www.hudclips.org
U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000
August 10, 1994
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
MORTGAGEE LETTER 94-40
TO: ALL APPROVED MORTGAGEES
ATTENTION: SINGLE FAMILY SERVICING MANAGERS
SUBJECT: Single Family Claims for Insurance Benefits:
Procedural Changes Resulting from Implementation
of Electronic Data Interchange - Title Approval Letters and
Default Reason Codes
The purpose of this mortgagee letter is to provide guidance
concerning recent procedural changes involving HUD's Single Family
Claims for Insurance Benefits. The two procedural changes to be
addressed are the changes in the appearance of the title approval
letters and a change in the default codes.
For additional guidance refer to Mortgagee Letter 93-10, Single
Family Claims for Insurance Benefits: Electronic Data Interchange
Pilot Implementation dated April 5, 1993, and Mortgagee Letter 93-24,
Single Family Default Monitoring System: Introduction of Revised
Form HUD 92068A; dated August 11, 1993.
(I) Title Approval Letters
Mortgagees were advised of the changes to be made in the
appearance of the title approval letter in Mortgagee Letter 93-10.
Many lenders have already received these "system generated" letters
from selected HUD Field Offices. All title approval letters will
be system generated where HUD has approved title on or after June 20,
1994. Local HUD Offices will continue to review and approve your
title evidence, but the actual letters will be centrally produced
and mailed to lenders from Headquarters. Each title approval letter
will identify the approving office, but will not bear a signature
since it will be system generated.
(II) Change of Default Codes for Claims for Insurance Benefits
Effective for all claims filed on or after September 1, 1994,
mortgagees shall utilize the following codes in reporting the cause of
default in Item 4, Part A of Form HUD-27011. Noting the cause of
default is required for all claim types except Automatic Assignments
(claim type 03) and Supplemental claims (claim type 05).
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Please note that these are the same codes that are used in identifying
the cause of default on Form HUD-92068A, Single Family Delinquent Report on
Loans that are 90 or More Days Delinquent, Single Family Default Monitoring
System.
DEFAULT REASON CODES (ITEM 4, FORM HUD-27011)
01 Death of a principal mortgagor
02 Illness of a 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
(III) Electronic Data Interchange Update
As many mortgagees have heard, HUD has been testing with several
mortgagees for both claims and SFDMS applications. This initial group has
begun EDI submission of claims and is scheduled to begin EDI submission of
SFDMS data within the next forty-five days.
HUD will soon begin adding additional lenders to the program.
Ultimately, HUD expects to expand the EDI program to all lenders servicing
FHA mortgages. HUD's Trading Partner Coordinator, John Buck, will be in
contact with those mortgagees who have already submitted a mortgagee
profile and attended the EDI Orientation seminar to prepare for
implementation scheduling. As a reminder, before any lender may
participate, a Mortgagee Profile Survey must be completed and returned to
HUD. Copies may be requested from the Office of Information Policies and
Systems (attention Rex Gavin at (202) 708-0306).
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HUD has compiled an Implementation Guide to fully explain how the EDI
program will function, including how, and what is required of lenders to
participate in this program. The guide will be made available, at a
scheduled EDI orientation, to each lender that has previously completed
the Mortgagee Profile Survey and has expressed an interest in EDI. All
mortgagees that have previously received their Implementation Guides will
receive periodic updates as revisions are made to the Guide.
Sincerely yours,
Assistant Secretary for Housing
- Federal Housing Commissioner