) In addition to the information required pursuant to paragraph (b)(2) of this section, the written notice must include a statement that the servicer may or intends to invoke its specified remedy of foreclosure. Model clause MS-4(D) in appendix MS-4 to this part may be used to comply with this requirement. (ii) The written notice may not contain a request for payment. (iii) A servicer is prohibited from providing the written notice more than once during any 180-day period. If a borrower is 45 days or more delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 190 days after the provision of the prior written notice. If a borrower is less than 45 days delinquent at the end of any 180-day period after the servicer has provided the written notice, a servicer must provide the written notice again no later than 45 days after the payment due date for which the borrower remains delinquent or 190 days after the provision of the prior written notice, whichever is later. ``` _Authority_: 12 CFR §1024.39(d) _Source_: _Snapshot_: `949b7002d0a50547` _Fetched_: 2026-09-26T20:35:05Z --- --- # 12 CFR §1024.38 — General servicing policies, procedures, and requirements **Register slug:** `reg-x-1024.38` **Obligation count:** 7 ## Register description Regulation X §1024.38 requires mortgage servicers to maintain reasonable policies and procedures designed to achieve enumerated servicing objectives, plus standard record-retention and servicing-file requirements. ## Obligations #### 12 CFR §1024.38(a) **Obligation ID:** `reg-x-1024.38-a` **Operative duty (lender voice):** > (a): (a) Reasonable policies and procedures. A servicer shall maintain policies and procedures that are reasonably designed to achieve the objectives set forth in paragraph (b) of this section. **Verbatim regulator text:** ``` (a) Reasonable policies and procedures. A servicer shall maintain policies and procedures that are reasonably designed to achieve the objectives set forth in paragraph (b) of this section. ``` _Authority_: 12 CFR §1024.38(a) _Source_: _Snapshot_: `cd3528008171638e` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.38(b)(1) **Obligation ID:** `reg-x-1024.38-b-1` **Operative duty (lender voice):** > (b)(1): (b) Objectives—(1) Accessing and providing timely and accurate information. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (i) Provide accurate and timely disclosures to a borrower as required by this subpart or oth… **Verbatim regulator text:** ``` (b) Objectives—(1) Accessing and providing timely and accurate information. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (i) Provide accurate and timely disclosures to a borrower as required by this subpart or other applicable law; (ii) Investigate, respond to, and, as appropriate, make corrections in response to complaints asserted by a borrower; (iii) Provide a borrower with accurate and timely information and documents in response to the borrower's requests for information with respect to the borrower's mortgage loan; (iv) Provide owners or assignees of mortgage loans with accurate and current information and documents about all mortgage loans they own; (v) Submit documents or filings required for a foreclosure process, including documents or filings required by a court of competent jurisdiction, that reflect accurate and current information and that comply with applicable law; and (vi)(A) Upon receiving notice of the death of a borrower or of any transfer of the property securing a mortgage loan, promptly facilitate communication with any potential or confirmed successors in interest regarding the property; (B) Upon receiving notice of the existence of a potential successor in interest, promptly determine the documents the servicer reasonably requires to confirm that person's identity and ownership interest in the property and promptly provide to the potential successor in interest a description of those documents and how the person may submit a written request under § 1024.36(i) (including the appropriate address); and (C) Upon the receipt of such documents, promptly make a confirmation determination and promptly notify the person, as applicable, that the servicer has confirmed the person's status, has determined that additional documents are required (and what those documents are), or has determined that the person is not a successor in interest. ``` _Authority_: 12 CFR §1024.38(b)(1) _Source_: _Snapshot_: `cd3528008171638e` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.38(b)(2) **Obligation ID:** `reg-x-1024.38-b-2` **Operative duty (lender voice):** > (b)(2): (2) Properly evaluating loss mitigation applications. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (i) Provide accurate information regarding loss mitigation options available to a borrower from the owner or assig… **Verbatim regulator text:** ``` (2) Properly evaluating loss mitigation applications. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (i) Provide accurate information regarding loss mitigation options available to a borrower from the owner or assignee of the borrower's mortgage loan; (ii) Identify with specificity all loss mitigation options for which borrowers may be eligible pursuant to any requirements established by an owner or assignee of the borrower's mortgage loan; (iii) Provide prompt access to all documents and information submitted by a borrower in connection with a loss mitigation option to servicer personnel that are assigned to assist the borrower pursuant to § 1024.40; (iv) Identify documents and information that a borrower is required to submit to complete a loss mitigation application and facilitate compliance with the notice required pursuant to § 1024.41(b)(2)(i)(B); and (v) Properly evaluate a borrower who submits an application for a loss mitigation option for all loss mitigation options for which the borrower may be eligible pursuant to any requirements established by the owner or assignee of the borrower's mortgage loan and, where applicable, in accordance with the requirements of § 1024.41. (vi) Promptly identify and obtain documents or information not in the borrower's control that the servicer requires to determine which loss mitigation options, if any, to offer the borrower in accordance with the requirements of § 1024.41(c)(4). ``` _Authority_: 12 CFR §1024.38(b)(2) _Source_: _Snapshot_: `cd3528008171638e` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.38(b)(3) **Obligation ID:** `reg-x-1024.38-b-3` **Operative duty (lender voice):** > (b)(3): (3) Facilitating oversight of, and compliance by, service providers. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (i) Provide appropriate servicer personnel with access to accurate and current documents and inform… **Verbatim regulator text:** ``` (3) Facilitating oversight of, and compliance by, service providers. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (i) Provide appropriate servicer personnel with access to accurate and current documents and information reflecting actions performed by service providers; (ii) Facilitate periodic reviews of service providers, including by providing appropriate servicer personnel with documents and information necessary to audit compliance by service providers with the servicer's contractual obligations and applicable law; and (iii) Facilitate the sharing of accurate and current information regarding the status of any evaluation of a borrower's loss mitigation application and the status of any foreclosure proceeding among appropriate servicer personnel, including any personnel assigned to a borrower's mortgage loan account as described in § 1024.40, and appropriate service provider personnel, including service provider personnel responsible for handling foreclosure proceedings. ``` _Authority_: 12 CFR §1024.38(b)(3) _Source_: _Snapshot_: `cd3528008171638e` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.38(b)(4) **Obligation ID:** `reg-x-1024.38-b-4` **Operative duty (lender voice):** > (b)(4): (4) Facilitating transfer of information during servicing transfers. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (i) As a transferor servicer, timely transfer all information and documents in the possession or co… **Verbatim regulator text:** ``` (4) Facilitating transfer of information during servicing transfers. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer can: (i) As a transferor servicer, timely transfer all information and documents in the possession or control of the servicer relating to a transferred mortgage loan to a transferee servicer in a form and manner that ensures the accuracy of the information and documents transferred and that enables a transferee servicer to comply with the terms of the transferee servicer's obligations to the owner or assignee of the mortgage loan and applicable law; and (ii) As a transferee servicer, identify necessary documents or information that may not have been transferred by a transferor servicer and obtain such documents from the transferor servicer. (iii) For the purposes of this paragraph (b)(4), transferee servicer means a servicer, including a master servicer or a subservicer, that performs or will perform servicing of a mortgage loan and transferor servicer means a servicer, including a master servicer or a subservicer, that transfers or will transfer the servicing of a mortgage loan. ``` _Authority_: 12 CFR §1024.38(b)(4) _Source_: _Snapshot_: `cd3528008171638e` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.38(b)(5) **Obligation ID:** `reg-x-1024.38-b-5` **Operative duty (lender voice):** > (b)(5): (5) Informing borrowers of the written error resolution and information request procedures. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer informs borrowers of the procedures for submitting written notices of error set f… **Verbatim regulator text:** ``` (5) Informing borrowers of the written error resolution and information request procedures. The policies and procedures required by paragraph (a) of this section shall be reasonably designed to ensure that the servicer informs borrowers of the procedures for submitting written notices of error set forth in § 1024.35 and written information requests set forth in § 1024.36. ``` _Authority_: 12 CFR §1024.38(b)(5) _Source_: _Snapshot_: `cd3528008171638e` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.38(c) **Obligation ID:** `reg-x-1024.38-c` **Operative duty (lender voice):** > (c): (c) Standard requirements—(1) Record retention. A servicer shall retain records that document actions taken with respect to a borrower's mortgage loan account until one year after the date a mortgage loan is discharged or servicing of a mortgage loan is transferred by the servicer to a transferee se… **Verbatim regulator text:** ``` (c) Standard requirements—(1) Record retention. A servicer shall retain records that document actions taken with respect to a borrower's mortgage loan account until one year after the date a mortgage loan is discharged or servicing of a mortgage loan is transferred by the servicer to a transferee servicer. (2) Servicing file. A servicer shall maintain the following documents and data on each mortgage loan account serviced by the servicer in a manner that facilitates compiling such documents and data into a servicing file within five days: (i) A schedule of all transactions credited or debited to the mortgage loan account, including any escrow account as defined in § 1024.17(b) and any suspense account; (ii) A copy of the security instrument that establishes the lien securing the mortgage loan; (iii) Any notes created by servicer personnel reflecting communications with the borrower about the mortgage loan account; (iv) To the extent applicable, a report of the data fields relating to the borrower's mortgage loan account created by the servicer's electronic systems in connection with servicing practices; and (v) Copies of any information or documents provided by the borrower to the servicer in accordance with the procedures set forth in § 1024.35 or § 1024.41. ``` _Authority_: 12 CFR §1024.38(c) _Source_: _Snapshot_: `cd3528008171638e` _Fetched_: 2026-09-26T20:35:00Z --- --- # 12 CFR §1024.37 — Force-placed insurance **Register slug:** `reg-x-1024.37` **Obligation count:** 9 ## Register description Regulation X §1024.37 sets requirements before [LENDER] may assess a borrower for force-placed hazard insurance: reasonable basis, 45-day initial notice, 15-day reminder notice (delivered no sooner than 30 days after the initial notice), 45-day renewal notice, mandatory cancellation and refund within 15 days of evidence of borrower coverage, bona-fide-and-reasonable charge limitation. ## Obligations #### 12 CFR §1024.37(a) **Obligation ID:** `reg-x-1024.37-a` **Operative duty (lender voice):** > (a): (a) Definition of force-placed insurance—(1) In general. For the purposes of this section, the term “force-placed insurance” means hazard insurance obtained by a servicer on behalf of the owner or assignee of a mortgage loan that insures the property securing such loan. (2) Types of insurance not co… **Verbatim regulator text:** ``` (a) Definition of force-placed insurance—(1) In general. For the purposes of this section, the term “force-placed insurance” means hazard insurance obtained by a servicer on behalf of the owner or assignee of a mortgage loan that insures the property securing such loan. (2) Types of insurance not considered force-placed insurance. The following insurance does not constitute “force-placed insurance” under this section: (i) Hazard insurance required by the Flood Disaster Protection Act of 1973. (ii) Hazard insurance obtained by a borrower but renewed by the borrower's servicer as described in § 1024.17(k)(1), (2), or (5). (iii) Hazard insurance obtained by a borrower but renewed by the borrower's servicer at its discretion, if the borrower agrees. ``` _Authority_: 12 CFR §1024.37(a) _Source_: _Snapshot_: `2411f904505bf7ce` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.37(b) **Obligation ID:** `reg-x-1024.37-b` **Operative duty (lender voice):** > (b): (b) Basis for charging borrower for force-placed insurance. A servicer may not assess on a borrower a premium charge or fee related to force-placed insurance unless the servicer has a reasonable basis to believe that the borrower has failed to comply with the mortgage loan contract's requirement to… **Verbatim regulator text:** ``` (b) Basis for charging borrower for force-placed insurance. A servicer may not assess on a borrower a premium charge or fee related to force-placed insurance unless the servicer has a reasonable basis to believe that the borrower has failed to comply with the mortgage loan contract's requirement to maintain hazard insurance. ``` _Authority_: 12 CFR §1024.37(b) _Source_: _Snapshot_: `2411f904505bf7ce` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.37(c) **Obligation ID:** `reg-x-1024.37-c` **Operative duty (lender voice):** > (c): (c) Requirements before charging borrower for force-placed insurance—(1) In general. Before a servicer assesses on a borrower any premium charge or fee related to force-placed insurance, the servicer must: (i) Deliver to a borrower or place in the mail a written notice containing the information req… **Verbatim regulator text:** ``` (c) Requirements before charging borrower for force-placed insurance—(1) In general. Before a servicer assesses on a borrower any premium charge or fee related to force-placed insurance, the servicer must: (i) Deliver to a borrower or place in the mail a written notice containing the information required by paragraph (c)(2) of this section at least 45 days before a servicer assesses on a borrower such charge or fee; (ii) Deliver to the borrower or place in the mail a written notice in accordance with paragraph (d)(1) of this section; and (iii) By the end of the 15-day period beginning on the date the written notice described in paragraph (c)(1)(ii) of this section was delivered to the borrower or placed in the mail, not have received, from the borrower or otherwise, evidence demonstrating that the borrower has had in place, continuously, hazard insurance coverage that complies with the loan contract's requirements to maintain hazard insurance. (2) Content of notice. The notice required by paragraph (c)(1)(i) of this section shall set forth the following information: (i) The date of the notice; (ii) The servicer's name and mailing address; (iii) The borrower's name and mailing address; (iv) A statement that requests the borrower to provide hazard insurance information for the borrower's property and identifies the property by its physical address; (v) A statement that: (A) The borrower's hazard insurance is expiring, has expired, or provides insufficient coverage, as applicable; (B) The servicer does not have evidence that the borrower has hazard insurance coverage past the expiration date or evidence that the borrower has hazard insurance that provides sufficient coverage, as applicable; and (C) If applicable, identifies the type of hazard insurance for which the servicer lacks evidence of coverage; (vi) A statement that hazard insurance is required on the borrower's property, and that the servicer has purchased or will purchase, as applicable, such insurance at the borrower's expense; (vii) A statement requesting the borrower to promptly provide the servicer with insurance information; (viii) A description of the requested insurance information and how the borrower may provide such information, and if applicable, a statement that the requested information must be in writing; (ix) A statement that insurance the servicer has purchased or purchases: (A) May cost significantly more than hazard insurance purchased by the borrower; (B) Not provide as much coverage as hazard insurance purchased by the borrower; (x) The servicer's telephone number for borrower inquiries; and (xi) If applicable, a statement advising the borrower to review additional information provided in the same transmittal. (3) Format. A servicer must set the information required by paragraphs (c)(2)(iv), (vi), and (ix)(A) and (B) in bold text, except that the information about the physical address of the borrower's property required by paragraph (c)(2)(iv) of this section may be set in regular text. A servicer may use form MS-3A in appendix MS-3 of this part to comply with the requirements of paragraphs (c)(1)(i) and (2) of this section. (4) Additional information. Except for the mortgage loan account number, a servicer may not include any information other than information required by paragraph (c)(2) of this section in the written notice required by paragraph (c)(1)(i) of this section. However, a servicer may provide such additional information to a borrower on separate pieces of paper in the same transmittal. ``` _Authority_: 12 CFR §1024.37(c) _Source_: _Snapshot_: `2411f904505bf7ce` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.37(d) **Obligation ID:** `reg-x-1024.37-d` **Operative duty (lender voice):** > (d): (d) Reminder notice—(1) In general. The notice required by paragraph (c)(1)(ii) of this section shall be delivered to the borrower or placed in the mail at least 15 days before a servicer assesses on a borrower a premium charge or fee related to force-placed insurance. A servicer may not deliver to… **Verbatim regulator text:** ``` (d) Reminder notice—(1) In general. The notice required by paragraph (c)(1)(ii) of this section shall be delivered to the borrower or placed in the mail at least 15 days before a servicer assesses on a borrower a premium charge or fee related to force-placed insurance. A servicer may not deliver to a borrower or place in the mail the notice required by paragraph (c)(1)(ii) of this section until at least 30 days after delivering to the borrower or placing in the mail the written notice required by paragraph (c)(1)(i) of this section. (2) Content of the reminder notice—(i) Servicer receiving no insurance information. A servicer that receives no hazard insurance information after delivering to the borrower or placing in the mail the notice required by paragraph (c)(1)(i) of this section must set forth in the notice required by paragraph (c)(1)(ii) of this section: (A) The date of the notice; (B) A statement that the notice is the second and final notice; (C) The information required by paragraphs (c)(2)(ii) through (xi) of this section; and (D) The cost of the force-placed insurance, stated as an annual premium, except if a servicer does not know the cost of force-placed insurance, a reasonable estimate shall be disclosed and identified as such. (ii) Servicer lacking evidence of continuous coverage. A servicer that has received hazard insurance information after delivering to a borrower or placing in the mail the notice required by paragraph (c)(1)(i) of this section, but has not received, from the borrower or otherwise, evidence demonstrating that the borrower has had sufficient hazard insurance coverage in place continuously, must set forth in the notice required by paragraph (c)(1)(ii) of this section the following information: (A) The date of the notice; (B) The information required by paragraphs (c)(2)(ii) through (iv) and (ix) through (xi) and (d)(2)(i)(B) and (D) of this section; (C) A statement that the servicer has received the hazard insurance information that the borrower provided; (D) A statement that requests the borrower to provide the information that is missing; (E) A statement that the borrower will be charged for insurance the servicer has purchased or purchases for the period of time during which the servicer is unable to verify coverage; (3) Format. A servicer must set the information required by paragraphs (d)(2)(i)(B) and (D) of this section in bold text. The requirements of paragraph (c)(3) of this section apply to the information required by paragraph (d)(2)(i)(C) of this section. A servicer may use form MS-3B in appendix MS-3 of this part to comply with the requirements of paragraphs (d)(1) and (d)(2)(i) of this section. A servicer may use form MS-3C in appendix MS-3 of this part to comply with the requirements of paragraphs (d)(1) and (d)(2)(ii) of this section. (4) Additional information. Except for the borrower's mortgage loan account number, a servicer may not include any information other than information required by paragraph (d)(2)(i) or (ii) of this section, as applicable, in the written notice required by paragraph (c)(1)(ii) of this section. However, a servicer may provide such additional information to a borrower on separate pieces of paper in the same transmittal. (5) Updating notice with borrower information. If a servicer receives new information about a borrower's hazard insurance after a written notice required by paragraph (c)(1)(ii) of this section has been put into production, the servicer is not required to update such notice based on the new information so long as the notice was put into production a reasonable time prior to the servicer delivering the notice to the borrower or placing the notice in the mail. ``` _Authority_: 12 CFR §1024.37(d) _Source_: _Snapshot_: `2411f904505bf7ce` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.37(e) **Obligation ID:** `reg-x-1024.37-e` **Operative duty (lender voice):** > (e): (e) Renewing or replacing force-placed insurance—(1) In general. Before a servicer assesses on a borrower a premium charge or fee related to renewing or replacing existing force-placed insurance, a servicer must: (i) Deliver to the borrower or place in the mail a written notice containing the inform… **Verbatim regulator text:** ``` (e) Renewing or replacing force-placed insurance—(1) In general. Before a servicer assesses on a borrower a premium charge or fee related to renewing or replacing existing force-placed insurance, a servicer must: (i) Deliver to the borrower or place in the mail a written notice containing the information set forth in paragraph (e)(2) of this section at least 45 days before assessing on a borrower such charge or fee; and (ii) By the end of the 45-day period beginning on the date the written notice required by paragraph (e)(1)(i) of this section was delivered to the borrower or placed in the mail, not have received, from the borrower or otherwise, evidence demonstrating that the borrower has purchased hazard insurance coverage that complies with the loan contract's requirements to maintain hazard insurance. (iii) Charging a borrower before end of notice period. Notwithstanding paragraphs (e)(1)(i) and (ii) of this section, if not prohibited by State or other applicable law, if a servicer has renewed or replaced existing force-placed insurance and receives evidence demonstrating that the borrower lacked insurance coverage for some period of time following the expiration of the existing force-placed insurance (including during the notice period prescribed by paragraph (e)(1) of this section), the servicer may, promptly upon receiving such evidence, assess on the borrower a premium charge or fee related to renewing or replacing existing force-placed insurance for that period of time. (2) Content of renewal notice. The notice required by paragraph (e)(1)(i) of this section shall set forth the following information: (i) The date of the notice; (ii) The servicer's name and mailing address; (iii) The borrower's name and mailing address; (iv) A statement that requests the borrower to update the hazard insurance information for the borrower's property and identifies the borrower's property by its physical address; (v) A statement that the servicer previously purchased insurance on the borrower's property and assessed the cost of the insurance to the borrower because the servicer did not have evidence that the borrower had hazard insurance coverage for the property; (vi) A statement that: (A) The insurance the servicer purchased previously has expired or is expiring, as applicable; and (B) Because hazard insurance is required on the borrower's property, the servicer intends to maintain insurance on the property by renewing or replacing the insurance it previously purchased; (vii) A statement informing the borrower: (A) That insurance the servicer purchases may cost significantly more than hazard insurance purchased by the borrower; (B) That such insurance may not provide as much coverage as hazard insurance purchased by the borrower; and (C) The cost of the force-placed insurance, stated as an annual premium, except if a servicer does not know the cost of force-placed insurance, a reasonable estimate shall be disclosed and identified as such. (viii) A statement that if the borrower purchases hazard insurance, the borrower should promptly provide the servicer with insurance information. (ix) A description of the requested insurance information and how the borrower may provide such information, and if applicable, a statement that the requested information must be in writing; (x) The servicer's telephone number for borrower inquiries; and (xi) If applicable, a statement advising a borrower to review additional information provided in the same transmittal. (3) Format. A servicer must set the information required by paragraphs (e)(2)(iv), (vi)(B), and (vii)(A) through (C) of this section in bold text, except that the information about the physical address of the borrower's property required by paragraph (e)(2)(iv) may be set in regular text. A servicer may use form MS-3D in appendix MS-3 of this part to comply with the requirements of paragraphs (e)(1)(i) and (2) of this section. (4) Additional information. Except for the borrower's mortgage loan account number, a servicer may not include any information other than information required by paragraph (e)(2) of this section in the written notice required by paragraph (e)(1) of this section. However, a servicer may provide such additional information to a borrower on separate pieces of paper in the same transmittal. (5) Frequency of renewal notices. Before each anniversary of a servicer purchasing force-placed insurance on a borrower's property, the servicer shall deliver to the borrower or place in the mail the written notice required by paragraph (e)(1) of this section. A servicer is not required to provide the written notice required by paragraph (e)(1) of this section more than once a year. ``` _Authority_: 12 CFR §1024.37(e) _Source_: _Snapshot_: `2411f904505bf7ce` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.37(f) **Obligation ID:** `reg-x-1024.37-f` **Operative duty (lender voice):** > (f): (f) Mailing the notices. If a servicer mails a written notice required by paragraphs (c)(1)(i), (c)(1)(ii), or (e)(1) of this section, the servicer must use a class of mail not less than first-class mail. **Verbatim regulator text:** ``` (f) Mailing the notices. If a servicer mails a written notice required by paragraphs (c)(1)(i), (c)(1)(ii), or (e)(1) of this section, the servicer must use a class of mail not less than first-class mail. ``` _Authority_: 12 CFR §1024.37(f) _Source_: _Snapshot_: `2411f904505bf7ce` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.37(g) **Obligation ID:** `reg-x-1024.37-g` **Operative duty (lender voice):** > (g): (g) Cancellation of force-placed insurance. Within 15 days of receiving, from the borrower or otherwise, evidence demonstrating that the borrower has had in place hazard insurance coverage that complies with the loan contract's requirements to maintain hazard insurance, a servicer must: (1) Cancel t… **Verbatim regulator text:** ``` (g) Cancellation of force-placed insurance. Within 15 days of receiving, from the borrower or otherwise, evidence demonstrating that the borrower has had in place hazard insurance coverage that complies with the loan contract's requirements to maintain hazard insurance, a servicer must: (1) Cancel the force-placed insurance the servicer purchased to insure the borrower's property; and (2) Refund to such borrower all force-placed insurance premium charges and related fees paid by such borrower for any period of overlapping insurance coverage and remove from the borrower's account all force-placed insurance charges and related fees for such period that the servicer has assessed to the borrower. ``` _Authority_: 12 CFR §1024.37(g) _Source_: _Snapshot_: `2411f904505bf7ce` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.37(h) **Obligation ID:** `reg-x-1024.37-h` **Operative duty (lender voice):** > (h): (h) Limitations on force-placed insurance charges—(1) In general. Except for charges subject to State regulation as the business of insurance and charges authorized by the Flood Disaster Protection Act of 1973, all charges related to force-placed insurance assessed to a borrower by or through the se… **Verbatim regulator text:** ``` (h) Limitations on force-placed insurance charges—(1) In general. Except for charges subject to State regulation as the business of insurance and charges authorized by the Flood Disaster Protection Act of 1973, all charges related to force-placed insurance assessed to a borrower by or through the servicer must be bona fide and reasonable. (2) Bona fide and reasonable charge. A bona fide and reasonable charge is a charge for a service actually performed that bears a reasonable relationship to the servicer's cost of providing the service, and is not otherwise prohibited by applicable law. ``` _Authority_: 12 CFR §1024.37(h) _Source_: _Snapshot_: `2411f904505bf7ce` _Fetched_: 2026-09-26T20:35:00Z --- #### 12 CFR §1024.37(i) **Obligation ID:** `reg-x-1024.37-i` **Operative duty (lender voice):** > (i): (i) Relationship to Flood Disaster Protection Act of 1973. If permitted by regulation under section 102(e) of the Flood Disaster Protection Act of 1973, a servicer subject to the requirements of this section may deliver to the borrower or place in the mail any notice required by this section and the… **Verbatim regulator text:** ``` (i) Relationship to Flood Disaster Protection Act of 1973. If permitted by regulation under section 102(e) of the Flood Disaster Protection Act of 1973, a servicer subject to the requirements of this section may deliver to the borrower or place in the mail any notice required by this section and the notice required by section 102(e) of the Flood Disaster Protection Act of 1973 on separate pieces of paper in the same transmittal. ``` _Authority_: 12 CFR §1024.37(i) _Source_: _Snapshot_: `2411f904505bf7ce` _Fetched_: 2026-09-26T20:35:00Z --- ---