PRE-FORECLOSURES 4330.4

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CHAPTER 8: PRE-FORECLOSURE SALES

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8-1 GENERAL. These instructions are to be used only for claims involving

a successful pre-foreclosure sale where the mortgagor\'s participation

was approved during the Pre-foreclosure Sale (\"PFS\") Program

demonstration (Section 204 of the National Housing Act, 12 USC 1710).

(Revised instructions will be issued by Mortgagee Letter when

Pre-foreclosure Sales are implemented nationwide).

NOTE: Intake under the demonstration ceased in September 1994.

In a successful pre-foreclosure sale, neither foreclosure nor

conveyance of the property to the Department occurs. The defaulting

mortgagor sells the property at fair market value (with certain

adjustments, as approved by the Secretary), which is less than the

outstanding indebtedness at the time of sale. HUD will pay a claim to

the lender equal to the difference between the fair market sale price

and the outstanding indebtedness, approved costs and expenses and

debenture interest.

Information is also provided for cases which are accepted for

participation in the pre-foreclosure sales program but are foreclosed

or a deed-in-lieu of foreclosure is accepted because the sale was not

successful.

8-2 PROGRAM COORDINATOR. The essential decisions relating to the

pre-foreclosure sale are made by a Program Coordinator (the Loan

Management Branch of the local HUD office or a contractor). The

Program Coordinator will make the following determinations and provide

appropriate information and directions to the mortgagee and the

closing agent.

A. The eligibility of the mortgagor for participation in the program

(See Appendix 19).

B.Instructions to the mortgagee to delay or postpone the

foreclosure sale date (See Appendix 19).

C.Identification of liens to be paid by the mortgagee to facilitate

the sale or acceptance of a deed-in-lieu of foreclosure (See

Appendix 20).

D.Approval or rejection of the sales contract (See Appendix 21).

E.Incentives to be paid to the mortgagor at closing (See Appendix

22).

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Page 8-19/94

4330.4 PRE-FORECLOSURES

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F.Termination of the mortgagor\'s participation in the program (See

Appendix 23).

G.Recommends that the mortgagee accept a deed-in-lieu of

foreclosure (See Appendix 24).

8-3RESPONSIBILITIES OF MORTGAGEE IN THE PRE-FORECLOSURE SALES PROGRAM.

Mortgagees are responsible for:

A.Correct notification procedures (in particular, sending

appropriate notices and contacting mortgagors in only those five

local HUD Office jurisdictions covered by the demonstration);

B.Overall responsiveness and timeliness of the servicing staff to

mortgagors who appear to be entered in, or qualified for, the

pre-foreclosure sale program;

C.Overall mortgagee cooperation with all aspects of the program.

D.Pay the amount or amounts approved by the Program Coordinator for

the discharge of liens or encumbrances and determine that such

liens or encumbrances are discharged or released of record; and,

E.Cancel and surrender the credit instrument to the mortgagor and

satisfy the mortgage of record on receipt of the sales proceeds

available for mortgage satisfaction and a copy of Form HUD-1

approved by the Program Coordinator.

8-4MARKETING THE PROPERTY. A mortgagor who has been accepted as a

participant in the pre-foreclosure sales program is responsible for

selling the property, either through his/her own efforts or through a

real estate agent. The purchase price must be sufficient to provide

at least 90% of the appraised value of the property after expenses of

the transaction unless waived by the local HUD office and the sales

contract must be approved by the Program Coordinator.

The mortgagee will be requested to delay the foreclosure sale during

the period of marketing.

8-5SALES PROCEEDS. Following a successful pre-foreclosure sale, the

closing agent will distribute the sale proceeds as provided in the

sales contract and the approved closing worksheet. The closing agent

will forward to the mortgagee a copy of Settlement Statement, HUD-1,

and the portion of sales proceeds available for satisfaction of the

mortgage. Upon receipt of the portion of sales proceeds available for

mortgage satisfaction and a copy of HUD-1 approved by the Program

Coordinator the mortgagee will satisfy the mortgage. The amount

received will be

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9/94 Page 8-2

PRE-FORECLOSURES 4330.4

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entered in Item 108 of Part B, Form HUD-27011.

8-6DEED-IN-LIEU OF FORECLOSURE. The Program Coordinator may recommend to

the mortgagee that a deed-in-lieu of foreclosure be accepted if the

mortgagor is unable to find a qualified buyer for the property

(Exhibit 24). If such recommendation is made, the mortgagee continues

to be responsible for compliance with the requirements of Handbook

4330.1, REV-2, paragraph 9-4, and must transfer good marketable title

to HUD within 30 days after the mortgagee acquired good marketable

title to and possession of the property. The deed may be in the form

of a direct conveyance.

The following additional allowances and expenditures are authorized:

A.\$500 payment to the mortgagor as consideration for execution of

the deed-in-lieu. This amount should be entered in Item 305

rather than Item 307 to assure 100% reimbursement.

B.The amount approved by the Program Coordinator and paid by the

mortgagee for the discharge of junior liens. The amount paid

should be entered in Item 309 of Part D.

C.\$250 payment to the mortgagee as compensation for administrative

costs relating to the pre-foreclosure sales claim. This amount

should be entered in Item 408, Part E and carried over to Item

129, Part B.

A copy of the Request for Deed-In-Lieu of Foreclosure (Exhibit 24) and

Discharge of Liens (Exhibit 19), if applicable, should be maintained

in the claim review file to support the above payments.

8-7CLAIM TYPE. Within 30 days after the date of the pre-foreclosure sale

closing the mortgagee must file its claim for insurance benefits on

Form HUD-27011, as provided in this Chapter.

Do not file Form HUD-27050A \"Mortgage Insurance Termination\" following

the sale.

If the pre-foreclosure sale is not completed and a deed-in-lieu of

foreclosure is accepted or the mortgage is foreclosed, the mortgagee

must file its claim as a conveyance claim (Chapter 2). In such cases,

however, the conveyance claim may include compensation to the

mortgagee for administrative costs (paragraph 8-11), incentive

payments to the mortgagor, payments for lien satisfaction if a

deed-in-lieu is accepted and title search costs.

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Page 8-39/94

4330.4 PRE-FORECLOSURES

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8-8TIME REQUIREMENTS. The claim for insurance benefits (Parts A and B of

Form HUD-27011) must be submitted to HUD within 30 days after the date

of the pre-foreclosure sale closing. If the sale proceeds have not

been received from the Closing Agent, an extension of time must be

requested. Failure to comply will result in curtailment of debenture

interest to the date the claim should have been submitted or to the

date extended by HUD.

If the pre-foreclosure sale is unsuccessful or if the Program

Coordinator terminates the mortgagor\'s participation in the

Pre-foreclosure Sale Program, the mortgagee must initiate foreclosure

no later than 60 days after the date of the termination (Appendix 23)

and must meet the conveyance time requirements (paragraph 2-2).

8-9EXTENSION OF TIME REQUIREMENTS. If the mortgagee cannot comply with

the above requirements for a particular action because of

circumstances beyond its control, it should submit a request for an

extension of time to the local HUD office using form HUD-50012. The

request should be made as soon as possible and must be made before the

time limit for that action expires.

If the pre-foreclosure sale is unsuccessful and the mortgagee cannot

initiate foreclosure or acquire a deed-in-lieu within the time frames

specified because of the delay requested by the Program Coordinator,

the mortgagee must file an Extension Request, Form HUD-50012, with the

Loan Management Branch of the local HUD office. A copy of the

Instructions to Mortgagee (Exhibit 19) and the Termination of

Participation (Appendix 23) must be attached to the Form HUD-50012.

The normal time frames for institution of foreclosure will apply

should the case result in a conveyance to HUD. However, acceptance

into the Pre-foreclosure Sale Program might constitute grounds for

approving an extension request depending on the individual

circumstances of the case. Any legal cost incurred for the

foreclosure related actions, will be reimbursed at the regular

two-thirds rate.

If foreclosure was initiated within the conveyance time requirements

but further action was delayed at the request of the Program

Coordinator, a brief note of the cause of delay should be entered in

the Mortgagee\'s Comments on Part A and supporting documents should be

retained in the claim review file.

8-10TITLE REQUIREMENT. Since the property is not conveyed to the

Secretary, title evidence procedures are not applicable.

The Program Coordinator may request the mortgagee to obtain a title

search to determine the existence of liens or encumbrances on the

property. If such request is made the mortgagee shall obtain a title

search showing the name and address of the holder, and the amount of

the lien or encumbrance. The cost of the search will be

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9/94 Page 8-4

PRE-FORECLOSURES 4330.4

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reimbursed by entry in Item 305.

8-11 INCENTIVE PAYMENTS AND COMPENSATION.

A.Certain payments may be made to the mortgagor at the closing as

incentive for selling the property:

1.\$1,500 or 50% of the amount by which the selling price

exceeds the appraised value, whichever is greater, plus

2.\$500 if the closing occurs within three months of the date

the mortgagor\'s application to participate in the

Pre-foreclosure Sales Program has been accepted or \$200 if

the closing occurs within four months of such date.

These payments are made at the sales closing by the closing agent

and will reduce the net proceeds of the sale. No entry should be

made in the insurance claim for these payments.

B.If the property is not sold, the mortgagee is authorized to pay

the mortgagor \$500 for execution of a deed-in-lieu of foreclosure

which conveys good marketable title to the mortgagee or to HUD.

Such allowance should be entered in Item 305.

C.The mortgagee is authorized to pay an amount approved by the

Program Coordinator for the discharge of liens or encumbrances

which restrict the sale of the property or the acceptance of a

deed-in-lieu under the Pre-foreclosure Sales Program. Such

allowances should be entered in Item 309.

D.The mortgagee is entitled to receive as a part of the insurance

settlement \$250 as compensation for administrative costs relating

to each Pre-foreclosure Sale claim, each claim involving a

deed-in-lieu of foreclosure under the Pre-foreclosure Sales

Program and each conveyance claim made because of the termination

of a mortgagor from the PFS program. Such allowance should be

entered in Item 408 of Part E and carried over to Item 129 of

Part B.

8-12DISCHARGE OF LIENS. The Program Coordinator may request the
mortgagee

to pay outstanding liens in order to facilitate the sale of the

property or to perfect the title so that a deed-in-lieu of foreclosure

will be acceptable under the Pre-foreclosure Sales Program. The

request must be in writing (Appendix 20) and must identify the

lien(s).

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Page 8-59/94

4330.4 PRE-FORECLOSURES

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It may be possible for the mortgagee or the mortgagor to negotiate a

satisfaction or release of a junior lien for less than the full amount

of the lien. The lien holder may be willing to compromise the amount

of the lien to avoid discharge by a foreclosure action. Satisfaction

or release of the lien may permit a pre-foreclosure sale or

deed-in-lieu which would otherwise be unacceptable.

The amount paid by the mortgagee for satisfaction or release of the

lien should be entered in Item 309 of Part D.

8-13PROTECTION AND PRESERVATION OF PROPERTIES. (Applicable only if

property is vacant) The mortgagee is responsible for inspection,

protection and preservation of the property when the mortgage is in

default and a payment is not received within 45 days of the due date.

The responsibility continues until the Program Coordinator instructs

the mortgagee to delay or postpone the foreclosure sale (Appendix 19).

Funds expended for this purpose will be reimbursed on filing Part C

with the application for insurance benefits.

The mortgagee will not be responsible for, and will not be reimbursed

for inspection, protection and preservation of the property after

receiving instructions from the Program Coordinator to delay or

postpone the foreclosure sale, unless specifically requested by the

Program Coordinator.

If the Program Coordinator notifies the mortgagee that the mortgagor\'s

participation in the program has been terminated (Appendix 23) or

recommends that the mortgagee accept a deed-in-lieu of foreclosure

(Appendix 24), or if the postponement of foreclosure period expires

(Appendix 19), the mortgagee again becomes responsible, and will be

reimbursed for inspection, protection and preservation of the

property. The mortgagee will also be responsible for any damage

suffered by the property after such notice, recommendation or

expiration because of the mortgagee\'s failure to take action.

8-14REIMBURSABLE COSTS AND EXPENSES. It is anticipated that claims for

the reimbursement of expenses on pre-foreclosure sale claims will be

minimal and that most expenses which are normally incurred when

conveying a property to HUD will not be necessary. However, expenses

which are appropriately advanced by the mortgagee on behalf of the

mortgaged property may be claimed for reimbursement.

A.Disbursements for taxes, assessments, hazard insurance and other

allowable items payable before the date of the pre-foreclosure

sale closing.

B.Costs of foreclosure initiation (subject to the two-thirds

limitation) if foreclosure was initiated and further action was

postponed pending completion of a pre-foreclosure sale.

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9/94 Page 8-6

PRE-FORECLOSURES 4330.4

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C.The cost of inspections, protection and preservation actions,

subject to regional limitations, performed prior to acceptance

into the Pre-foreclosure Sales Program if established criteria

required such actions.

D.An amount paid for the release or discharge of liens or

encumbrances with the approval of the Program Coordinator.

E.\$250 to be paid to the mortgagee as compensation for

administrative costs. No debenture interest should be computed

on this amount.

F.If the pre-foreclosure sale is successful and the property is

sold, HUD will not pay for any of the following costs incurred by

the mortgagee:

1.Costs to maintain, protect, and preserve the property after

the pre-foreclosure sale closing,

2.Eviction costs, or

3.Any other costs related to the property which were incurred

after the closing date.

8-15HAZARD INSURANCE. There will be no reimbursement from HUD for any

hazard insurance premiums allocated to the period after the

pre-foreclosure sale closing. Otherwise appropriate advances by the

mortgagee for hazard insurance premiums are reimbursable.

8-16SPECIAL FORBEARANCE. If a claim for insurance benefits is filed

pursuant to a default under a special forbearance agreement entered

into between the mortgagee and the mortgagor, the debenture or cash

payment will include all unpaid mortgage interest computed to the

earlier of 90 days following the date the mortgagor failed to meet the

requirements of the forbearance agreement or the date the Program

Coordinator accepts the mortgagor as a participant in the

pre-foreclosure sales program.

8-17DEFICIENCY JUDGMENTS. Mortgagors determined to be eligible for, and

who participate in the pre-foreclosure sales program, are not to be

pursued for deficiency judgments.

8-18DEBENTURE INTEREST ALLOWANCE. The issue date of debentures, or the

beginning date for computation of the debenture interest allowance if

settlement of the claim is made in cash, will be the date of default

as such term is defined in 24 CFR 203.331, provided the insurance

settlement does not include unpaid mortgage interest resulting from a

default under a special forbearance agreement.

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Page 8-79/94

4330.4 PRE-FORECLOSURES

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When a default under a special forbearance agreement is involved, the

debentures will be dated, or the debenture interest allowance will be

computed from the last date of the mortgage interest calculation.

When the claim is settled in cash, the cash payment will include an

amount equivalent to the interest the debentures would earn, if they

were issued, at the debenture rate.

Debenture interest will be paid on the unpaid principal balance from

the date of default to the date of the closing of the pre-foreclosure

sale.

Debenture interest continues on the difference between the unpaid

principal balance and the net pre-foreclosure sale proceeds, to the

date of final settlement of the claim.

Further debenture interest is paid on allowable costs and advances

from the date of expenditure to the date of final settlement of the

claim.

If the mortgagee fails to take the actions set forth under \"Time

Requirements\" within the time specified, or at such further time as

may be approved by HUD in writing, the interest allowance shall be

computed only to the date the particular action should have been taken

or to which it was extended (24 CFR 203.402(k)(2)(ii)).

8-19 CLAIM PAYMENT.

Upon receipt of Parts A and B, Form HUD-27011, and the required

attachments in Headquarters, HUD will pay to the mortgagee the unpaid

principal balance of the mortgage and an amount determined by:

A.Adding the following items:

1.Allowable costs and advances.

2.Debenture interest on the unpaid principal balance from the

date of default to the date of closing of the

pre-foreclosure sale.

3.Debenture interest on allowable costs and advances from the

date of expenditure to the date of closing of the

pre-foreclosure sale.

4.Debenture interest on the difference between the unpaid

principal balance plus allowable costs and advances, less

the net proceeds of the sale, from the date of closing of

the pre-foreclosure sale to the date of claim settlement.

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9/94 Page 8-8

PRE-FORECLOSURES 4330.4

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5.\$250 to compensate the mortgagee for administrative costs

under the pre-foreclosure sales program.

6.Allowable mortgage interest if the mortgagor failed to meet

the requirements of a special forbearance agreement.

7.Amounts paid to satisfy or release junior liens with the

approval of the Program Coordinator.

B.Deducting the following items:

1.All amounts received by the mortgagee on account of the

mortgage after closing of the pre-foreclosure sale.

2.All amounts received by the mortgagee from any source

relating to the property on account of rent or other income

after deducting handling expenses.

3.All cash retained by the mortgagee for the account of the

mortgagor that have not been applied to reduction of

principal.

4.All amounts received by the mortgagee relating to the sale

of the property.

8-20DOCUMENTS TO BE SUBMITTED. It is very important that all required

documentation be forwarded to the appropriate location in a timely

manner. Failure to meet any of the documentation requirements could

jeopardize all or part of the claim reimbursement. The various

documentation requirements imposed on the mortgagee are designed to

provide critical control and notification functions which enable HUD

to expedite the payment of claim.

All documents must be sent to HUD Headquarters or the local HUD Office

within 30 days of the sale closing date.

A.To HUD Headquarters.

1.The original of Parts A and B.

2.Copies of Parts C, D and E.

3.The original Mortgage Insurance Certificate.

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Page 8-99/94

4330.4 PRE-FORECLOSURES

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4.A copy of Form HUD-l.

5.A copy of the \"special\" forbearance agreement, if any.

6.A worksheet showing reallocation of mortgage payments if

capitalization method of accounting is used.

B.To the Local HUD Office:

1.Copies of Parts A and B.

2.The original of Parts C, D and E.

3.A copy of Form HUD-1.

8-21 CLAIM PREPARATION - PRE-FORECLOSURE SALES.

The claim must be completed as described below using HUD Form-27011,

Single Family Application for Insurance Benefits. In order to avoid

delay in payment, the claim must be complete and accurate and contain

all information requested.

In many instances, the instructions for conveyance claims apply

equally in pre-foreclosure sales cases. When this occurs the words

\"Same as Conveyance\" appear after the Item title and the conveyance

instructions for that item are repeated verbatim for convenience.

If the property is acquired by the mortgagee and conveyed to HUD

(although pre-foreclosure procedures were followed but the sale was

unsuccessful), the claim must be prepared using the conveyance

instructions (Chapter 2). If the property is sold pursuant to the

requirements of the pre-foreclosure sales program, the following

instruction must be used.

Whether the property was sold or acquired by the mortgagee and

conveyed to HUD, if the pre-foreclosure sales procedures were

followed, write in bold letters, preferably colored, across the top of

each part of the form \"Pre-foreclosure Sales Program\". The purpose of

this addition is to assure special handling for the claim and

appropriate recognition of incentive payments.

Because this program is new, some of the item titles do not adequately

describe the information to be entered. Pending revision of the claim

form, enter information as instructed in this chapter notwithstanding

inaccurate item titles.

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9/94 Page 8-10

PRE-FORECLOSURES 4330.4

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A.Instructions for the Completion of HUD Form 27011, Part A,

Initial Application. The following item by item instructions are

to be used when completing HUD Form 27011, Part A, for claims

involving an authorized pre-foreclosure sale.

PART A

INITIAL APPLICATION

Item 1 Claim Type. Enter 07 in the space next to

Items 2

and 3 FHA Case Number and Section of Act Code

(Same as Conveyance). Enter the FHA Case Number

and the appropriate Section of the National

Housing Act ADP code. All mortgages endorsed

since 1962 use the first style shown below, with

three numerals, then a hyphen, then six numerals

(or seven including the check digit). Be sure to

include the hyphen on the claim, whether the claim

is submitted on paper or through electronic data

interchange (EDI), even though CHUMS may omit it.

The three other acceptable FHA case number

formats, for pre-1962 mortgages, are also

illustrated below. All models include the Section

of the Act (SOA) ADP codes. The formatted case

number appears on the MIC or the advanced notice

of S/F Annual MIP unless the case is included in

CHUMS, as in \"5\" below.

\(1\) X X X - X X X X X X X X X

FHA Case No. SOA ADP Code

\(2\) X X - X X X X X X X X X

FHA Case No. SOA ADP Code

\(3\) X X X X X X - X X X X X

FHA Case No. SOA ADP Code

\(4\) X X X - X X X X X X X X

FHA Case No. SOA ADP Code

\(5\) X X X X X X X X X X X X X

FHA Case No. SOA ADP Code

(used in CHUMS)

Item 4 Default Reason Code (Same As Conveyance). Enter

the applicable code number from the defa

ult

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Page 8-119/94

4330.4 PRE-FORECLOSURES

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listed below. If code 15 is used, explain the

reason on the reverse of Part A under \"Mortgagee\'s

CODE REASON

01 =Death of a principal mortgagor

02 =Illness of a principal mortgagor

03 =Illness of mortgagor\'s family

member

04 =Death of mortgagor\'s family member

05 =Marital difficulties

06 =Curtailment of income (Reduction of

income of borrower)

07 =Excessive obligations, same income,

including habitual nonpayment of

debts

08 =Abandonment of property

09 =Distant employment transfer

10 =Neighborhood problem

11 =Property problem

12 =Inability to sell property

13 =Inability to rent property

14 =Military service

15 =Other reasons (Explain.)

Item 5 Endorsement Date (Same as Conveyance). Enter the

endorsement date that appears on the Mortgage

Insurance Certificate. If the mortgage was

insured before MIC\'s were issued, enter the

endorsement date that appears on the note.

Item 6 Date Form Prepared. Enter the date this form is

completed and submitted to HUD. To avoid

debenture interest curtailment, Part A must be

submitted within 30 days after the date of the

pre-foreclosure sale closing.

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9/94 Page 8-12

PRE-FORECLOSURES 4330.4

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Item 7 Due Date of First Payment to Principal and

Interest (Same as Conveyance). Enter the date the

first payment to Principal and Interest is due.

Obtain this date from the mortgage note.

Item 8 Due Date of Last Complete Installment Paid (Same

as Conveyance). Enter the date the last complete

installment paid was due, not the date it was

paid. This item should be taken from the payment

ledger. If no payments have been made, enter the

date in Item 7 (Due Date of the First Payment to

Principal and Interest). Note that the date in

this item will always be the first of the month.

Item 9 Date of Possession and Acquisition of Marketable

Title. Enter the date the Program Coordinator

accepts the applicant into the PFS Program.

Item 10 Date Deed or Assignment Filed for Record or Date

of Closing or Appraisal. Enter the date of the

pre-foreclosure sale closing.

Item 11 Date Foreclosure Proceedings (a) Instituted or (b)

Date of Deed In Lieu. If foreclosure proceedings

were instituted enter the date. If a deed-in-lieu

is accepted or if foreclosure was completed the

claim must be filed as conveyance.

Item 12 Holding Mortgagee Number (Payee) (Same as

Conveyance). Enter the complete 10-digit

mortgagee number of the holding mortgagee.

Note: This number determines the payee\'s name and

the address to which the insurance benefits check

and claim payment data are mailed.

Item 13 Servicing Mortgagee Number (Same as Conveyance).

Enter the complete 10-digit mortgagee number of

the servicing mortgagee.

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Page 8-139/94

4330.4 PRE-FORECLOSURES

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Note:This number determines the name and

address to which all computer generated

letters and claim payment data is

mailed. Information will be mailed only

to the holding mortgagee if this item is

not completed.

Item 14 Mortgagee Reference Number (Same as Conveyance).

Enter the loan number (maximum 15 digits) used by

the mortgagee for identifying the case if any.

This number will be printed on the benefits check.

If the mortgagee is FNMA or GNMA, the FNMA or GNMA

loan number must be entered.

Item 15 Original Mortgage Amount (Same as Conveyance).

Enter the original mortgage amount. This figure

should be taken from the mortgage note. If there

has been a recast of the mortgage, make a notation

of the recasting on the reverse side of Part A

under \"Mortgagee\'s Comments\" and make reference to

24 CFR 203.342.

Item 16 Holding Mortgagee EIN. Not applicable.

Item 17 Unpaid Loan Balance as of Date in Item 8 (Item 11

if coinsurance) (Same as Conveyance). Enter the

unpaid mortgage balance after crediting the last

complete monthly installment paid. This figure is

taken from the mortgagee\'s payment ledger.

Partial payments insufficient to complete a full

monthly installment are to be reported in Part B,

Item 109 as escrow funds.

Item 18 Date of Firm Commitment (Same as Conveyance).

Enter the date of the firm commitment. This date

should be taken from the firm commitment document,

if available. The debenture interest rate is

determined by the firm commitment date or the date

of endorsement, whichever yields the higher rate.

If the case was insured under the Direct

Endorsement Program or the commitment date is not

available, this item must be left blank. Direct

endorsement mortgages may be identified by

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9/94 Page 8-14

PRE-FORECLOSURES 4330.4

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the suffix code 700 through 799. Do not enter a

date here if this is a Direct Endorsement or a

converted coinsurance loan.

Item 19 Expiration Date of Extension to Foreclose/ Assign.

Not applicable.

Item 20 Date of Notice/Extension to Convey. Enter date of

approved extension to submit claim.

Item 21 Date of Release of Bankruptcy, If Applicable (Same

as Conveyance). Enter the date the bankruptcy

stay or the local law prohibition was released.

Note: When there is more than one bankruptcy, and

the mortgagee is entitled to a 60 day extension to

begin foreclosure, enter the release date which

applies to the extension.

\* Item 22 Is Property Vacant? Yes or No - Indicate the

occupancy status as of the date in Item 9.

Item 23 If Item 22 is \"No,\" Date of Local HUD Office

Approval - Not applicable.

Item 24 Is Property Conveyed Damaged? Yes or No - Not

applicable.

Item 25 If Item 24 is \"Yes,\" Date of (a) Local HUD Office

Approval (Pursuant to 203.379(a)) or (b)

Certification (pursuant to 203.379(b)) - Not

applicable.

Item 26 Type of Damage. Not applicable.

Item 27 Recovery or Estimate of Damage. Not applicable.

Item 28 Is Mortgagee Successful Bidder? Yes or No - Not

applicable.

Item 29 Deficiency Judgment Code. Not applicable.

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Page 8-159/94

4330.4 PRE-FORECLOSURES

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Item 30 Authorized Bid Amount. Enter the selling price of

the property from HUD-1.

Item 31 Mortgagee Reported Curtailment Date (Same as

Conveyance). Not applicable.

Item 32 Schedule of Tax Information. Not applicable.

Item 33 Mortgagor\'s Name and Property Address (Same as

Conveyance). - Enter the name of the mortgagor in

default as it appears on the ledger record. Enter

the property address as it appears on the security

instrument or the mortgage insurance certificate.

Enter the social security numbers of all

mortgagors, if known. At least one social

security number is required.

Item 34 Brief Legal Description of Property. Enter a

brief description of the property. This

information is found on the mortgage.

Item 35 Name and Address of Mortgagee (Same as

Conveyance). Enter the name and address of the

mortgagee, including the ZIP code.

Item 36 Name and Address of Mortgagee\'s Servicer (Same as

Conveyance). Enter the name and address of the

mortgagee\'s servicer, including the ZIP code, if

applicable. Include the name and telephone number

of a contact person who can answer questions about

the claim.

Items 37

and 38 Mortgagee Official Signature, Date and Title. and

Servicer Signature, Date and Title (Same as

Conveyance). The claim must be signed and dated

by an official of the holding mortgagee if the

holding mortgagee is filing the claim. If a

servicer is filing the claim on behalf of the

mortgagee, an official of the servicer must sign

and date the form. The application must be

complete when signed and the actual date signed

must

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5/95 Page 8-16

PRE-FORECLOSURES 4330.4

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be entered by the signing official. The

application will be returned if it is not signed

or if it contains a stamped or duplicated

signature.

\* Note to

signing

official: Please be sure you have read and understand the

certifications on the HUD Form-27011 before

signing and dating. If your system prints the

date in items 37 and 38, check to ensure this is

the date you are signing the form. Also check the

submission date in item 6 to ensure it does not

reflect an earlier date. The date in item 6

should be the same date as item 37 or item 38.\*

Item 39 Amount of Monthly Payment to: (a) FHA insurance,

\(b\) Taxes, (c) Hazard Insurance and (d) Interest

and Principal. Not applicable.

Item 40 If Bankruptcy Filed, Enter Date. Enter the date

of the last bankruptcy action. This is required

if Item 21 is completed.

Item 41 If Conveyed/Assigned Damaged, Date Damage

Occurred. Not applicable.

Item 42 Date HIP Cancelled or Refused, if Applicable. Not

applicable.

Item 43 Number of Living Units. Not applicable.

Item 44 Status of Living Units. Not applicable.

Mortgagee\'s Comments, if Any. Use this area to justify unusual

circumstances as well as other information required by the

instructions. Enter the name and phone number of the Program

Coordinator

HUD\'s Comments, if any. HUD USE ONLY.

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Page 8-179/94

4330.4 PRE-FORECLOSURES

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B.Instructions for the Completion of HUD Form 27011, Part B, Fiscal

Data. The following item-by-item instructions are to be used

when completing HUD Form 27011, Part B, for pre-foreclosure sales

cases. Prepare this Part after Parts C, D and E have been

completed. The information entered in this part is transferred

from those parts.

PART B

FISCAL DATA

Item 100 Mortgagor\'s Name and Property Address (Same as

Conveyance). Enter the mortgagor\'s name and

property address as they appear in Item 33 of Part

A.

Items 101

and 102 FHA Case Number and Section of Act Code (Same as

Conveyance). Enter the FHA Case Number and

Section of the Act Code as they appear in Items 2

and 3 of Part A.

Item 103 Mortgagee\'s Reference Number (Same as Conveyance).

Enter the mortgagee\'s Reference Number as it

appears in Item 14 of Part A.

Item 104 Date Form Prepared. Enter the date Parts A and B

are prepared and submitted to HUD.

Item 105 Expiration Date to Submit Title Evidence, if

Applicable. Not applicable.

Item 106 Check if Supplemental. Not applicable.

Item 107 Adjustment to Loan Balance (if different from

block 17 on Part A). Not applicable.

Item 108 Sale/Bid Price or Appraisal Value (for Coinsurance

or Nonconveyances). Enter the amount of proceeds

received from the Closing Agent.

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9/94 Page 8-18

PRE-FORECLOSURES 4330.4

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Item 109 Escrow Balance (as of Date in Block 10, Part A).

Enter amount remaining in escrow account as of the

date of the pre-foreclosure sale closing. Also

include any funds received on account of the

mortgage which have not been applied to reduce the

indebtedness, e.g., partial payments, hazard

insurance refunds, buydown monies, funds held in

escrow for on-site repairs (pursuant to Form

HUD-92300, Assurance of Completion Agreement). DO

NOT SEND ESCROW FUNDS TO HUD. (CONFIRM IF THE

ESCROW BALANCE WAS INCLUDED IN THE FUNDS RETAINED

TO SATISFY THE MORTGAGE)

oSee Item 123 for unapplied Section 235

assistance payments.

oPayment of expenses for which funds are

escrowed shall be charged to the escrow

account in full or in part until the escrow

account balance equals zero. Expenses paid

from available escrow funds are not to be

recorded on Part D.

oDO NOT ENTER A NEGATIVE BALANCE. Advances by

the mortgagee for expense payments normally

charged to the escrow account shall be

recorded under Part D, Items 305 or 311, as

appropriate. When the first occurrence of an

expense results in a negative balance to

escrow, enter the negative amount in Item 305

or 311, whichever is appropriate. Interest

on advances shall be computed from the date

of disbursement to the date the claim is

mailed. If there were any advances from

escrow prior to the date of default, interest

is calculated from the date of default.

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Page 8-199/94

4330.4 PRE-FORECLOSURES

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oIllustration of Mortgagee Advances:

Date Date Escrow Due

Paid Interest Principal Escrow Balance

Balance Forward . . . . . . . . . . . . . \$151.60

1/01/83 2/03/83 \$73.32 \$21.07 \$70.69 222.29

8/03/83 198.98- 23.31

12/11/83 51.19- (27.88)/1

Item 110 Total Disbursements for Protection and

Preservation from Line 264, Part C. Enter the

total amount appearing in Part C, Item 264.

Item 111 Total Disbursements from line 305, Part D. Enter

the total amount appearing in Part D, Item 305.

Item 112 Attorney/Trustee Fees Paid From Line 306, Part D.

Enter the total amount appearing in Part D, Item

306\.

Item 113 Foreclosure, Acquisition, Conveyance and Other

Costs from Line 307, Part D. Enter the total

amount appearing in Part D, Item 307.

Item 114 Bankruptcy Fee (if applicable) from Line 310, Part

D. Enter the amount of bankruptcy fees appearing

in Part D, Item 310.

Item 115 Rental Income. Enter any income from the rent of

the property between the date of default and the

date of pre-foreclosure sales closing.

Item 116 Rental Expense (Same as Conveyance). Enter rental

expenses incurred, if any. If there is no entry

in Item 115, make no entry in this item.

Item 117 Total Taxes on Deed from Line 308, Part D. Not

applicable.

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/1First amount to be entered on Part D, Item 305 or 311, as applicable.

Interest should only be calculated on \$27.88, not the \$51.19.

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9/94 Page 8-20

PRE-FORECLOSURES 4330.4

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Item 118 Recovery or Damage (if not reported on Part A).

Use Line 119 if Reported on Part A. Not

applicable.

Item 119 Estimate or Recovery from Part A. Not applicable.

Item 120 Special Assessments (DO NOT USE FOR COINSURANCE)

from Line 3O9, Part D (Same as Conveyance). Enter

the total amount paid and debenture interest which

appear in Item 309, Part D.

Item 121 Mortgage Note Interest. Mortgage note interest

will be included in the insurance benefits if a

mortgagor fails to meet the requirements of a

special forbearance agreement and the failure

continues for at least 60 calendar days.

From. Enter the date of the last completely paid

installment after all funds received under the

agreement are applied according to the terms of

the mortgage (Item 8, Part A). If no mortgage

payments were made, enter a date 30 days prior to

the due date of the first scheduled payment (Item

7, Part A).

To. Enter the earliest of the following dates:

1.the date of sales closing,

2.90 calendar days following the date the

mortgagor fails to meet the requirements of

the forbearance agreement, or

3.the date the Program Coordinator accepts the

mortgagor as a participant in the

Pre-foreclosure Sales program.

Rate. Enter the mortgage interest rate as it

appears on the mortgage note. Show fractions in

decimals to three places.

Computation method. To obtain the amount of

accrued mortgage interest due, multiply the Daily

Interest Rate

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Page 8-219/94

4330.4 PRE-FORECLOSURES

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Factor by the amount of the unpaid principal

balance. The Daily Interest Rate Factor is

provided in Appendix 8. This result is then

multiplied by the number of days from the due date

of the last completely paid installment to the

date selected as the \"ending date\". To assist in

determining the number of days refer to the Julian

Date Calendars provided in Appendix 9.

Item 122 Mortgage Insurance Premiums (Same as Conveyance).

Enter total from Item 311, Part D.

Item 123 Unapplied Section 235 Assistance Payments (Same as

Conveyance). Enter unapplied assistance payments

in Column A, if applicable.

Item 124 Overpaid Section 235 Assistance Payments (Same as

Conveyance). Enter the amount of any funds

advanced by the mortgagee to repay to HUD

assistance to which the mortgagor was not entitled

and which was not recovered from the mortgagor,

unless the overpayment was the result of error on

the part of the mortgagee. Amount is to be

entered in Column B. Do not calculate debenture

interest for Column C.

Items 125 Overhead Costs. Not applicable.

Item 126 Uncollected Interest (Approved Forbearance

Agreements Only). Not applicable.

Item 127 Amount Due from Buyer at Closing or at Appraisal

Notice Date (From Line 406, Part E). Not

applicable.

Item 128 Amount Owed to Buyer at Closing or at Appraisal

Notice Date (From Line 407, Part E). Not

applicable.

Item 129 Additional Closing Costs at Settlement. Enter the

\"Total\" from Line 408, Part E.

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9/94 Page 8-22

PRE-FORECLOSURES 4330.4

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NOTE: Do not calculate debenture interest on the

administrative fee. Mortgagees are not entitled

to debenture interest on this item.

Items 130

and 131 Not Applicable.

Item 133 Contact: Holding Mortgagee, Name and Telephone

Number; or Contact: Servicing Mortgagee, Name and

Telephone Number (Same as Conveyance). Enter the

name and telephone number of a person in the

holding or servicing mortgagee\'s office who can

answer questions concerning the information

reported on this claim form. Include the Holding

Mortgagee number which you entered in Item 12 of

Part A.

Items 134

to 136 Enter the totals of Columns A - Deductions; B -

Additions; and C - Interest.

Item 137 Net Claim Amount (Columns B - A + C). The net

claim amount calculated by the mortgagee will

differ from the actual amount HUD will pay due to

possible interest curtailment, disallowed

expenses, and additional debenture interest

calculated to the date of claim settlement.

Items 138

and 139 Mortgagee\'s Official Signature, Date and Title

(signature not necessary if signed by a servicer)

and Servicer Signature, Date, and Title. Enter a

signature in at least one of these blocks.

C.Instructions for the Completion of HUD Form 27011, Part C,

Support Document.

There should be no entry in Part C unless inspections,

preservation or protection costs were incurred before the

mortgagee was instructed to delay or postpone the foreclosure

sale.

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Page 8-239/94

4330.4 PRE-FORECLOSURES

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Any debenture interest calculated on such expenses should run

from the date of expenditure or default, if later, to the date of

the pre-foreclosure sale closing.

D.Instructions for the Completion of HUD Form 27011, Part D,

Support Documentation (Continuation 1).

The following item-by-item instructions are to be used when

completing Form HUD-27011, Part D, for pre-foreclosure claims.

The general instructions for the preparation of Part D in

conveyance claims are applicable in pre-foreclosure cases except

that the property is not conveyed to the Secretary.

Expenditures may be entered on Part D as they occur, however,

debenture interest calculations should not be made until the date

of claim submission because interest allowance will be computed

from the date of expenditure or default if later, to the date of

the pre-foreclosure sale closing.

oDate Paid. A separate entry must be made for each payment.

Enter the date the check was disbursed. If an expenditure

or advance was made prior to the date of default, enter the

date of default and enter the actual date paid in

parentheses following the description.

oDescription of Service Performed. Enter a description of

the items or types of services performed. Additional space

is provided on the reverse of the form.

oAmount Paid. Actual payment amounts are to be entered.

This information will be transferred to Part B, Fiscal Data.

oDebenture Interest. To obtain the amount of interest due on

an expenditure, multiply the daily interest rate factor by

the amount paid. Multiply this result by the number of days

from the date paid for each line item to the date of closing

of the pre-foreclosure sale (Item 10, Part A). Daily

Interest Rate Factor tables are provided in Appendix 8 to

assist in converting the debenture interest rates. In

addition, Julian date calendars are provided in Appendix 9

to assist in determining the number of days from the date

the expenditure was paid to the date of the pre-foreclosure

sale closing or the curtailment date.

oTotal the \"Amount Paid\" and \"Debenture Interest\" columns.

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9/94 Page 8-24

PRE-FORECLOSURES 4330.4

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PART D

SUPPORT DOCUMENT (Continuation 1)

Items 300

and 301 FHA Case Number and Section of Act Code (Same as

Conveyance). Enter the FHA case number and

Section of the Act Code as they appear in Items 2

and 3 of Part A.

Item 302 Mortgagee\'s Reference Number (Same as Conveyance).

Enter the mortgagee\'s reference number as it

appears in Item 14 of Part A.

Item 303 Debenture Interest Rate (Same as Conveyance).

Using the Debenture Interest Rate Table provided

in the Appendix 4, determine the rate at the date

of firm commitment and the rate at the date of

endorsement, then enter the higher rate. In

Direct Endorsement cases, enter the rate in effect

on the date of endorsement.

Item 304 Date (Same as Conveyance). Enter the date entered

in Part B, Item 104 if all actions taken by the

mortgagee are within the time requirements or the

automatic extensions specified in Paragraph 2-13

or within the extended time requirements (See

Paragraph 1-3). If the mortgagee failed to comply

with a time requirement (including actions

reported in Part A) or its approved extension,

enter the date the action should have been taken.

Debenture interest will be computed to this date.

If there was more than one failure, enter the

earliest date on which a required action should

have been taken (See paragraph 2-5c).

Item 305 Disbursements for HIP, Taxes, Ground Rents and

Water Rates (which were liens prior to mortgage),

Eviction Costs and Other Disbursements Not Shown

Elsewhere. (Do not include any penalties for late

payment). Itemize

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Page 8-259/94

4330.4 PRE-FORECLOSURES

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all disbursements in these categories including

for each item the date paid, the period covered,

the description, and the amount paid. Enter the

costs of title search and other fees related to

the pre-foreclosure sale. Do not include

disbursements which were paid from available

escrow funds or sale proceeds. No expense should

be incurred after the date of sale closing, unless

the local HUD office instructs you to take an

action. See explanation for escrow account, Part

B, Item 109.

Item 306 Attorney/Trustee Fee. Itemize the fees paid to

attorneys in connection with the initiation of

foreclosure action, if any. Do not enter fees for

bankruptcy or eviction. HUD WILL CALCULATE THE

TWO-THIRDS ALLOWANCE (24 CFR 203.402).

Item 307 Foreclosure and/or Acquisition, Conveyance and

Other Costs. Enter all disbursements required to

vest title to the property in the name of the

purchaser. If additional space is needed, attach

a separate sheet to Part D. HUD WILL CALCULATE

THE TWO-THIRDS ALLOWANCE FOR EXPENSES AND INTEREST

(24 CFR 203.402).

Item 308 Taxes on Deed. Not applicable.

Item 309 Special Assessments (Do not use for Coinsurance,

see Part E). For each item in this category,

enter the date the lien was attached or would be

attached. Do not include any special assessments

which became liens before the mortgage was

endorsed for insurance, if not noted in the

application for insurance. Enter disbursements

made with the approval of the Program Coordinator

for the release or satisfaction of junior liens.

Item 310 Bankruptcy (Same as Conveyance). Itemize the

bankruptcy fees paid. There must be an entry in

Item 40. HUD WILL CALCULATE THE TWO-THIRDS

ALLOWANCE FOR EXPENSES AND INTEREST (24 CFR

203.402).

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9/94 Page 8-26

PRE-FORECLOSURES 4330.4

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Item 311 Mortgage Insurance Premiums. Itemize all MIP

disbursements, including the period covered. Only

include the \"advanced\" MIP disbursements paid

after the due date of the last completely paid

installment to the date of closing.

E.Instructions for the Completion of HUD Form 27011, Part E Support

Document (Continuation 2). Part E is to be completed for a

pre-foreclosure sale to claim the \$250 administrative fee only.

No other items on this Part should be completed.

PART E

SUPPORT DOCUMENT (Continuation 2)

Items 400

and 401 FHA Case Number and Section of Act Code (Same as

Conveyance). Enter the FHA case number and

Section of the Act Code as they appear in Items 2

and 3 of Part A.

Item 402 Mortgagee\'s Reference Number (Same as Conveyance).

Enter the mortgagee\'s reference number as it

appears in Item 14 of Part A.

Item 403 Debenture Interest Rate. Not applicable.

Item 404 Date. Enter the date entered in Part B in Item

104 if all actions taken by the mortgagee are

within the time requirements or the automatic

extensions specified in Paragraph 2-13 or within

the extended time requirements (See Paragraph

1-3). If the mortgagee failed to comply with a

time requirement (including actions reported in

Part A) or its approved extension, enter the date

the action should have been taken. Debenture

interest will be computed to this date. If there

was more than one failure, enter the earliest date

on which a required action should have been taken

(See paragraph 2-5c).

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Page 8-279/94

4330.4 PRE-FORECLOSURES

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Items 405

thru 407 Overhead Costs; Amounts Due from Buyer at Closing;

Amounts Owed to Buyer at Closing. Not applicable.

Item 408 Additional Closing Costs. Enter the \$250

administrative fee (Carry over to Part B, Item

129).

Item 409 Appraisal Fee. Not applicable.

Item 410 Deficiency Judgement Costs/Fees. Not applicable.

Items 411

and 412 Reserved.

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9/94 Page 8-28