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**U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT**

WASHINGTON, D. C. 20410-8000

September 13, 1985

OFFICE OF THE ASSISTANT SECRETARY FOR

HOUSING-FEDERAL HOUSING COMMISSIONER

**Mortgagee Letter 85-20**

TO: ALL APPROVED MORTGAGEES

**SUBJECT:** Ferrell v. Pierce, 73 C 334, N.D. ILL.

Assignment Reprocessing

This Mortgagee Letter is to advise all lenders of recent

developments with respect to the above litigation, and to alert

you to reprocessing efforts by the Department.

The Department of Housing and Urban Development (HUD) is

required by the United States District Court in the case of

Ferrell v. Pierce, 73 C 334 (N.D. Illinois) to reprocess certain

cases in which a homeowner was rejected for an assignment of the

mortgage by the local HUD office between January 1, 1980 and July

11, 1983.

On August 13, 1985, we began notifying affected homeowners of

their right to have their case reprocessed by HUD if they so

choose. If the mortgage still exists, local offices will contact

you to determine the status of the mortgage and perhaps, in some

instances, to request your assistance in providing information or

documents needed to reprocess the request. You will also receive,

during reprocessing, copies of all letters and notifications sent

to these mortgagors. HUD offices will also be asking mortgagees

to delay foreclosure action for eligible cases where the mortgages

are either in foreclosure, or where initiation of foreclosure

action might be imminent. We realize that delays can be costly,

and it is not our intention that lenders suffer as a result of

actions required of HUD. We strongly urge you to delay the

foreclosure wherever possible, and we are prepared to expedite

processing of those requests.

If delaying foreclosure will prevent you from starting

foreclosure within one year of the date of default (see 24CFR

203.355), you should request an extension of time to foreclose

from the field office. The date of the extension expiration

should be entered in Block 19 of
[[HUD-27011]{.underline}](http://www.hudclips.org/sub_nonhud/cgi/pdfforms/27011.pdf).
If you have already

incurred foreclosure expenses, and HUD ultimately accepts

assignment of the mortgage, you may claim any reasonable

foreclosure expenses previously incurred in your claim for

insurance benefits. However, you must, in order to ensure that

foreclosure expenses are paid, indicate boldly at the top of the

claim, and on all copies, \"FERRELL REPROCESSING FORECLOSURE

EXPENSES INCURRED.\" This language must also be stated in the

Mortgagee\'s Comments Section on the reverse of Part A.

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2

When HUD contacts you on an individual case, if you are

unable to delay foreclosure, or if foreclosure has been completed

and you are unable to delay eviction, you must immediately advise

the HUD field office so that HUD can take appropriate action to

protect the mortgagor\'s interest in the property. You will be

instructed by the field office to take specific actions in each

individual case.

Where the mortgage has been foreclosed, but the property has

not yet been conveyed to HUD, the field office will direct you to

convey the property to HUD if the former mortgagor is in occupancy

(or the former mortgagor and any tenants on 2-4 unit dwellings).

In these cases, file your claim for insurance benefits as follows:

\(1\) Check Block 22 \"No\", indicating that property is

occupied (not vacant).

\(2\) Insert the date of this Mortgagee Letter in Block 23

marked, \"Date of Field Office Approval\".

\(3\) Be certain that all cases conveyed occupied pursuant

to Ferrell reprocessing are marked \"FERRELL

REPROCESSING\" boldly in the top margin of Part A of the

claim form. Also, add in \"Mortgagee Comments\" section

the following language: \"Property conveyed occupied

pursuant to Ferrell reprocessing.\" This last item is

CRITICAL TO PROPER HANDLING OF YOUR CLAIM.

The records you retain in support of your claim must

indicate that the field office contacted you in connection with

the mortgagor\'s request for assignment reprocessing, and what you

told the field office with respect to whether foreclosure or

eviction would be delayed. You must also note the instructions

given to you by the field office in each case.

Also, in some instances, mortgagors who request reprocessing

of previously rejected requests may now be in bankruptcy, or under

a payment plan with their lenders. HUD offices will be checking

status of those cases with you upon receipt of the mortgagor\'s

request for reprocessing. If the mortgagor is currently

delinquent, under a payment plan with the lender, or in

bankruptcy, and foreclosure is not pending at this time, you will

be instructed to note the mortgagor\'s file and, should

institution of foreclosure become necessary as a result of the

mortgagor\'s failure to bring the account current, the case must be

sent to the field office for reprocessing at that time. We also

strongly urge delaying foreclosure on these cases as well. If you

are unable to do so, you must advise the field office so that it

can take action to protect the mortgagor\'s interest in the

property pending outcome of the reprocessing.

You must have a current assignment acceptance letter from

the field office to assign mortgages to HUD, and you must file the

assignment for record within 30 days of the date of the acceptance

letter.

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3

Although HUD is taking all reasonable measures to ensure that

normal service to mortgagees and the general public is not

disrupted, there may be some unforseen delays in responding to

assignment requests or other program matters. If any serious

problems develop for lenders as a result, please contact Richard

Buchheit, Director, Single Family Servicing Division, or a member

of his staff, on (202) 755-6672.

Questions concerning this Mortgagee Letter should also be

directed to the above telephone number.

Sincerely,

Silvio J. DeBartolomeis

Acting General Deputy Assistant

Secretary for Housing-

Federal Housing Commissioner

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U.S. Department of Housing Postage and Fees Paid

and Urban Development Department of Housing

and Urban Development

Washington, D.C. 20410 HUD-401

Official Business

Penalty for Private Use, \$300

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