Single Family Hawaiian Home Lands Assignments

Section 247 Assignments

HUD has special mortgage insurance claims procedures for properties on Hawaiian Home Lands. A lender insuring a loan with HUD under Section 247 of the National Housing Act must assign the loan to HUD filing its timely claim for mortgage insurance benefits. Consult 24 CFR §§203.439 and 203.665 to learn what must be done before filing insurance claims for loans with the Automated Data Processing (ADP) codes of 759, 780, 793, 805, 808 or 811 (last three digits of FHA case number).

Filing Claims

The Section 247 program goal is to help the Department of Hawaiian Home Lands (DHHL) in working with native Hawaiian beneficiaries to preserve their homes. Unlike other FHA single family programs, claims can only be filed if all of the following conditions are met:

• After written notification to DHHL of the mortgagor's default
• After the mortgagor's default remains uncured after six months
• By assignment of the insured mortgage and mortgage note to HUD

The following information is intended to provide the lender with processing procedures for Section 247 Assignments.

Preconditions of Filing an Insurance Claim

A lender must determine that four program requirements are met before submitting a claim for insurance benefits:

• Mortgagor was in default for 180 days or more
• DHHL was notified of mortgagor's default by letter at 90 days
• Face-to-face interview(s) was conducted with the defaulting mortgagor at least 30 days before the application for assignment is made, unless this requirement is inapplicable under 24 CFR §203.604(c)
• Mortgagor was properly evaluated for loss mitigation

Processing Procedures for Section 247 Assignments

An FHA lender assigns the insured mortgage and note to HUD as part of the claims process. See 24 CFR §203.350(c). An authorized agent of the lender signs an endorsement on the original note to convey the mortgage note to HUD, specifically stating: "All right, title and interest of the undersigned to the within credit instrument is hereby assigned to the Secretary of Housing and Urban Development of Washington, D.C., his/her successors and assigns." If the original note can't be located, the lender should submit a lost note affidavit.

Submitting Title Evidence Package and Servicing Records

Be sure to include a transmittal letter identifying a contact individual's name and telephone number if HUD needs more information when submitting claims, title evidence or servicing records. Guidance is available from these sources:

• Consult HUD Handbook 4330.4, Rev-1, FHA Single Family Insurance Claims, for claim filing instructions
• Call Gayle Ota, Single Family Program Specialist, in the Honolulu Field Office at (808) 522-8190, ext. 228 if you are a lender or servicer with questions about submitting servicing records
• Contact Susan Lee, Chief Counsel, Honolulu Field Office, at (808) 522-8179, ext. 258 if you have questions about the title evidence required by HUD

At the same time the lender files form HUD-27011, Parts A, B and D, a request for title approval must be submitted with the title evidence package to:

Chief Counsel, Honolulu Office
U.S. Department of Housing and Urban Development
500 Ala Moana Blvd., Suite 3A
Honolulu, HI 96813

The title evidence package must contain these key documents for title approval:

• Original note endorsed to HUD in the format required by HUD-27011 A
• Original mortgage, with evidence of recordation by DHHL
• Recorded consent to mortgage signed by DHHL
• Recorded intervening assignments of mortgage, if any
• Recorded Assignment of Mortgage (AOM) to HUD with required warranty
• Copy of mortgagor's Homestead Lease and recorded lease assignments and amendments, if any
• Recorded Mortgage Insurance Program Rider to the Homestead Lease

In addition to the title documents noted above, also submit the following servicing records:

• Copies of HUD-27011-A, B and D
• Copy of Title Submission Certification
• Proof of request to endorse fire policy
• Loan history commencing from date of first payment
• Copy of signed management review checklist plus all supporting servicing records
• Initial DHHL notification letter
• Evidence of loss mitigation efforts

Upon satisfactory review of the above noted documents:

• The Honolulu Field Office Counsel will issue a title approval letter to the submitting lender
• The Honolulu Field Office Counsel will prepare the conveyance documents to transfer the loan from HUD to DHHL for execution by an authorized official of the National Servicing Center (NSC)
• The NSC will assure that the AOM from HUD to DHHL is recorded
• The NSC will retain records of the Assignment

Re-conveyance to Lender

If HUD does not accept assignment of the mortgage and note, the loan will be reassigned to the lender with a request for repayment of any claim amount already paid.