FHA Mortgagee Letter 2025-13 — Mortgagee Letter 2025-13

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.