PDF Partial Claim Subordination RequestsPartial ClaimFrequently Asked Questions - HUD - The Law
The Lender will advance funds on behalf of the Borrower in an amount necessary to reinstate the delinquent loan, not to exceed the equivalent of 12 months PITI.A Promissory Note and Subordinate Mortgage will be executed by the Borrower.The Promissory Notes are not due and payable until the Borrower pays off the first mortgage or no longer owns the property.
Can the lender include all fees and corporate advances in the Partial Claim option?
Legal fees and related foreclosure costs may be included in the Partial Claim amount according to the Mortgagee Letter 2008-21.
Can the Lender consider a partial claim if the Loan Modification was completed less than a year ago?
The lender can use a partial claim to assist the Borrower if they meet certain criteria.There is a valid documented reason for the default that is reflected in Mortgagee Letter 2003-19, page 6, Paragraph N, Limitations on Use.The reason for a partial claim is up to the lender.
The Mortgagee Letter 2008-21 states that the late charges should be forgiven by the lender.
When calculating total indebtedness for the purpose of a Preforeclosure Sale, the Partial Claim amount must be included.
Can the lender collect administrative fees and costs associated with the Partial Claim Subordinate Note and Mortgage?
No.Mortgagee Letter 2003-19, Page 6, Paragraph L, "Mortgagee Incentives" states that the Borrower may not be charged any additional costs.
Two years ago a partial claim was executed, now the Borrower has re-defaulted on the loan, will HUD subordinate the claim so the lender can complete a loan modification?
The HUD will allow the Lender to complete the Loan Modification.All language requirements and terms must be evident in the Subordination Document, so the Lender should contact HUD's Contractor at (877) 622-8525.
The five business day submittal for recordation and the 60-days from date of execution for filing the claim criteria stipulated in Mortgagee Letter 2003-19, what are the procedures for those Partial Claim properties in jurisdictions that require execution of the subordinate agreement by a HUD official?
The Department requires that the Partial Claim Security Instruments be submitted for recordation to the appropriate jurisdiction within a maximum period of five business days following the execution and prior to filing a claim with HUD.
Until the security interests are legally recorded in the appropriate jurisdiction, the responsibility for servicing the partial claim remains with the lender.
The above paragraph is threefold; (1) execution of documents by Borrower, (2) Lender receiving the documents back, and (3) asset is eligible for filing of claim and sending executed documents for recordation.
HUD's reviewers will look at the time line at each stage, expecting the Lender to expedite all actions within its control to meet the maximum five business days following the execution and prior to filing a claim with HUD.
The HUD official signature is required for the partial claims.The lender should specify adeadline date for the Borrower to return.The maximum five business days will begin after the Lender has received the returned documents executed by the HUD Official, with the exception that they will be forwarded to the National Servicing Center, Oklahoma City, OK for HUD Signature.Louisiana, Oklahoma, Maryland, and three counties in California are included as of this writing.
The collection process on a partial claim that is not collected from the Borrower at the time of the first mortgage payment is a question.
The Department bills the Borrower directly if they don't pay their partial claim by the time they pay off their first mortgage.A lump sum payoff is required for the partial claim debt to be forgiven.
There are two events that end the lender's responsibility for a partial claim.The executed Subordinate Mortgage is received by HUD.The lender is obligated to give HUD the full payoff amount of the partial claim if there is a request for payoff.
Will a Borrower be eligible for a partial claim if the asset is less than a year old?
If the financial analysis shows that the Borrower has the ability to support the normal monthly payment, and the owner-occupant is committed to continuing to occupy the property as a primary residence, then yes, that's right.If the Borrower's surplus income percentage is less than zero, a partial claim cannot be used.
Per Mortgagee Letter 2003-19, under Definition and Existing Guidance, a Lender will advance funds on behalf of a Borrower in an amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months worth of principal, interest, taxes, and insurance).It is necessary for the Borrower to have sufficient funds to pay towards the arrearage so that it is not more than a year delinquent.
The Illinois Attorney has over 20 years of experience.Real Estate law is the focus of my law firm.The ReoMac preferred attorney is a member of the Illinois Bar, ISBA and ABA.You can view all posts by BethMannRealEstateLaw.