crfs provides recap of recent updates to the HUD Single Family Housing Policy Handbook 4000.1

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On October 24, the FHA published an update to its Single Family Housing Policy Handbook 4000.1 (SF Handbook). The Transmittal provides the Handbook Sections and a brief description of the updates. The updates to these sections may be implemented immediately, and must be implemented no later than January 2, 2020.

CRFS has conducted a thorough review of all of the updates made to the Servicing and Loss Mitigation Section III as well as the Claims Section IV. Below are the revisions we have identified that directly impact the claim process.

  1. A.2.l.ii(B)(2) Home Disposition Options – Pre-Foreclosure Sales – Eligibility – Property Maintenance
    • A section for property maintenance requirements has been added to this section that clarifies the borrower responsibility to maintain the property in ready to show condition, make all basic property repairs and perform all normal property maintenance activities.
  1. A.2.p.iii(C) Property Valuation and CAFMV – Damage to the Property after Appraisal
    • The Mortgagee must submit a variance via EVARS if it becomes aware of any damage that occurs to the Property after the appraisal has been completed. The Mortgagee will be provided with additional instructions as appropriate.
  1. A.2.t.iv Conveyance of Acquired Properties – Notice of Property Transfer
    • The Mortgagee must prepare conveyance deeds to the Secretary of HUD. Deeds must be recorded in the name of the “Secretary of Housing and Urban Development, his/her successors and assigns,” hereinafter referred to as “Grantee,” whose address is HUD’s MCM.
  1. A.4.b.ii(B)(2) Reacquisition by HUD and Resubmission of Claim – Reacquisition Package – Required Documentation
    • For Properties reconveyed due to title issues, the Mortgagee must include in its reacquisition package:
      documentation demonstrating that all title issues are fully remediated; and
      for Manufactured Housing, evidence that the Manufactured Home is affixed to the land, is classified and taxed as real estate, and the title to the Manufactured Home has been surrendered or purged in accordance with the jurisdictional requirements.
  1. A.2.p.ii(B) Qualification Criteria for Use of Commissioner’s Adjusted Fair Market Value – Standard
    • The requirement that the mortgage is not subject to indemnification in order to proceed with CAFMV bidding has been removed.
  1. A.2.t.ii(C)(7)(a) Mortgagee Property Preservation and Protection Action – Securing and Maintaining the Property – Standard
    • Securing should take place as soon as reasonably practicable, but no more than five Days following the determination that the Property is vacant and/or abandoned post-foreclosure, or 15 business days following the determination that the Property is vacant and/or abandoned pre-foreclosure
  1. A.2.c.vii(A)(2) Claims for Additional Funds – Supplemental Claims for Correction of Dates in Part A – Required Supporting Documentation
    • Updated guidance for required supporting documentations for supplemental claims for correction of dates in Part A.
  1. A.2.d.iii(B) Computation of Claim Amount – Eviction and P&P Costs when Property is Sold to a Third Party
    • When filing a CWCOT claim where a third party is the successful bidder at the foreclosure sale, the Mortgagee may not claim eviction costs as part of the CWCOT claim. Mortgagees may only be reimbursed for Cash for Keys on CWCOT claims resulting from post-foreclosure sales efforts.
    • When a third party is the successful bidder at the foreclosure sale or the Mortgagee elects to retain the Property and file a CWCOT claim, the Mortgagee may claim reimbursement for Property P&P costs incurred before the foreclosure sale. If the Property is sold as part of a post-foreclosure sales effort, the Mortgagee may claim reimbursement for Property P&P costs incurred before the Closing Date.
  1. A.2.e.ii(A)(7) Computation of Claim Amount – Allowable Costs – Borrower Consideration
    • The Mortgagee may not claim reimbursement for the amount of the PFS Borrower Consideration, which is to be included on the Closing Disclosure.