On March 27th, 2019, the Federal Housing Administration (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. CRFS has conducted a thorough review of all of the updates made to the Servicing and Loss Mitigation Section as well as the Claims Section. A majority of the updates do not represent a change to CRFS procedures. Many of the updates incorporate previously published policy or provide additional clarity.
We have determined that the following sections require changes to CRFS procedures or require clarification from HUD due to discrepancies with other policy or direction.
1. IV Claims and Disposition, 2. Claim Types, a. Claim Type 01- Conveyances
The following has been added to this section:
The Mortgagee may claim no more than 75 percent of the maximum attorney fee for incurred fees associated with routine foreclosure that was not completed because any of the following occurred after the Mortgagee initiated foreclosure:
- The Borrower executed a DIL of Foreclosure;
- The Borrower successfully completed a PFS; or
- The Borrower filed for a bankruptcy petition.
HUD will reimburse allowable attorney fees in accordance with HUD guidance pertaining to the reimbursement of foreclosure costs.
As a result of the addition to the Handbook, CRFS recommends a change of this procedure to claiming 75% of the attorney fee allowable for incomplete valid foreclosure actions.
2. III: Servicing and Loss Mitigation, 2. Default Servicing, K. Home Retention Options
FHA- HAMP Incentive
The updated Handbook version was updated to include a new validation requirement (third bullet) when determining the eligibility for HAMP Incentive eligibility.
The Mortgagee may claim an incentive for use of the FHA-HAMP Option if:
- The permanent FHA-HAMP documents are executed within 60 days of the borrower’s successful completion of their TPP; and
- The mortgagee reports to HUD the characteristics of the FHA-HAMP Loan Modification; and
- Three or more full monthly payments are due and unpaid (i.e. 61 days or more past due) when the FHA-HAMP documents are executed
CRFS procedure will be updated to validate all of the above requirements for filing an incentive claim prior to submitting the claim.
3. III. Servicing and Loss Mitigation, 2. Default Servicing, I. Home Disposition Options
PFS Owner Occupant Borrower Compensation
The updated Handbook includes PACE obligation as an acceptable use of the compensation:
The Owner occupant borrower may apply the entire amount of $3000 compensation or a portion of it to resolve liens, including a PACE obligation
DIL Borrower Consideration
The updated Handbook includes PACE obligation as an acceptable use of the compensation.
The Owner- Occupant borrower may apply the entire amount of the consideration or a portion of it to resolve liens, including PACE obligation liens.
CRFS procedure will be updated to validate that any PACE lien amounts paid are offset with the borrower compensation/consideration when applicable.