4330.2 REV-2

Appendix C

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Case Study #1

Synopsis of the Situation

Oldest Unpaid Installment \-- 5/93

Date of Default \-- 6/93

The lender notified Mr. Smith and Ms. Jones that it intends to foreclose
on

their mortgage. Mr. Smith and Ms. Jones jointly own a home with a

FHA-insured mortgage. The couple has lived in this home for six years.

They have missed three full mortgage payments. They own no other real

property.

Mr. Smith voluntarily resigned from his position as a restaurant manager
in

August 1993. Prior to resigning, Mr. Smith badly cut his hand on a meat

slicer. He filed a workers compensation claim because he alleged the

injury was work-related. Although the injury occurred on the restaurant

premises, it was not directly related to Mr. Smith\'s job and it did not

keep him from performing his duties as restaurant manager. His workers\'

compensation claim was denied because the injury did not affect Mr.
Smith\'s

ability to manage restaurants. The claim is currently inactive.

Ms. Jones is currently the only source of income for the household. Her

income is not enough to cover the mortgage payments of \$850.00 per
month.

Mr. Smith and Ms. Jones claim that their difficulty resulted from

unanticipated expenses incurred prior to the date of default including:

o Traffic fines - not yet paid

o Automobile repair costs - 1/93

o Outstanding credit obligations - paid off in 5/93

The car repairs required a significant amount of the couple\'s savings
and

cut into their monthly disposable income. The couple reports that Ms.

Jones\' mother surrendered two certificates of deposit to help them make
the

February, March, and April mortgage payments.

Documentation Provided

o Copy of Ms. Jones\' 1991 tax return. She did not provide a 1992 tax

return.

o Copy of Ms. Jones\' last two paycheck stubs

o Verification of Employment (VOE) dated 9/15/93 for Ms. Jones. She

receives a 3% salary increase annually with acceptable performance.

o VOE dated 9/21/93 from Mr. Smith\'s previous employer. His gross

salary was \$1,500.00 per month.

o Copy of money order for \$600 paid to VISA 2/8/93

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

1 of 1503/95

4330.2 REV-2

Appendix C

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o Copies of the surrendered certificates of deposits and checks made out

to Mr. Smith and Ms. Jones from Ms. Jones\' mother

o Copy of canceled checks dated 5/3/93 and 5/24/93 made out for

department store credit cards. The checks were made out for \$400.00

and \$600.00, respectively.

o Copy of printout from county clerk showing traffic violation occurred

on 6/25/93, but has not been paid

o Notes from telephone conversation between the Field Office and a case

worker at the unemployment agency. The unemployment agency case

worker reported that Mr. Smith has rejected two jobs for which they

sent him to interview.

Analysis

Criterion One: Notification of Intent to Foreclose \-- This criterion is

met. The lender has notified the borrowers that it intends to foreclose
on

the mortgage.

Criterion Two: Three Unpaid Installments \-- This criterion is met. The

borrowers have missed three monthly installments.

Criterion Three: Principal Residence \-- This criterion is met. The

borrowers have lived in this residence for six years.

Criterion Four: No Other FHA-insured or Secretary-held Mortgage \-- This

criterion is met. The homeowners own no other property.

Criterion Five: Circumstances \-- This criterion is not met. Mr.
Smith\'s

voluntary termination occurred after default and cannot be considered a

circumstance that led to the default.

Mr. Smith\'s difficulty in attaining worker\'s compensation benefits
cannot

be considered a factor for default. First, he applied for worker\'s

compensation benefits after the first payment was missed. Second, the

reason for Mr. Smith\'s claim not being approved is unclear.

The fines cannot be considered as contributing to default. Traffic

violations do not constitute a circumstance beyond the applicants\'
control.

Also documentation provided shows that Mr. Smith and Ms. Jones decided
to

pay credit card obligations while ignoring mortgage payments. The amount

of the credit card payments combined with Ms. Jones\' income would have

covered the mortgage payments.

HUD concludes that the default is due to a lack of financial priorities
and

not circumstances beyond the applicants\' control. Importantly, the
traffic

fines have not been paid yet.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

03/95 2 of 15

4330.2 REV-2

Appendix C

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Criterion Six: Reasonable Prospects \-- This criterion is not met.

Generally, if the borrowers document a history of gainful employment, it

may be reasonable to assume that their financial difficulties are

temporary. Mr. Smith\'s rejection of two jobs does not indicate that he
is

actively looking for work or that he plans to look. Ms. Jones\'
projected

income is not sufficient to meet the mortgage obligations.

Final Resolution

Applicants for assignment must meet all six criteria. Mr. Smith and Ms.

Jones did not meet criteria five and six. Therefore, they are not
eligible

for assignment at this time. During the appeal, they would need to
provide

additional documentation related to criteria five and six. For example,

Mr. Smith might provide copies of letters or notarized affidavits from

organizations with which he has interviewed for employment.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

3 of 1503/95

4330.2 REV-2

Appendix C

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Case Study #2

Synopsis of the Situation

Oldest Unpaid Installment \-- 7/94

Date of Default \-- 8/94

Mr. and Mrs. Brown are facing foreclosure on the mortgage for one of two

homes they own jointly. The mortgage in default is FHA-insured. The

mortgage on their other property is privately insured. The property in

default is not their principal place of residence. Mr. and Mrs. Brown
rent

the property with the FHA-insured mortgage to Mrs. Brown\'s 72 year old

mother. The rent is used to make part of the mortgage payment.

The lender notified Mr. and Mrs. Brown of its intent to foreclose after
the

couple missed three full mortgage payments. The borrowers have no prior

history of problems making the mortgage payment. Mr. and Mrs. Brown have

maintained the two properties for over thirteen years.

Documentation provided

o Doctor\'s letter dated 4/23/94 showing that Mrs. Brown was suffering

from a medical condition. The letter prescribed bed rest for Mrs.

Brown until the condition is cured. The prognosis is for full

recovery within eight months.

oCopy of Mr. Brown\'s last two paychecks. Mr. Brown\'s income is only

enough to cover the privately held mortgage for the residence in which

they live.

oWritten statement from the couple claiming that Mrs. Brown does not

have disability insurance

oVerification of Employment (VOE) dated 6/94 for Mrs. Brown. Shows

that Mrs. Brown is on an extended leave without pay.

oCopy of thirty-day notice indicating intent to vacate from Mr. and

Mrs. Brown\'s tenant dated 3/15/94

oCopy of sample tenant rent receipts showing that rental income covers

only 75% of the mortgage amount

oDocumentation from Mrs. Brown\'s mother\'s doctor that indicates the

older woman broke her hip and needs temporary full-time in home

nursing care

oReceipts from the nursing agency

oCopies of rent receipts

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

03/95 4 of 15

4330.2 REV-2

Appendix C

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Analysis

Criterion One: Notification of Intent to Foreclose \-- This criterion is

met. The lender has notified the homeowner that it intends to foreclose
on

the mortgage.

Criterion Two: Three Unpaid Installments \-- This criterion is met.
Three

monthly installments have not been paid.

Criterion Three: Principal Residence \-- This criterion is not met. The

property in default is not the homeowners\' principal residence. HUD may

waive this criterion since the rental income from this property is
applied

to the mortgage debt.

Criterion Four: No Other FHA-insured or Secretary-held Mortgage \-- This

criterion is met. The homeowners have no other FHA-insured mortgage.

Criterion Five: Circumstances \-- This criterion is met. The default was

due to an illness. Medical conditions are beyond the borrower\'s control

and the medical condition occurred prior to the date of default. In
fact,

Mrs. Brown\'s prognosis suggests that she can return to work four months

after the date of default.

Criterion Six: Reasonable Prospects \-- This criterion is met. The
medical

condition is temporary. The borrowers can be expected to resume full

mortgage payments in the future.

Final Resolution

Applicants for assignment must meet all six criteria. Mr. and Mrs. Brown

have not met criterion three. Since the rental income from this property

is applied to the mortgage, criterion three can be waived. They have met

all other criteria. Therefore, HUD may accept Mr. and Mrs. Brown for

assignment.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

5 of 1503/95

4330.2 REV-2

Appendix C

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Case Study #3

Synopsis of Situation

Oldest Unpaid Installment \-- 7/1/93

Date of Default \-- 8/1/93

The lender has notified Ms. Green that it plans to foreclose on her

FHA-insured mortgage. She paid less than half the mortgage debt for two

months and then missed two monthly payments completely.

Ms. Green was terminated from her job as a bookkeeping clerk in January

1993\. She was terminated for unexcused absences. Ms. Green claimed that

her father\'s poor health affected her attendance at work. On March 8,

1993, she assumed a non-qualifying FHA-insured mortgage. She moved into

the home on April 1, 1993. Apparently she lived off savings until she

defaulted on the loan.

Documentation Provided

oCopy of notice showing intent to break lease. The notice was dated

3/1/93.

oEvidence of \$117 in monthly food stamps

oCopy of test admission notice dated 3/30/93 for temporary employment

agency. No documentation was provided to show that she actually took

the test.

Analysis

Criterion One: Notification of Intent to Foreclose \-- This criterion is

met. The lender has notified the homeowner that it intends to foreclose
on

the mortgage.

Criterion Two: Three Unpaid Installments \-- This criterion is met. At

least three monthly installments have not been paid.

Criterion Three: Principal Residence \-- This criterion is met. The

homeowner lives in the home with a FHA-insured mortgage.

Criterion Four: No Other FHA-insured or Secretary-held Mortgage \-- This

criterion is met. The homeowner owns no other property.

Criterion Five: Circumstances \-- This criterion has not been met. Ms.

Green chose to assume a loan when she was unemployed and had only enough

savings to maintain her mortgage from March to July. This is not

considered a circumstance beyond her control. No evidence was provided
to

show that her father\'s illness affected her ability to make her monthly

payments or influenced her attendance at work.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

03/95 6 of 15

4330.2 REV-2

Appendix C

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Criterion Six: Reasonable Prospects \-- This criterion has not been met.

Ms. Green did not provide any documentation to show that she was
actively

seeking employment. HUD could not verify a history of gainful
employment.

She was trying to get temporary employment, but provided no evidence
that

she had been successful. HUD has no evidence of projected income. Based

on the available information, HUD cannot assume that she will be able to

make her mortgage payments in the future.

Final Resolution

Applicants for assignment must meet all six criteria. Ms. Green did not

meet criteria five and six. Therefore, she is not eligible for
assignment

at this time. During the appeal, she would need to provide additional

documentation related to criteria five and six.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

7 of 1503/95

4330.2 REV-2

Appendix C

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Case Study #4

Synopsis of the Situation

Oldest Unpaid Installment \-- 11/1/93

Date of Default \-- 12/1/93

Mr. and Mrs. Edwards live in a home with a FHA-insured mortgage. They
own

no other real property. The lender notified them that it intends to

foreclose on their mortgage.

After missing three full mortgage payments, Mr. and Mrs. Edwards
received

an anniversary gift of \$400 from a relative on 4/1/94. The lender
accepted

payment towards one month\'s delinquency on 4/8/94. Their mortgage
payment

is \$350.00/month.

Mr. Edwards was terminated from his job as a mechanic in November 1993.

Mr. Edwards was terminated because he missed five consecutive workdays
and

never contacted his employer to explain. He applied for and was denied

unemployment benefits. He then appealed the decision and was determined

ineligible.

In January, Mr. Edwards got two jobs. Mrs. Edwards is currently
employed.

Their income is sufficient to make the monthly mortgage payments.

Documentation Provided

oVerification of Employment (VOE) dated 4/7/94 from Septic Repairs, for

Mr. Edwards. No VOE was provided from Mr. Edwards\' second job.

oStatement dated 4/6/94 from Mr. Edwards\' previous job at Joe\'s Car

Dealership. The statement confirmed that he was terminated for

unexplained absences.

oVOE dated 3/16/94 and statement of projected income dated 4/3/94 from

Mrs. Edwards\' employer

oCopy of sample stubs from Mrs. Edwards\' payroll checks from 11/93 to

2/94

oChild care statement showing \$200 in monthly child care costs

oCopy of Mrs. Edwards\' 1993 W-2 form

oRequest for food stamps dated 12/15/93

oCopy of bank statement showing a deposit of \$400 on 4/2/94. On

4/5/94, \$350 was withdrawn.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

03/95 8 of 15

4330.2 REV-2

Appendix C

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Analysis

Criterion One: Notification of Intent to Foreclose \-- This criterion is

met. The lender has notified the homeowners that it intends to foreclose

on the mortgage.

Criterion Two: Three Unpaid Installments \-- This criterion is met.

Although the homeowners made a payment on 4/8/94, they still owed
mortgage

payments from December through April. The payment made on 4/8/94 was

applied to the November installment. The mortgage remained at least
three

payments delinquent. Therefore, the lender was still able to foreclose.

Because the oldest unpaid installment is dated November 1, 1993, the
date

of default must be December 1, 1993. For the purposes of the assignment

review, the date of default was established in January (after the third

unpaid installment). Application of a partial payment does not advance
the

date of default.

Criterion Three: Principal Residence \-- This criterion is met. The

homeowners have lived in this residence for six years.

Criterion Four: No Other FHA-insured or Secretary-held Mortgage \-- This

criterion is met. The homeowners own no other property.

Criterion Five: Circumstances \-- This criterion is not met. The default

is directly attributable to Mr. Edwards\' loss of employment. His

termination was not beyond his control. This analysis is supported by
the

fact that he was not approved for unemployment benefits and the
statement

from his previous employer which stated the specific reasons for his

dismissal.

Criterion Six: Reasonable Prospects \-- This criterion is met. Given the

documented salary only, Mr. and Mrs. Edwards\' projected combined income
is

adequate to meet their monthly obligations.

Final Resolution

Applicants for assignment must meet all six criteria. Mr. and Mrs.
Edwards

did not meet criterion five. Therefore, they are not eligible for

assignment at this time. During the appeal, they would need to provide

additional documentation related to criterion five.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

9 of 1503/95

4330.2 REV-2

Appendix C

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Case Study #5

Synopsis of the Situation

Oldest Unpaid Installment \-- 3/94

Date of Default \-- 4/94

The lender notified Mr. and Mrs. Duly that it intends to foreclose on
their

mortgage. The couple owns a home with a FHA-insured mortgage. They have

missed three full mortgage payments. They own no other real property.

Mrs. Duly is a 24 year old housewife with four children. Her children

range in age from six months to five years. She has never worked. Mr.

Duly was convicted in January 1994 of physically abusing Mrs. Duly. He
was

sentenced to ten years in prison. While in prison, Mr. Duly receives no

income. Mrs. Duly wants to file for bankruptcy. The mortgage payment is

\$800.

Documentation Provided

oCopy of the couple\'s joint tax return from 1992 and 1993. The returns

indicate that Mr. Duly was the sole source of income for the family.

oCopy of police reports to show that they were called to the Duly

residence monthly over a one year period. Mr. Duly is now in jail.

oDocumentation of 18 hours of college credit for Mrs. Duly. The

documentation was dated 6/93. The documentation did not specify what

career she was pursuing.

oCopy of Aid to Families with Dependent Children/AFDC (welfare) checks

from March 1994 and April 1994. Mrs. Duly received \$450 per month.

Analysis

Criterion One: Notification of Intent to Foreclose \-- This criterion is

met. The lender has notified the homeowners that it intends to foreclose

on the mortgage.

Criterion Two: Three Unpaid Installments \-- This criterion is met. The

homeowners have missed three monthly installments.

Criterion Three: Principal Residence \-- This criterion is met. The

homeowners live in the home with a FHA-insured mortgage.

Criterion Four: No Other FHA-insured or Secretary-held Mortgage \-- This

criterion is met. The homeowners own no other property.

Criterion Five: Circumstances \-- This criterion is met. The default is

directly attributable to a loss of income due to a marital separation.

Mrs. Duly is applying on her own. The separation qualifies as a

circumstance beyond her control. The police reports are sufficient to

document this.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

03/95 10 of 15

4330.2 REV-2

Appendix C

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Criterion Six: Reasonable Prospects \-- This criterion is not met. Mrs.

Duly has never worked. She provided no evidence that she is making

arrangements to meet her mortgage obligations. She documented no
prospects

for employment or job training. Mr. Duly will not be eligible for parole

until after 36 months.

Final Resolution

Applicants for assignment must meet all six criteria. Mrs. Duly did not

meet criterion six. Therefore, she is not eligible for assignment at
this

time. During the appeal, she would need to provide additional

documentation related to criterion six.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

11 of 1503/95

4330.2 REV-2

Appendix C

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Case Study #6

Synopsis of the Situation

Oldest Unpaid Installment \-- 1/94

Date of Default \-- 2/94

Mr. Sita has marital problems. He moved out of his home with a
FHA-insured

mortgage in December 1993. Mrs. Sita obtained a restraining order on

January 2, 1994. Mrs. Sita then stopped payment on the mortgage checks
for

January 1994 and February 1994. On March 30, 1994, Mrs. Sita filed for

divorce. By this time, three full mortgage payments had been missed. Mr.

Sita did not know that Mrs. Sita had not made the mortgage payments
after

he left the property.

Mr. Sita was awarded the property in the divorce settlement dated April
15,

1994\. The lender notified Mr. Sita of its intention to foreclose on his

mortgage. Mr. Sita owns no other property.

Documentation Provided

oDivorce settlement dated April 15, 1994. Documents that Mr. Sita was

awarded the home.

oVerification of Employment (VOE) dated April 2, 1994 for Mr. Sita

oCopy of Mr. Sita\'s last two paycheck stubs

oCopy of Mr. Sita\'s driver\'s license. The property in question was

listed as his home address.

oCopy of Mr. Sita\'s 1993 tax return. Shows that Mr. Sita\'s income is

sufficient to cover the mortgage payments.

Analysis

Criterion One: Notification of Intent to Foreclose \-- This criterion is

met. The lender has notified the homeowners that it intends to foreclose

on the mortgage.

Criterion Two: Three Unpaid Installments \-- This criterion is met.
Three

monthly installments have not been paid.

Criterion Three: Principal Residence \-- This criterion is not met. The

property in default was not the homeowner\'s principal residence at the
date

of default or assignment review. However, Mr. Sita has:

oReasonably explained why the home was not his principal residence at

the time of default or assignment review

oEstablished that the property had been his principal residence

(driver\'s license)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

03/95 12 of 15

4330.2 REV-2

Appendix C

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

oProvided proof that he had been awarded the house in the divorce

settlement

Consequently, HUD can waive this criterion.

Criterion Four: No Other FHA-insured or Secretary-held Mortgage \-- This

criterion is met. The homeowners own no other property.

Criterion Five: Circumstances \-- This criterion is met. The date of

default corresponds with Mr. Sita\'s departure from the residence.

Additionally, Mr. Sita was not aware that his ex-wife was not making the

mortgage payments.

Criterion Six: Reasonable Prospects \-- This criterion is met. Mr.
Sita\'s

projected income is more than adequate to meet his monthly obligations.

Final Resolution

Applicants for assignment must meet all six criteria. Although, Mr. Sita

does not meet criterion three, he has presented appropriate evidence to

support waiving this criterion. He has met all other criteria.
Therefore,

HUD may accept Mr. Sita for assignment.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

13 of 1503/95

4330.2 REV-2

Appendix C

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Case Study #7

Synopsis of Situation

Oldest Unpaid Installment \-- 4/94

Date of Default \-- 5/94

The lender notified Mr. and Mrs. James that it intends to foreclose on

their FHA-insured mortgage. The home is the couple\'s principal
residence

and only property. The lender accepted less than half of the mortgage

payments for six months, but could do this no longer.

Mr. James is suffering with a terminal illness. The prognosis is
long-term

disability. He has not worked since October 1993. He will not be able to

return to work. His medical insurance has covered the majority of his

health care costs. He does not have disability or life insurance. The

only form of assistance for which Mr. James qualifies is SSI.

Mrs. James\' income is not enough to cover the mortgage. They have lived

primarily off their savings since October 1993. Additionally, she has
had

to reduce her work hours to meet her husband\'s home health care needs.

Documentation Provided

oSample copies of Mrs. James\' paycheck stubs from December 1993 to May

1994\. The pay stubs show that her income has decreased due to shorter

hours at work. They also indicate that her hourly wage is

insufficient to meet the mortgage obligations, regardless of her

number of hours worked.

oCopy of Mr. James\' request for extended leave without pay from Mac

Ogden Plumbing dated October 1993. His terminal illness was his

reason for leaving.

oCopy of medical receipts from 8/93 to 3/94 show increasing

out-of-pocket medical expenses

oApplication for food stamps dated 1/25/94

oDoctor\'s letter dated 2/16/94 indicating that Mr. James suffers from a

terminal illness

oThe Social Security Administration indicated to the lender that his

benefits would be approximately \$200 per month

Analysis

Criterion One: Notification of Intent to Foreclose \-- This criterion is

met. The lender has notified the homeowners that it intends to foreclose

on their mortgage.

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These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

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4330.2 REV-2

Appendix C

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Criterion Two: Three Unpaid Installments \-- This criterion is met. The

homeowners have missed the equivalent of three monthly installments.

Criterion Three: Principal Residence \-- This criterion is met. The

homeowners live in the home.

Criterion Four: No Other FHA-insured or Secretary-held Mortgage \-- This

criterion is met. The homeowners own no other property.

Criterion Five: Circumstances \-- This criterion is met. Although, the

couple\'s problems started months before the date of default, it is
evident

that Mr. James\' terminal illness has affected the couple\'s ability to
meet

their mortgage obligations. Medical conditions are beyond the
borrower\'s

control.

Criterion Six: Reasonable Prospects \-- This criterion is not met. Mrs.

James is currently the sole income earner for the family. The SSI
benefits

plus Mrs. James\' projected earnings will not be enough to cover the

mortgage payments. Based on the available information, HUD cannot assume

that her hourly wage will increase in the future. She would meet this

criterion if she could show that either:

oMr. James would be able to work from home to supplement the family

income and meet the mortgage obligations, or

oShe could supplement her current income in the future to meet her

mortgage obligations.

Final Resolution

Applicants for assignment must meet all six criteria. Mr. and Mrs. James

did not meet criterion six. Therefore, they are not eligible for

assignment at this time. During the appeal, they would need to provide

additional documentation related to criteria five and six.

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These case studies are designed to illustrate situations that may occur
in

processing assignment application cases. Each case should be evaluated
on

its own merit.

15 of 1503/95