www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 November 12, 1996 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER MORTGAGEE LETTER 96-61 MEMORANDUM FOR: ALL APPROVED MORTGAGEES ATTENTION: SERVICING MANAGERS (SINGLE FAMILY) SUBJECT: FHA Loss Mitigation Procedures - Special Instructions INTRODUCTION This Mortgagee Letter is the third in a series which will address FHA's loss mitigation procedures. This letter will provide information regarding changes to special forbearance, mortgage modification, pre-foreclosure sales procedures and deeds-in-lieu of foreclosure. This letter introduces the use of partial claims, measurement of lender performance and provisions of incentive payments and reimbursements. Also included are two attachments. Both attachments should be read in conjunction with the Mortgagee Letter. Attachment A is a checklist of eligibility criteria for each of the loss mitigation procedures. Attachment B contains instructions required to file a claim. BACKGROUND Effective April 26, 1996, FHA's Mortgage Assignment Program was terminated by enactment of the Balanced Budget Downpayment Act, I, in conjunction with the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (Pub. L. 104-134, approved April 26, 1996). It was replaced with new authority for FHA to implement loss mitigation procedures. On July 3. 1996, FHA published in the Federal Register an Interim Rule further delineating the loss mitigation process. (See also Mortgagee Letter 96-32 , Loss Mitigation - Mortgage Modification, issued on June 28, 1996). OVERVIEW The Department, with this Mortgagee Letter, is implementing a comprehensive approach toward promoting alternatives to foreclosure and enhancing lender flexibility to meet that goal. Within guidelines established by HUD, lenders now have wider latitude to make determinations with respect to which loss mitigation option may be most appropriate for each borrower, the lender and FHA. These options include special 2 forbearance plans, mortgage modifications, pre-foreclosure sales and deeds-in-lieu of foreclosure; in addition, mortgagees will have a new foreclosure alternative to be known as "partial claims." The strategies discussed in this Letter may be used singly or in combination, as required on a case-by-case basis. Guidelines established by HUD give lenders a wide variety of loss mitigation tools, lender incentives and reimbursements. The use of these loss mitigation tools will be monitored by FHA; incentives and some reimbursements will be based on the Department's evaluation of lender participation and effectiveness. Future mortgagee letters will address streamline refinancing, housing counseling, expedited foreclosure processing, assumptions and other aspects of loss mitigation. BENEFITS Loss mitigation approaches generally fall into two broad categories -- (a) those which (if utilized successfully) would result in curing the default and retaining homeownership, and (b) those which would result in the relinquishment of homeownership, by means of a sale to a third party or by a voluntary conveyance of the property by deed in lieu of foreclosure. FHA's first objective is to help the homeowner remain in the home whenever possible; however, the latter approach allows disposition of the property without the full adverse impact of foreclosure. FHA's loss mitigation structure will have the following benefits: o Minimizing paperwork and enabling lenders to work directly with borrowers to determine the appropriate cure for each default. o Providing reimbursement for administrative expenses to offset costs of putting loss mitigation into practice. o Rewarding success in loss mitigation by paying incentives to lenders for employing loss mitigation techniques, and by paying these incentives at higher rates to lender who achieve the highest rates of cure and foreclosure avoidance. o Creating a flexible approach which allows for the addition of new loss mitigation tools, and the modification of existing tools. o Mitigating losses resulting from loan defaults by emphasizing alternatives to foreclosure. 3 Superior overall performance in loss mitigation, as determined annually by FHA, will utilize comparative lender ranking, and will be rewarded through payments of enhanced incentives. Performance measurement will be based on the avoidance of foreclosure claims through effective loss mitigation efforts. Enhanced incentive payments for any current year will be based on performance scores earned during the previous year. FHA expects to disclose details on the scoring process in the first quarter of FY 97, with initial scores for calendar year 1996 to be released in March 1997. Special forbearance, mortgage modification, pre-foreclosure sale and deeds-in-lieu are loss mitigation tools that have been available for some time. The following guidelines define recent changes regarding their use both individually and in conjunction with other options. FHA's additional option, the partial claim, is also described below. The FHA requirements for lender participation in loss mitigation are identified below as well as in Attachments A and B. PROGRAM REQUIREMENTS EVALUATION Mortgagees are required under 203.605 of 24 CFR to document monthly evaluations of mortgagors in default to determine which loss mitigation tools are appropriate, if any. Mortgagees are required to maintain documents supporting loss mitigation efforts on loans within their portfolio. These files must include, but are not limited to: Special forbearance plans, Credit reports, Income verification and Brokers Price opinion (BPO). Under 203.355 of 24 CFR mortgagees are required at a minimum, to evaluate all loss mitigation techniques when three full monthly installments due on the mortgage are unpaid. FHA encourages lenders to intervene with a default management plan at the earliest possible opportunity. Section 203.355 CFR also states the mortgagee must take one of the following actions within nine months from the date of default, or within any additional time approved by the Secretary or authorized by sections 203.345 or 203.346. SPECIAL FORBEARANCE Special forbearance provides for a continuation of lender forbearance beyond timeframes when foreclosure should be initiated, based on certain circumstances. The new procedures allow mortgagees to enter into a special forbearance agreement without HUD's permission. However, FHA requires lenders to regularly consider all reasonable means to address delinquency at the earliest possible timeframe. 4 Homeowners may be considered for special. forbearance provided they have recently experienced (1) an involuntary reduction in income or an increase in living expenses and (2) the lender determines the borrower has a reasonable ability to pay under the terms of the forbearance plan to eliminate the arrearage. FHA has changed its special forbearance requirements to provide for a period of reduced or suspended payments which may result in an arrearage not to exceed the equivalent of 12 months of principal, interest, taxes, and insurance premiums (PITI) over a period of up to 18 months from the date of the oldest unpaid installment. To determine the-cap for an adjustable rate mortgage on a special forbearance calculate the monthly payment due on the date of default times twelve. Special forbearance plans may not include late charges or foreclosure costs. (Loans removed from the foreclosure process due to an improvement in the borrowers circumstances are eligible for special forbearance). Lenders may establish a plan which extends beyond 18 months. After that time the payments must equal or exceed the monthly mortgage installment under the note. However, foreclosure costs may be collected from the mortgagor prior to the initiation of special forbearance. For lender eligibility for incentive payments, a written special forbearance plan MUST BE EXECUTED no earlier than four missed payments (120 days from the due date of the oldest unpaid installment) and no later than seven missed payments (210 days from the date of the oldest unpaid installment). FHA requires that lenders review the status of forbearance plans each month. Plans may be renegotiated, but lenders are not eligible for additional incentives resulting from renegotiated plans. Renegotiated plans may not exceed FHA's timeframe requirements associated with the delinquency. FHA will pay lenders $100 for each Special Forbearance Agreement executed, regardless of the outcome of the plan. Lenders whose overall loss mitigation performance is ranked in the top 25 percentile, beginning March 1997, will become eligible for incentive payments of $200 for all special forbearance agreements executed during FY 1997 based on their 1996 scores. When a special forbearance agreement has been utilized and failed or there has been a bankruptcy, mortgagees are entitled to collect all unpaid interest at the note rate, computed from the earliest of several dates as provided in section 203.402a of the regulations. This will result in two additional months note interest, as compared to a foreclosure claim without special forbearance. See HUD Handbook 4330.1 Rev-5 Appendix 24 for a sample forbearance agreement. 5 Attachment A includes a checklist of requirements for lenders to follow in determining eligibility for special forbearance. Attachment B identifies procedures for filing claims for incentive payments and reimbursements. MORTGAGE MODIFICATION The intent of a modification is to eliminate the arrearage and to reduce the monthly mortgage obligation for a borrower who has recovered from financial distress, but whose net income has been reduced to a level lower than it was prior to the default. (Mortgagee Letter 96-32 supersedes the relevant parts of HUD Handbook 4330.1 Rev.5) Sept 1994. Mortgage modification is most advantageous when implemented during periods of low interest rates and when the stability of the mortgage can be enhanced by refinancing the debt. This option is also valuable when the arrearage can be capitalized into the loan balance, the term extended and the interest rate reduced to current market rates so that the resulting monthly payment is at a level the borrower can afford. Mortgagee Letter 96-32 , signed July 1, 1996, announced an agreement between FHA and the Government National Mortgage Association (GNMA), which created greater flexibility in GNMA requirements for repooling modified mortgages. (Please refer to Mortgagee Letter 96-32 for the special requirements that must be met if a mortgage that is being considered for modification is in a Ginnie Mae pool). FHA expects that virtually all modifications on defaulted FHA loans will be accomplished without assignment of the modified mortgage to FHA. In rare instances consideration will be given to an optional assignment of the mortgage to the Department. For consideration of this option, lenders should write to: The Department of Housing and Urban Development Single Family Servicing Division 451 7th Street S.W. Room 9178 Washington D.C. 20410 A detailed explanation of the loan status and a justification for an assignment request must be provided. Additionally, mortgage modifications may not be used in conjunction with the partial claim option. Please refer to Mortgagee Letter 96-32 for the special requirements that must be met if a mortgage that is being considered for modification is in a Ginnie Mae pool. 6 Defaulted FHA loans being considered for loan modification must meet the criteria included in Attachment A. Section 203.616 states the mortgagee must notify HUD of the modification. Procedures for mortgage modification are identified in Mortgagee Letter 96-49 . Following modification of an eligible mortgage, FHA will now reimburse lenders $500 per case for administrative processing expenses and up to $250.00 for a title search. (See Attachment B for claim filing instructions, see Attachment A for criteria). If the mortgage cannot be repooled, you may request assignment to HUD under the existing procedures. If a mortgage is assigned to HUD, the mortgagee may be required to service the mortgage according to HUD Handbook 4330.1 Rev-5 "Administration of Insured Home Mortgages." Servicing mortgagees will be compensated at a rate of 44 basis points to be reimbursed annually for activities they perform for the Secretary. Additional details will be provided to the lender upon agreement to accept assignment. Further instructions regarding pass-through payments will be provided upon assignment of the mortgage. If an assignment to the Department is completed, lenders will be reimbursed $500.00 per case for administrative processing, and up to $250 for title search. The mortgagee must ensure first-lien status of the mortgage and may require a subordination agreement and/or an endorsement to the mortgagee's title policy. Items included in the new principal balance are: Principal, interest, escrow items. Items that may not be included are legal, administrative costs and late charges. If the principal balance is increased as a result of a mortgage modification the original Mortgage Insurance Certificate (MIC) will remain in effect as valid documentation of mortgage insurance. PARTIAL CLAIM FHA will pay a partial claim to cure a default if the loan is at least four months delinquent, but does not exceed the equivalent of 12 months PITI. A partial claim may not be utilized if the mortgage is in foreclosure or when the loan has been in default for more than 18 months. A partial claim may be utilized as a stand-alone tool or in conjunction with a special forbearance plan. To secure repayment of the partial claim a promissory note must be executed by the lender in the name of the Secretary. Also, a subordinate mortgage must be obtained, which will carry no note interest and will include the arrearage due on the loan. The partial claim may not include late charges or foreclosure costs. However, lenders are permitted to collect foreclosure costs from mortgagor to terminate foreclosure. This could occur if a homeowners circumstances change and the lender elects to withdraw the case 7 from foreclosure and file a partial claim. Lenders are responsible for establishing a repayment plan not to exceed 36 monthly installments. This will start payment upon the satisfaction of the lien. Repayment of the subordinate loan will not be required until the first mortgage is satisfied FHA will assume responsibility for servicing this note upon payment of the partial claim. The mortgagee must send the original mortgage to HUD after they have recorded the documents. The mortgagee must use HUD's model form of note and subordinate mortgage. The mortgagee must ensure first-lien status of the FHA mortgage. An administrative fee of $250.00 will be paid to lenders for processing a partial claim. No additional costs or fees will be paid by HUD. The administrative fee is to include recordation costs. (See Attachment A and B). If a final insurance claim is filed the amount of the partial claim will not be deducted from the final claim except for the amount that was applied to principal in the partial claim. PRE-FORECLOSURE SALE Lenders have the option of resolving incurable defaults by offering borrowers, who cannot meet their mortgage obligation, the opportunity to sell their property through pre-foreclosure sales. Borrowers who agree to sell their properties using this option are relieved of their mortgage obligation, while receiving assistance toward seller-paid closing costs. Instructions for processing a pre-foreclosure sale were identified in Mortgagee Letter 94-45 , HUD's Nationwide Pre-foreclosure Sales (PFS) Procedure, dated September 30, 1994. Pre-foreclosure requirements identified in the Mortgagee Letter remain unchanged except for the following: o Eligibility will be determined using gross sales price, which must be at least 95 percent of the "as is" appraised value. o The requirement that the loan must be three months delinquent has been modified. The lender may file a claim on a pre-foreclosure sale provided the loan is at least two months delinquent prior to the pre-foreclosure sale closing date. o Current regulations limit the pre-foreclosure sale period to three months. The three month sale period begins upon lender approval. This will be automatically extended two months for lenders scoring in the top 25 percentile of overall lender performance, effective 8 upon release of lender performance scores in March 1997. DEED-IN-LIEU Another opportunity to prevent foreclosure is a voluntary transfer or deed-in-lieu. This should be considered when the borrower is in default and does not qualify for any other loss mitigation options available, or upon failure of a preforeclosure sale. This tool is valuable as a cost saving alternative to foreclosure. The CAIVRS system must be checked prior to acceptance of a deed-in-lieu to ensure the mortgagor does not have any other FHA mortgage in default. HUD will reimburse the lender up to $250.00 for the cost of a title search in addition to a $250.00 administrative fee upon successful completion of the deed-in-lieu. The mortgagee must be able to convey good marketable title. The borrower may be paid up to $500.00 to voluntarily convey the property. LENDER PERFORMANCE Based on the additional options and flexibility of the FHA Loss Mitigation Procedures, lenders now have significant means available to minimize financial losses and help borrowers avoid foreclosure. FHA estimates that approximately 50% of seriously delinquent loans will be cured through borrower self-help, while the remaining 45% will benefit from forbearance or other relief measures available through loss mitigation procedures. FHA's expectation is that lenders will determine the most appropriate tool to resolve a delinquency with foreclosure as a last resort. The percentages listed below indicate FHA's anticipated use of these tools across the portfolio of 90-Day noncured defaults. Self-cured 50% FHA Special Forbearance 10% Partial Claim 5% Refinance/loan modification 3% Property sale by owner 8.5% Pre-foreclosure sale 16.5% Deed-In-Lieu of foreclosure 2.0% Foreclosure 5.0% 9 Although there are varying factors that will effect the success rates from lender to lender, the Department will monitor lenders participation and effectiveness. If there any additional questions please call 1-800-697-6967. Sincerely, Nicolas P. Retsinas Assistant Secretary for Housing- Federal Housing Commissioner Attachments ATTACHMENT A ELIGIBILITY REQUIREMENTS SPECIAL FORBEARANCE YES NO Does the borrower occupy the property as a principal residence? X Does the borrower have a commitment to remain in his/her home? X Has counseling been recommended to the borrower? X Does the borrower have prospects for improved financial status? X Is the borrower more than 120 days delinquent and less than 210 days delinquent? X Have you received independent verification of the borrower's income and ensured that it is adequate to meet repayment requirements? X Does the agreement require the borrower to make payments at least equal to the monthly mortgage installment by at least the 18th month from the date of oldest unpaid installment? X Has the borrower executed a written forbearance agreement, which clearly defines the term, frequency of payments, and amounts due under forbearance? X Has the borrower been informed that failure to comply with the special forbearance plan will result in foreclosure initiation? X Has the borrower been informed that partial claims designed to cure arrearage may only be filed in conjunction with a special forbearance within 18 months of the oldest unpaid installment? Arrearage cannot exceed 12 months PITI X Has the borrower been informed that special forbearance, used in conjunction with a partial claim, cannot result in arrearage which exceeds 12 months PITI? X Has the borrower been informed that the special forbearance agreement may be renegotiated at any time, provided that the revised agreement complies with overall FHA timeframes and eligibility requirements? X Has the borrower provided in writing, information on his/her overall financial status? X If the answers to a particular homeowner's circumstances match the answers above, the homeowner qualifies for FHA's special forbearance provision, and the lender may submit a claim for incentive following an executed agreement. MORTGAGE MODIFICATION YES NO Does the borrower have a commitment to remain in his/her home? X Has counseling been recommended to the borrower? X Has a property broker price opinion been obtained? X Has the lender received independent verification of income? X Has a credit report been obtained on the borrower? X Has a title search been done with no junior liens present or existing? X Does the new unpaid principal balance consist of PITI balances from the original mortgage plus any advances made on behalf of the borrower for taxes, insurance and late fees? X Does the new unpaid principal balance include legal expenses or administrative costs incurred as a result of mortgage modification? X Does the borrower occupy the property as a principal residence? X Is the borrowers income adequate to support the new mortgage payment? X If the answers to a particular homeowner's circumstances match the answers above, the homeowner qualifies for FHA's mortgage modification provision, and the lender may submit a claim for incentive following an executed modification. PARTIAL CLAIM YES NO Does the borrower have a commitment to remain in his/her home? X Has counseling been recommended to the borrower? X Has a partial claim been filed in the last three years? X Has it been determined that either a special forbearance or mortgage modification will not resolve the delinquency? X Has the borrower overcome financial difficulties to the point where he/she can at a minimum meet the mortgage obligation required under the note? X Is the borrower more than 91 days delinquent and less than 511 days delinquent? X Has a credit report been obtained on the borrower? X Has independent verification of the borrower's income been obtained? X Has a brokers price opinion been obtained? X Does the borrower occupy the property as a principal residence? X Is the debt to income ratio, excluding arrearage owed under the mortgage; More than 29% Less than 50% (not eligible) X Have repayment provisions been made and a junior lien prepared in the name of the Secretary of HUD? X If the answers to a particular homeowner's circumstances match the answers above, the homeowner qualifies for FHA's partial aim provision, and the lender may submit a claim for incentive following an executed claim. PRE-FORECLOSURE SALE YES NO Did the homeowner provide documentation that a housing counseling agency has been involved? X Does the borrower occupy the property as a principal residence? X Does the property have negative equity but appraises at 70% or more of the outstanding mortgage balance? X Has a current appraisal been provided? X Has a title search been done? X Has the borrower been informed that the gross sales proceeds must be at least 95% of the appraised value? X Has the borrower been informed that he/she has at least 90 days to sell the property, This period of time may be extended up to an additional 60 days at the lenders discretion for a lender with an annual performance score in the top 25 percentile? X Has the borrower been informed that the lender must initiate foreclosure or deed- in-lieu within 60 days of termination of an unsuccessful pre-foreclosure sale attempt? X Has the borrower been informed that seriously damaged properties are not eligible? X Has the borrower provided documentation that indicates he/she is making a good faith effort to sell the property? X If the answers to a particular homeowner's circumstances match the answers above, the homeowner qualifies for FHA's pre-foreclosure sale provision, and the lender may submit a claim for incentive following a completed sale. DEED-IN-LIEU YES NO Has housing counseling been recommended to the borrower? X Does the borrower occupy the property as a principal residence? X Has the borrower been informed he/she may receive an incentive of up to $500? X Can good marketable title be obtained? X Has CAIVRS been checked to determine if the mortgagor has any other FHA loans in default? X If the answers to a particular homeowner's circumstances match the answers above, the homeowner qualifies for FHA's Deed-in-Lieu provision, and the lender may submit a claim for incentive following a completed deed-in-lieu of foreclosure. CLAIM INSTRUCTIONS GENERAL: To allow lenders to begin-filing for benefits under the new loss mitigation provisions immediately, we will use the existing claim form HUD-27011 as the vehicle to make these claims. Please note that certain items on the form are being adapted for this new use. These items are highlighted in the instructions below. These new loss mitigation claims should be sent to HUD Headquarters to the same address that other claims are sent: Department of Housing and Urban Development Office of Mortgage Insurance Accounting and Servicing Single Family Mortgage Insurance Claims Branch P.O. Box 23998 Washington, D.C. 20026-3998 If express mail is used, send to: Department of Housing and Urban Development Single Family Mortgage Insurance Claims Branch Systems Management and Control Section. 451 Seventh Street S.W., Room 6137 Washington D.C. 20410 CLAIM PAYMENT: All loss mitigation claims will be paid via electronic funds transfer using Treasury's ACH program. The ACH routing information used for regular claim payments will be used to route these loss mitigation claim payments. Therefore, it is essential that all claimants be set up to receive ACH payments. Payments for a number of claims may be grouped together in one EFT payment. Mortgagees will receive a separate Advice of Payment to identify each individual payment in each payment batch. CLAIM PREPARATION - SPECIAL FORBEARANCE ADMINISTRATIVE FEE (31) When a special forbearance agreement is executed, lenders may submit a claim for $100 (or $200 if ranked in the top 25%) for reimbursement of administrative costs. The claim must be completed as described below using Form HUD-27011, Single Family Application for Insurance Benefits. These claims must be received at HUD Headquarters no later than 60 days from the date the forbearance agreement is executed. Any claims received after this date will be disallowed. FHA mortgage insurance must be active at the time the claim is filed. Documents to be submitted to HUD Headquarters are the HUD-27011, Parts A and B. It is not necessary to send a copy of these claims to the local HUD Office. Instructions for the completion of HUD-27011, Part A: At the top of the claim form, please enter "LOSS MITIGATION-SPECIAL FORBEARANCE". This will help to expedite claim processing. (Please note that the underlined words below show what is actually on the claim form as the title for each item. For this new type of claim, item 9 is being used for a purpose other than those described in the heading. Please see the item description for instructions about how to complete item 9.) Item 1 Claim type. Place an "X" in the block labelled "other". Enter "31" next to the word "other". Item 2 FHA Case Number. Enter the FHA Case Number as shown on the Mortgage Insurance Certificate (MIC). Acceptable format is: XXX-XXXXXXX If the MIC shows only six digits after the dash, enter an "X" for the final digit. Item 3 Section of the Act Code. Enter the ADP code for the Section of the National Housing Act under which the mortgage was insured. This is found on the MIC immediately following the FHA Case Number. Acceptable format is: XXX Item 4 Default reason code. Enter the applicable default reason code number from the list below. CODE REASON 01 = Death of principal mortgagor 02 = Illness of principal mortgagor 03 = Illness of mortgagor's family member 04 = Death of mortgagor's family member 05 = Marital difficulties 06 = Curtailment of income (reduction of income of a borrower) 07 = Excessive obligations - same income, including habitual non-payment of debts 08 = Abandonment of property 09 = Distant employment transfer 10 = Neighborhood problem 11 = Property problem 12 = Inability to sell property 13 = Inability to rent property 14 = Military service 15 = Other (explain in Mortgages Comments) Item 5 Endorsement date. Enter the endorsement date that appears on the Mortgage Insurance Certificate. Item 6 Date form prepared. Enter the date this form is submitted to HUD. Item 7 Due date of first payment to principal and interest. Enter the due date of the first payment to principal and interest. Obtain this date from the mortgage note. Item 8 Due date of last complete installment paid. Enter the date the last complete installment paid was due, not the date it was paid. This item should be taken from the payment ledger. If no payments have been made, enter the date in Item 7 (Due date of first payment to principal and interest). Note that the date in this item will always be the first of the month. Item 9 Date of Possession and acquisition of marketable title. Enter the date the forbearance agreement is executed. Item 10 Not applicable. Item 11 Not applicable. Item 12 Holding mortgagee number (payee) (10 digits). Enter the complete 10-digit mortgagee number of the holding mortgagee. Note: Disregard the word "payee" in the item heading. For special forbearance administrative fee claims only, the payee will be the servicer. Item 13 Servicing mortgagee number. Enter the complete 10-digit number of the servicer. This item must be completed, even if the servicer is the same as the holder. Note: For special forbearance administrative fee claims only, this number determines the payee's name, address and EFT routing information. Item 14 Mortgagee Reference Number. Enter the loan number (maximum 15 digits) used by the mortgagee for identifying the case if any. Item 15 Original mortgage amount. Enter the original mortgage amount. This figure should be taken from the mortgage note. Item 16 Not applicable. Item 17 Unpaid loan balance as of date in block 8. Enter the unpaid mortgage balance after crediting the last complete monthly installment paid. This figure is taken from the mortgagee's payment ledger. Item 18 thru Not applicable. Item 32 Item 33 Mortgagor's name, property address and SSN. Enter the name of the mortgagor in default as it appears on the ledger record. Enter the property address as it appears on the security instrument or the mortgage insurance certificate. Enter the social security number of all mortgagors, if applicable. At least one social security number is required. Item 34 Brief Legal Description of Property. Enter a brief legal description of the property. This information is found on the mortgage. Item 35 Name and address of mortgagee. Enter the name and address of the mortgagee, including zip code. Item 36 Name and address of mortgagee's servicer. Enter the name and address of mortgagee's servicer, including zip code, if applicable. The advice of payment will be sent to the servicer. Items 37 Mortgagee official signature, date and title. and 38 Servicer signature date and title. The claim must be signed and dated by an official of the servicer. The application will be returned if it is not signed or if it contains a stamped or duplicated signature. Item 39 Amount of Monthly Payment to: (a) FHA insurance, (b) Taxes, (c) Hazard Insurance and (d) Interest and Principal. Enter the regular payment. Item 40 through Not applicable. Item 44 Mortgagee's Comments, if any. May be used if necessary. Instructions for the completion of HUD-27011, Part B, Fiscal Data. Use the HUD-27011, Part B to claim the administrative fee for special forbearance claims by claiming it on line 129. Support forms, Parts C, D and E are not required. Item 100 Mortgagor's Name and Property Address. Not required. Item 101 FHA Case Number. Enter the FHA Case Number as it appears in Item 2 of Part A. Item 102 Section of Act Code. Enter the Section of the Act code as it appears in Item 3 of Part A. Item 103 Mortgagee's reference number. Enter the mortgagee's reference number as it appears in Item 14 of Part A. Item 104 Date form Prepared. Not required. Item 105 to Not applicable. Item 128 Item 129 Administrative fee. (Please disregard item label, "additional closing costs at settlement", shown on claim form. This line item is used to claim the administrative fee.) Enter the administrative fee that HUD allows for entering a special forbearance agreement, in Column B. No interest should be claimed in Column C. Item 130 to Not applicable. Item 131 Item 133 Contact Name and Telephone Number: Holding Mortgagee/Servicing Mortgagee. Enter the name and telephone number of a person in the holder's or servicer's office who can answer questions concerning the information reported on this claim form. Item 134 Not applicable. Item 135 Enter the column B total which will equal the administrative fee. Item 136 Not applicable. Item 137 Net Claim Amount. Enter the net claim amount which equals the administrative fee. Items 138 and 139 Mortgagee official signature, date and title/ Servicer signature, date and title. This claim must be signed and dated by an official of the servicer. The application will be returned if it is not signed or if it contains a stamped or duplicated signature. CLAIM PREPARATION - LOAN MODIFICATION WITHOUT ASSIGNMENT (32) When a defaulted loan is modified without assignment to HUD in an effort to avoid foreclosure, lenders may submit a claim for reimbursement of administrative costs and title search. The claim must be completed as described below using Form HUD-27011, Single Family Application for Insurance Benefits. These claims must be received at HUD Headquarters no later than 60 days from the date of the loan modification. Any claims received after this date will be disallowed. FHA mortgage insurance must be active at the time the claim is filed. Documents to be submitted to HUD Headquarters are the HUD-27011, Parts A and B. It is not necessary to send a copy of these claims to the local HUD Office. Instructions for the completion of HUD-27011, Part A: At the top of the claim form, please enter "LOSS MITIGATION--LOAN MODIFICATION". This will help to expedite claim processing. (Please note that the underlined words show what is actually on the claim form as the title for each item. For this new type of claim, items 8, 9 and 17 are being used for a purpose other than those described in the heading. Please see the item description for instructions about how to complete them. Item 1 Claim type. Place an "X" in the block labelled "other". Enter "32" next to the word "other". Item 2 FHA Case Number. Enter the FHA Case Number as shown on the Mortgage Insurance Certificate (MIC). Acceptable format is: XXX-XXXXXXX If the MIC shows only six digits after the dash, enter an "X" for the final digit. Item 3 Section of the Act Code. Enter the ADP code for the Section of the National Housing Act under which the mortgage was insured. This is found on the MIC immediately following the FHA Case Number. Acceptable format is: XXX Item 4 Default reason code. Enter the applicable default reason code number from the list below. CODE REASON 01 = Death of principal mortgagor 02 = Illness of principal mortgagor 03 = Illness of mortgagor's family member 04 = Death of mortgagor's family member 05 = Marital difficulties 06 = Curtailment of income (reduction of income of a borrower) 07 = Excessive obligations - same income, including habitual non-payment of debts 08 = Abandonment of property 09 = Distant employment transfer 10 = Neighborhood problem 11 = Property problem 12 = Inability to sell property 13 = Inability to rent property 14 = Military service 15 = Other (explain in Mortgagee Comments) Item 5 Endorsement date. Enter the endorsement date that appears on the Mortgage Insurance Certificate. Item 6 Date form prepared. Enter the date this form is completed and submitted to HUD. Item 7 Due date of first payment to Principal and interest. Enter the due date of the first payment to principal and interest. Obtain this date from the mortgage note. Item 8 Due date of last complete installment paid. Enter the due date of the first payment to principal and interest under the modified mortgage. This date should be taken from the modified mortgage note. Note that the date in this item will always be the first of the month. Item 9 Date of possession and acquisition of marketable title. Enter the date the loan modification is signed. Item 10 Not applicable. Item 11 Not applicable. Item 12 Holding mortgagee number (payee) (10 digits). Enter the complete 10-digit mortgagee number of the holding mortgagee. Item 13 Servicing mortgagee number. Enter the complete 10-digit number of the servicer. This item must be completed, even if the servicer is the same as the holder. Item 14 Mortgagee Reference Number. Enter the loan number (maximum 15 digits) used by the mortgagee for identifying the case if any. Item 15 Original mortgage amount. Enter the original mortgage amount. This figure should be taken from the original mortgage note. Item 16 Not applicable. Item 17 Unpaid loan balance as of date in block 8. Enter the new loan balance after modification of the mortgage. This figure should be taken from the modification agreement. Item 18 thru Not applicable. Item 32 Item 33 Mortgagor's name, Property address and SSN. Enter the name of the mortgagor in default as it appears on the ledger record. Enter the property address as it appears on the security instrument or the mortgage insurance certificate. Enter the social security number of all mortgagors, if applicable. At least one social security number is required. Item 34 Brief Legal Description of Property. Enter a brief legal description of the property. This information is found on the mortgage. Item 35 Name and address of mortgagee. Enter the name and address of the mortgagee, including zip code. The advice of payment will be sent to the holder. The payment will be made to the holder via EFT. Item 36 Name and address of mortgagee's servicer. Enter the name and address of mortgagee's servicer, if any, including zip code, if applicable. A copy of the advice of payment will be sent to the servicer. Items 37 Mortgagee official signature, date and title. and 38 Servicer signature date and title. The claim must be signed and dated by an official of the holder or servicer. The application will be returned if it is not signed or if it contains a stamped or duplicated signature. Item 39 Amount of Monthly Payment to: (a) FHA insurance, (b) Taxes, (c) Hazard Insurance and (d) Interest and Principal. Enter the new monthly payment. Item 40 through Not applicable. Item 44 Mortgagee's Comments, if any. Enter the interest rate and term of the modified mortgage. Instructions for the completion of HUD-27011, Part B, Fiscal Data. Use the HUD-27011, Part B to claim the administrative fee and title search costs for loan modifications. Support forms, Parts C, D and E are not required. Item 100 Mortgagor's Name and Property Address. Not required. Item 101 FHA Case Number. Enter the FHA Case Number as it appears in Item 2 of Part A. Item 102 Section of Act Code. Enter the Section of the Act code as it appears in Item 3 of Part A. Item 103 Mortgagee's reference number. Enter the mortgagee's reference number as it appears in Item 14 of Part A. Item 104 Date form prepared. Not required. Item 105 to Not applicable. Item 112 Item 113 Foreclosure, acquisition, conveyance and other costs. Enter the cost of the title search, up to a maximum of $250, in Column B. Do not claim any interest in Column C. Item 114 to Not applicable. Item 128 Item 129 Administrative fee. (Please disregard item label, "additional closing costs at settlement", shown on claim form. This line item is used to claim the administrative fee.) Enter the $500 administrative fee that HUD allows for loan modification without assignment, in Column B. No interest should be claimed in Column C. Item 130 to Not applicable. Item 131 Item 133 Contact Name and Telephone Number: Holding Mortgagee/Servicing Mortgagee. Enter the name and telephone number of a person in the holder's or servicer's office who can answer questions concerning the information reported on this claim form. Item 134 Not applicable. Item 135 Enter the column B total. Item 136 Not applicable. Item 137 Net Claim Amount. Enter the net claim amount which equals the column B total. Items 138 and 139 Mortgagee official signature, date and title/ Servicer signature, date and title. This claim must be signed and dated by an official of the servicer. The application will be returned if it is not signed or if it contains a stamped or duplicated signature. CLAIM PREPARATION - PARTIAL CLAIM (33) When all the requirements for filing a partial claim are met and the subordinate lien has been signed, the lender may file for these insurance benefits. The claim must be completed as described below using Form HUD-27011, Single Family Application for Insurance Benefits. These claims must be received at HUD Headquarters no later than 60 days from the date of the recordation of the subordinate mortgage. Any claims received after this date will be disallowed. FHA mortgage insurance must be active at the time the claim is filed. Documents to be submitted to HUD Headquarters are the HUD-27011, Parts A and B. It is not necessary to send a copy of these claims to the local HUD Office. A copy of the subordinate mortgage must accompany each claim. Instructions for the completion of HUD-27011, Part A: At the top of the claim form, please enter "LOSS MITIGATION--PARTIAL CLAIM". This will help to expedite claim processing. (Please note that the underlined words show what is actually on the claim form as the title for each item. For this new type of claim, item 9 is being used for a purpose other than that described in the heading. Please see the item description for instructions about how to complete it. Item 1 Claim type. Place an "X" in the block labelled "other". Enter "33" next to the word "other". Item 2 FHA Case Number. Enter the FHA Case Number as shown on the Mortgage Insurance Certificate (MIC). Acceptable format is: XXX-XXXXXXX If the MIC shows only six digits after the dash, enter an "X" for the final digit. Item 3 Section of the Act Code. Enter the ADP code for the Section of the National Housing Act under which the mortgage was insured. This is found on-the MIC immediately following the FHA Case Number. Acceptable format is: XXX Item 4 Default reason code. Enter the applicable default reason code number from the list below. CODE REASON 01 = Death of principal mortgagor 02 = Illness of principal mortgagor 03 = Illness of mortgagor's family member 04 = Death of mortgagor's family member 05 = Marital difficulties 06 = Curtailment of income (reduction of income of a borrower) 07 = Excessive obligations - same income, including habitual non-payment of debts 08 = Abandonment of property 09 = Distant employment transfer 10 = Neighborhood problem 11 = Property problem 12 = Inability to sell property 13 = Inability to rent property 14 = Military service 15 = Other (explain in Mortgagee Comments) Item 5 Endorsement date. Enter the endorsement date that appears on the Mortgage Insurance Certificate. Item 6 Date form prepared. Enter the date this form is completed and submitted to HUD. Item 7 Due date of first payment to principal and interest. Enter the due date of the first payment to principal and interest. Obtain this date-from the mortgage note. Item 8 Due date of last complete installment paid. Enter the date the last complete installment paid was due, not the date it was paid. This item should be taken from the payment ledger. If no payments have been made, enter the date in Item 7 (Due date of the first payment to principal and interest). Note that the date in this item will always be the first of the month. Item 9 Date of possession and acquisition of marketable title. Enter the date the subordinate mortgage was recorded or mailed for recordation. Item 10 Not applicable. Item 11 Not applicable. Item 12 Holding mortgagee number (payee) (10 digits). Enter the complete 10-digit mortgagee number of the holding mortgagee. Item 13 Servicing mortgagee number. Enter the complete 10-digit number of the servicer. This item must be completed, even if the servicer is the same as the holder. Item 14 Mortgagee Reference Number. Enter the loan number (maximum 15 digits) used by the mortgagee for identifying the case if any. Item 15 Original mortgage amount. Enter the original mortgage amount. This figure should be taken from the mortgage note. Item 16 Not applicable. Item 17 Unpaid loan balance as of date in block 8. Enter the unpaid mortgage balance after crediting the last complete monthly installment paid. This figure is taken from the mortgagee's payment ledger. Item 18 thru Not applicable. Item 32 Item 33 Mortgagor's name, property address and SSN. Enter the name of the mortgagor in default as it appears on the ledger record. Enter the property address as it appears on the security instrument or the mortgage insurance certificate. Enter the social security number of all mortgagors, if applicable. At least one social security number is required. Item 34 Brief Legal Description of Property. Enter a brief legal description of the property. This information is found on the mortgage. Item 35 Name and address of mortgagee. Enter the name and address of the mortgagee, including zip code. The advice of payment will be sent to the holder. The payment will be made to the holder via EFT. Item 36 Name and address of mortgagee's servicer. Enter the name and address of mortgagee's servicer, if any, including zip code, if applicable. A copy of the advice of payment will be sent to the servicer. Items 37 Mortgagee official signature, date and title. and 38 Servicer signature date and title. The claim must be signed and dated by an official of the holder or servicer. The application will be returned if it is not signed or if it contains a stamped or duplicated signature. Item 39 Amount of Monthly Payment to: (a) PHA insurance, (b) Taxes, (c) Hazard Insurance and (d) Interest and Principal. Enter the amount of the regular payment. Item 40 through Not applicable. Item 44 Mortgagee's Comments, if any. May be used, if necessary. Instructions for the completion of HUD-27011, Part B, Fiscal Data. Use the HUD-27011, Part B to claim the amount due for a partial claim. Support forms, Parts C, D and E are not required. Item 100 Mortgagor's Name and Property Address. Not required. Item 101 FHA Case Number. Enter the FHA Case Number as it appears in Item 2 of Part A. Item 102 Section of Act Code. Enter the Section of the Act code as it appears in Item 3 of Part A. Item 103 Mortgagee's reference number. Enter the mortgagee's reference number as it appears in Item 14 of Part A. Item 104 Date form prepared. Not required. Item 105 to Not applicable. Item 106 Item 107 Adjustment to loan balance. Enter the total amount of the arrearage that has accumulated during the forbearance period. This figure should equal the amount of the subordinate mortgage. Item 108 to Not applicable. Item 128 Item 129 Administrative fee. (Please disregard item label, "additional closing costs at settlement", shown on claim form. This line item is used to claim the administrative fee.) Enter the $250 administrative fee that HUD allows for a partial claim, in Column B. No interest should be claimed in Column C. Item 130 to Not applicable. Item 131 Item 133 Contact Name and Telephone Number: Holding Mortgagee/Servicing Mortgagee. Enter the name and telephone number of a person in the holder's or servicer's office who can answer questions concerning the information reported on this claim form. Item 134 Not applicable. Item 135 Enter the column B total. Item 136 Not applicable. Item 137 Net Claim Amount. Enter the net claim amount which equals the column B total. Items 138 and 139 Mortgagee official signature, date and title/ Servicer signature, date and title. This claim must be signed and dated by an official of the servicer. The application will be returned if it is not signed or if it contains a stamped or duplicated signature. Revision to existing claim instructions for conveyances: Page 2-75 of Handbook 4330.4 REV 1 should be modified as follows: Item 408 Additional Closing Costs. This item is used to claim the administrative fee of $250 for facilitating a successful deed in lieu of foreclosure. Item 305 Disbursements for HIP, Taxes, etc. Costs up to $250 for a title search required to determine if the mortgagor meets the criteria for approval of a deed in lieu of foreclosure may be claimed here.