FHA Updates Servicing Handbook
By Anna DeSimone
July 7, 2015 HUD published FHA Info #15-54, News and Updates. The update referenced the June 24th announcement (FHA Info #15-50) which announced the publication of the Servicing and Loss Mitigation (Servicing) for Title II Forward Mortgages and the Servicer Tier Ranking System II (TRS II) sections of HUD’s Single Family Housing Policy Handbook (SF Handbook; HUD Handbook 4000.1).
Servicing Handbook Changes and Clarifications, Updated July 7, 2015:
The Servicing section of the FHA Single Family Housing Policy Handbook (SF Handbook) consolidates content from the Federal Housing Administration’s (FHA) Administration of Insured Home Mortgages (4330.1) Handbook and subsequent Mortgagee Letters, relevant Housing Notices, and other servicing policies and regulations published since 1994. These changes were made to accomplish the goal of conforming FHA policy to a standard format using clear, consistent language. Some of the changes may represent a proposed change to policy and, where appropriate, align with industry best practices.
Key Changes or Clarifications
Laws Applicable to Mortgage Servicing Generally
Reminds Mortgagees to comply with all laws, rules, and requirements applicable to mortgage servicing, including those issued by the Consumer Financial Protection Bureau
Responsibility During Transfers of Servicing Rights
Describes responsibilities of transferor and transferee servicing Mortgagees when servicing of an FHA-insured mortgage is transferred
Communication with Borrowers and Authorized Third Parties
Requires Mortgagees’ compliance with all laws, rules, and requirements applicable to third- party access to documentation and to describe FHA’s documentation requirements
Application of Partial Prepayments
Encourages Mortgagees to communicate with Borrowers on application of partial pre-payments
Escrowing of Funds
Aligns FHA and GSE requirements on accounts used in escrowing of funds
Late Charges
States requirements for calculation of late charges
Determination that the Property is Vacant or Abandoned
Requires the Mortgagee to notify the Borrower by mail of the determination that the property is vacant or abandoned
Reasonable Effort in Arranging a Face-to-Face Interview
Allows for the use of a third-party vendor to schedule the Borrower’s face-to-face interview with a Mortgagee representative
Loss Mitigation Agreements
Updates requirements for signatures on Loss Mitigation Option Agreements by Borrowers, Mortgagees, and Authorized Third Parties
Exceptions to Owner Occupancy Requirements
Describes standards for Loss Mitigation review for non-Borrowers to whom title was transferred subject to the Garn St. Germain Depository Institutions Act
Property Condition (in sections on Special-Forbearance Unemployment, Loan Modification, and FHA – Home Affordable Modification Program (FHA-HAMP))Describes circumstances in which the Mortgagee must perform a property inspection in relation to Home Retention Option review
Recordation of FHA-HAMP Partial Claim Documents
Requires submission of executed Partial Claim security instruments for recordation within five business days from the date of receipt from the Borrower or, where HUD execution is required, receipt from HUD
Pre-Foreclosure Sale (PFS) Approval to Participate
Requires transmission of the PFS Approval to Participate (ATP) to the Borrower via methods providing confirmation or a timestamp of delivery; receipt within 10 Days of the date on the ATP
Cash Reserve Contributions for Standard Deed-in-Lieu (DIL) Transactions
Requires cash reserve contributions from certain Borrowers in Standard DIL transactions
Local Property Preservation and Protection Requirements
Requires the Mortgagee to notify HUD’s Mortgagee Compliance Manager where state or local law inhibits the Mortgagee performance of HUD’s required property preservation and protection actions
About the Author
Anna DeSimone is President and Founder of Bankers Advisory and Principal of CliftonLarsonAllen LLP. She can be reached at anna@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
Comments are closed.