Servicing and Loss Mitigation Use of Terms
Assumptions: Assumption of an FHA-insured mortgage is a servicing function transferring the responsibility of paying a mortgage to another person through simple assumption or creditworthiness assumption.
Claims: HUD uses Insurance Benefit Claim (form HUD-27011) to pay insurance proceeds to a mortgagee. This form is used for all claim submissions for property conveyance and loss mitigation option incentives.
Deed-in-Lieu: A deed-in-lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors financially able to make their mortgage payments. DIL Fact Sheet.
Extension of Time: HUD may grant an Extension of Time for a mortgagee to initiate or complete a loss mitigation action (exception: pre-foreclosure sale option) and/or foreclosure action. A mortgagee must submit to NSC-Tulsa, Oklahoma, form HUD-50012 "Request for Extension of Time," before the expiration of the respective time frame via fax number (918) 292-8992.
FHA Connection: FHA Connection (FHAC) is the web portal you use to report on and update the status of your FHA portfolios. In addition, the FHAC facilitates the following servicing functions: claims processing, delinquent loans, HECM reports, monthly premiums, mortgage record changes, mortgage calculator, Mortgage Servicing Data Quality system and lender query by case number. See FHAC FAQs.
Foreclosure: You should consider initiating foreclosure only as a last resort and it should not be initiated until all relief options have been exhausted. When unavoidable, it must be started quickly and prosecuted vigorously to minimize losses to both the mortgagee and FHA.
General Loss Mitigation: This category includes all loss mitigation questions that are not specific to one of the five loss mitigation options.
General Servicing: This category includes all General Servicing items stated within HUD Handbook 4330.1 REV-5, Administration of Insured Home Mortgages.
Loan Modification: A loan modification permanently changes one or more terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford. Loan Modification Fact Sheet
Partial Claim: Under the partial claim option, a mortgagee will advance enough funds on behalf of a mortgagor to reinstate a delinquent loan (not to exceed the equivalent of 12 months PITI). The mortgagor will execute a promissory note and subordinate mortgage payable to HUD. Currently, these promissory or "partial claim" notes assess no interest and are not due and payable until the mortgagor either pays off the first mortgage or no longer owns the property. Partial Claim LM Fact Sheet
Pre-Foreclosure Sale: The Pre-Foreclosure Sale Program allows mortgagors in default to sell their homes and use the net sale proceeds to satisfy mortgage debt even though these proceeds are less than the amount owed. Pre-foreclosure Sale Fact Sheet
Single Family Default Monitoring System (SFDMS): Data reported to the Single Family Default Monitoring System (SFDMS) is used to measure the effectiveness of origination and servicing activities, and the potential risk to the insurance fund.
Special Forbearance: A Special Forbearance is a written repayment agreement between a mortgagee and a mortgagor, with a plan to reinstate an asset that has at least three mortgage payments due and unpaid. Special Forbearance Fact Sheet.
Variance: You are required to submit form HUD-90041, Request for Variance Procedure, to the FHA National Servicing Center in Oklahoma, to request permission for any pre-foreclosure sale program exception and to request an extension of time pertaining to the pre-foreclosure sale program. Variances are considered on a case-by-case basis. Fax requests to (918) 292-8992.
