HUD Handbook 4000.1 Part III.A.2 — Default Servicing (Forward Mortgages)
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.
Verbatim regulatory text
Verbatim provisions from HUD Handbook 4000.1 Part III.A.2 — Default Servicing (Forward Mortgages) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
HUD Handbook 4000.1 III.A.2.a.i — Default = 30-day uncorrected failure to perform
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.
HUD Handbook 4000.1 III.A.2.a.ii — Service delinquent/default FHA loans per FHA requirements + applicable laws
The Mortgagee must ensure FHA-insured Mortgages in Delinquency or Default are serviced in accordance with FHA requirements and applicable laws.
HUD Handbook 4000.1 III.A.2.a.ii — HUD considers all months to have 30 days for Default timelines
For the purpose of determining the date of Default and timelines related to Default, HUD considers all months to have 30 Days.
HUD Handbook 4000.1 III.A.2.c.ii — Late Charge cap 4% of overdue P&I (case numbers on/after 3/14/2016)
the Mortgagee may assess a Late Charge, not to exceed 4 percent of the overdue payment of P&I and in accordance with applicable state and federal laws.
HUD Handbook 4000.1 III.A.2.c.ii(A) — Advance written notice before collecting 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.