The vehicle utilized for payment of insurance proceeds from HUD to a Lender is the Insurance Benefit Claim form HUD-27011. This form is utilized for all submissions of claims for Conveyance of Property and Loss Mitigation Option incentives.
Question 1 - Mortgagee Letter 2003-19, page 1, states, "Under the Partial Claim Option, a Lender will advance funds on behalf of a Borrower in the amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months PITI)." Since the funds were advanced to bring the loan current, what date should the Lender enter into block 8?
Answer - The date should be the date of the last installment paid.
Question 2 - If a Borrower adheres to the submission of monthly payments, but fails to return an executed Special Forbearance Agreement, can the Lender file for a Special Forbearance Incentive Claim?
Answer - No, Mortgagee Letter 2002-17, Page 9, states in part the Lender must file the Incentive Claim within 60 days of the date the Special Forbearance was executed. Since the Lender does not have a Special Forbearance Agreement that has been executed by the Borrower the Lender cannot file the Incentive Claim.
Question 3 - What is the Lender's timeframe to file a Loan Modification Incentive Claim?
Answer - Mortgage Letter 2000-05, page 23, Paragraph N, "Filing for Incentive Payment" states in part the Lender must file the Claim for Incentive payment within 60 days of the execution date of the Loan Modification Agreement.
Question 4 - How long do Lenders have to file a second Supplemental Claim for non-routine foreclosure fees and costs from final settlement date?
Answer - HUD's Claims Handbook 4330.4, Chapter 7, Section 7-2, discusses Supplemental Claims in thorough detail and gives a time frame of 6 months from date of final settlement for filing Supplemental Claims.
Question 5 - When should self-curtailment occur?
Answer - Lenders are responsible for "self-curtailment" on claims when reasonable diligence and/or Single Family Default Monitoring System reporting requirements are not met and must enter the curtailment date in Block 31. See Mortgagee Letter 2005-30, Single Family Foreclosure Policy and Procedural Changes: Reasonable Diligence Requirements, for a discussion of these requirements and steps to take when these requirements are not met. Review Attachment 4 for examples. Additional information is available in Mortgagee Letter 1997-18.
If the Lender determines during its quality control review that it failed to self-curtail when submitting the Claim, it should remit Claim related payments to HUD through the Claim Remittance feature in FHA Connection. This feature can be accessed through the FHA Connection by selecting Single Family FHA, Single Family Servicing, Claims Processing, and then, under Claim Remittance, selecting Remit Single Family Claim.
Question 6 - Where can interpretations of Suspended Claim Errors Notifications be found?
Answer - Lenders may check Claim Status on the FHA Connection by making the following selections: Single Family FHA - Single Family Servicing - Claims Processing - Claims Status.
Question 7 - Can a Claim be submitted without a paper Mortgage Insurance Certificate (MIC)?
Answer - Yes. Mortgagee Letter 2005-11, Update to Mortgagee Letter 2003-17; Claim Filing Changes and Data Integrity, announced the elimination of MIC submission as a requirement for filing Claims for FHA Mortgage Insurance Benefits.
Question 8 - What is the proper methodology for listing the Section 235 subsidy payment from HUD when filing a Claim through FHA Connection?
Answer - Upon initiation of foreclosure on a Section 235 loan, the Lender is required to suspend the Section 235 subsidy. Any subsidy received during the Borrower's delinquency should be applied to the Borrower's account.
Question 9 - If “Company A” as an FHA-approved mortgage company sells a portfolio of FHA-insured loans to another FHA-approved institution “Company B”, but Company A retains servicing, is it possible for Company A to file Form HUD-27011, Single-Family Application for Insurance Benefits, in its name and receive proceeds to be forwarded to the new institution Company B, or will the Claim need to be filed in the name of the new holder, Company B?
Answer - A Claim may be submitted by either the servicer (Company A) or the new holder (Company B) of the mortgage loan. It must be signed by an official of the organization submitting the Claim. In either case the FHA Single Family Insurance Claim proceeds will be disbursed to the new holder (Company B) of the mortgage, as listed in Item 12 on Form HUD-27011. HUD will not honor requests for claim proceeds to be disbursed to any entity other than the holder of record at the time the Form HUD-27011, Single-Family Application for Insurance Benefits is filed.
Question 10 - Does HUD disburse the incentive payment for Special Forbearance Claims, Claim Type 31, to the Holder of Record or to the Servicer?
Answer - HUD disburses the incentive fee payment for Special Forbearance Claims, Claim type 31, directly to the Servicer, as identified in Block 13, Servicing Lender Number, Form HUD-27011, after the claim passes all the automated claim processing system edits.
This is the only claim type where HUD disburses the proceeds to the Servicer; proceeds for all other claim types are disbursed to the Holder of Record.
Question 11 - Mortgagee Letter 2008-21 now allows Lenders to include attorney fees and foreclosure costs in a Loan Modification and a Partial Claim. When filing an incentive claim, should the Lender break out the attorney fees and foreclosure costs separately on the claim form?
Answer - No. The Mortgagee Letter states that the legal fees and related foreclosure costs may now be capitalized into the Loan Modification principal balance or, for Partial Claims, these amounts may be included in the Partial Claim amount. There are no changes to the filing instructions for Loan Modifications and Partial Claims. As appropriate for the type of claim being filed, enter the new "modified" amount to Part A, block 11(b) or the Partial Claim Note amount to Part B, line 107.
For Loan Modifications, Lenders should continue to enter the allowable "Title Search Fee" to Part B, line 113.