4350.4

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

References:

Hbk. 2000.3, Office of Inspector General Activities

Hbk. 4010.1, Definitions, Policy Statements and General

Rulings

Hbk. 4060.1, Mortgagee Approval Handbook

Hbk. 4060.2, Mortgagee Review Board

Hbk. 4060.3, Field Office Guide for Mortgagee Monitoring

Hbk. 4065.1, Previous Participation Handbook

Hbk. 4110.2, Mortgagees\' Guide Home Mortgage Fiscal

Instructions

Hbk. 4350.1, Insured Project Servicing Handbook

Hbk. 4370.1, Reviewing Annual and Monthly Financial

Reports

Hbk. 4370.2, Financial Operations and Accounting

Procedures for Insured Multifamily

Projects

Hbk. 4372.1, Audit Guide for use by Independent Public

Accountants for Audit of Mortgagors having

HUD-Insured or Secretary held Multifamily

Mortgages

Hbk. 4561.1, Coinsurance for Mortgage Lenders (Section

221(d))

Hbk. 4561.2, Management Servicing and Disposition

Requirements for Projects with 221(d)

Coinsured Loans

Hbk. 4566.1, Coinsurance for Private Lenders - Section

223(f)

Hbk. 4566.2, Management Servicing and Disposition

Requirements for Projects with 223(f)

Coinsured Loans

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

2/92 ii

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4350.4

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

List of forms mentioned in this Handbook:

Form No. Form Name Appendix No.

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

[HUD-434](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/434.pdf)
Statement of Taxes 5-D

[HUD-2537](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2537.pdf)
Mortgagee\'s Application for 5-C

Partial Settlement (M/F Mtg.)

[HUD
2741](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2741.pdf)
Instructions for Applications for 5-A

Insurance Benefits (M/F Mortgages)

[HUD
2742](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2742.pdf)
Fiscal Data in Support of Claim 5-E

for Insurance Benefits (M/F Mtg.)

[HUD-2744A](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-a.pdf)
Allocation of Mortgagee Receipts 5-F

and Disbursements, Schedule A

[HUD-2744B](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-b.pdf)
Mortgagee\'s Report of Project 5-G

Collections, Schedule B

[HUD-2744C](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-c.pdf)
Mortgagee\'s Report of Project 5-H

Disbursements, Schedule C

[HUD-2744D](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-d.pdf)
Other Disbursements by Mortgagee 5-I

[HUD-2744E](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-e.pdf)
Mortgagee Report of Special 5-I

Escrow, Schedule E

HUD-2747 Application for Insurance 5-B

Benefits (M/F Mortgage)

HUD-9250 Reserve Fund for Replacements N/A

Authorization

HUD-9807 Request for Termination of 3

Multifamily Mortgage Insurance

[HUD-9822](http://www.hud.gov/offices/adm/hudclips/forms/files/9822.dot)
Physical Inspection Report and 1

Estimate of Repair Costs

HUD-9834 Management Review of Multifamily N/A

Projects

HUD-92080 Mortgage Record Change 4

HUD-92266 Application for Transfer of N/A

Physical Assets

HUD-92426 Notice of Default Status Report 2

on Multifamily Housing Projects

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iii 2/92

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4350.4 CHG-7

INSURED MULTIFAMILY MORTGAGEE

SERVICING AND FIELD OFFICE MONITORING HANDBOOK

TABLE OF CONTENTS

Paragraph Page

Chapter 1. PRACTICES, PROCEDURES, AND RESPONSIBILITIES

Section 1. Introduction

1-1 General 1-1

1-2 Definitions 1-1

1-3 Purposes of Servicing Loans 1-5

1-4 Compensation 1-5

1-5 Additional Revenue 1-6

1-6 The Housing Team 1-6

1-7 HUD Subsidies 1-6

1-8 HUD Assistance 1-7

1-9 HUD/Mortgagor Relationships 1-7

1-10 Mortgagees\' Control of Mortgagors 1-8

1-11 Mortgagees\' Obligations to Mortgagors 1-9

1-12 Interdependent Relationships 1-9

1-13 Ultimate Servicing Responsibility 1-10

Section 2. Applicability

1-14 Sections of the Housing Act 1-12

1-15 Applicability 1-12

Section 3. Mortgage Servicing, General Guidance

1-16 Statement of Mortgage Servicing Standards 1-13

1-17 Regulatory Authority 1-13

Section 4. Mortgagee Monitoring, General Procedures

1-18 Statement of Monitoring Procedures 1-14

1-19 Mortgagee Reviews are Mandatory 1-14

1-20 Remote Reviews by HUD Field Offices 1-15

1-21 HUD Headquarters Actions 1-16

1-22 Authority for Imposing Sanctions 1-16

v 6/96

4350.4 CHG-7

CHAPTER 2. LOAN ADMINISTRATION:

RESPONSIBILITIES OF MORTGAGE SERVICING

Section 1. Introduction

2-1 Objectives and Goals 2-1

2-2 Maximizing Revenue 2-1

2-3 Reducing Risk 2-1

2-4 Minimizing Costs 2-2

Section 2. Fiduciary Responsibilities

2-5 Definition of \"Fiduciary\" 2-3

2-6 Fiduciary Relationships 2-3

2-7 Efforts of Servicing Mortgagees 2-5

Section 3. Quality Control Plans and Credit Management

2-8 Quality Control Plans and Credit Management 2-6

2-9 Instructions for Quality Control Plans 2-6

2-10 Principles of Credit Management 2-6

Section 4. Routine Servicing

2-11 Eight Basic Servicing Functions 2-10

2-12 Servicing Loan Payments 2-10

2-13 Servicing Escrow Payments 2-13

2-14 Escrow Analysis 2-15

2-15 Servicing Taxes 2-16

2-16 Servicing Insurance Requirements 2-16

2-17 Servicing Contract Changes 2-17

Section 5. Servicing HUD Requirements

2-18 Mortgagees Agree to HUD Requirements 2-19

2-19 Annual Physical Inspections 2-19

2-20 Inspection Requirements 2-19

2-21 Investment of Funds 2-22

2-22 Investing Money in Residual Receipts Funds

for Certain Section 8 Projects 2-23

2-23 Investing Residual Receipts of All Other Projects 2-25

2-24 Investing Money in the Reserve Fund for

Replacements for Certain Section 8 Projects 2-25

2-25 Investing Reserve Funds for Replacements of

All Other Projects 2-26

2-26 Fee Structures for Investments 2-26

2-27 Liquidity 2-26

2-28 Timeliness 2-27

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4350.4 CHG-7

2-29 Minimum Amounts of Investments 2-27

2-30 Reporting to HUD, General 2-27

2-31 Mortgagees Must Keep HUD Informed 2-28

Section 6. Servicing Delinquent Accounts

2-32 General 2-31

2-33 Payment History 2-31

2-34 Costs of Delinquent Accounts 2-32

2-35 Causes of Delinquencies 2-32

2-36 Prompt Action 2-33

2-37 Notify HUD of Delinquencies 2-33

2-38 Notify Investor 2-35

2-39 Occasional Delinquencies 2-35

2-40 Chronic Delinquencies 2-35

2-41 Occasional Defaults 2-36

2-42 Reinstatement 2-37

2-43 Chronic Defaults 2-38

2-44 Mortgagee\'s Election Decision 2-39

Section 7. Claims

2-45 Initiating Insurance Claims, Insured Mortgages 2-42

2-46 Claims for Co-insured Mortgages (Reserved) 2-43

CHAPTER 3. MORTGAGEE RESPONSIBILITIES, CO-INSURED MORTGAGES

(RESERVED)

CHAPTER 4. HUD RESPONSIBILITIES

Section 1. Fiduciary

4-1 Actions by HUD 4-1

4-2 Contractual Obligations 4-1

4-3 HUD Reviews Mortgagees 4-1

4-4 Contents of Mortgagee\'s Certificate 4-2

4-5 HUD Responsibility for Enforcement of Regulations 4-4

4-6 Other HUD Responsibilities 4-4

Section 2. Claims Processing

4-7 General 4-5

4-8 Background 4-5

4-9 Actions Upon Mortgagee\'s Election 4-6

4-10 Claims Settlement: Cash/Debentures 4-6

4-11 Minimizing Costs 4-7

4-12 Fiscal Data Required 4-7

4-13 Description of Insurance Benefits 4-7

4-14 Miscellaneous Claims 4-8

vii 6/96

4350.4 CHG-7

Chapter 5. MORTGAGEE REMOTE MONITORING PROCEDURES

5-1 Seven Objectives of Monitoring 5-1

5-2 History of Monitoring 5-1

5-3 Role of Field Offices in Review Processes 5-2

5-4 Field Office Responsibility 5-3

5-5 Field Office Records 5-3

5-6 Contents of Field Office Files 5-5

5-7 Primary Purpose of Field Office Reviews 5-6

5-8 Secondary Purpose of Field Office Reviews 5-6

5-9 Field Office Criteria for Evaluating Mortgagees 5-6

5-10 Phases for Implementation 5-7

5-11 Evaluating Physical Inspections 5-7

5-12 Evaluating Escrow Procedures 5-11

5-13 Evaluating Property Insurance 5-14

5-14 Evaluating Collection Efforts 5-15

5-15 Evaluating Default Reporting 5-16

5-16 Identify Strengths and Weaknesses 5-17

5-17 Experience in Problem Areas 5-17

5-18 Develop Solutions at Local Level 5-17

5-19 Responsibilities of All Employees 5-19

5-20 Types and Timing of Referrals 5-20

5-21 Quarterly Summary Report, Dates Due 5-21

5-22 Quarterly Summary Report, Contents 5-21

5-23 Distribution of Recommendations 5-23

5-24 Null Reports 5-23

5-25 Activities of Regional Offices 5-23

5-26 Search for Patterns 5-24

5-27 Review Field Offices 5-25

5-28 Foster Training 5-25

5-29 Provide Assistance 5-25

5-30 Responsibility of the Office of Lender Activities 5-25

5-31 Role of OLA 5-25

Chapter 6. ENFORCEMENT

Section 1. General

6-1 Statutory Authority 6-1

6-2 Background 6-1

6-3 Previously Available Sanctions 6-1

6-4 Currently Available Sanctions 6-3

6-5 Amounts of Civil Money Penalties 6-3

6-6 Recommending Sanctions, General 6-3

6-7 Submission of Recommendations 6-3

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4350.4 CHG-7

Section 2. HUD Field Office Actions

6-8 Coordination of Activities and Authority 6-4

6-9 Distribution of Recommendations 6-4

6-10 Simultaneous Recommendations 6-4

Section 3. HUD Headquarters Actions

6-11 Office of Lender Activities Examines

Recommendations 6-6

6-12 Coordination of Information 6-6

6-13 Dissemination of Information to Field Offices 6-6

LIST OF APPENDICES

Appendix 1 Form
[HUD-9822](http://www.hud.gov/offices/adm/hudclips/forms/files/9822.dot),
Physical Inspection Report

Appendix 2 Form HUD-92426, Multifamily Default Status Report

Appendix 3 Form HUD-9807 (RESERVED)

Appendix 4 Form HUD-92080, Request for Termination of Multifamily

Mortgage Insurance

Appendix 5 Fiscal Data Package, Sample Forms:

A.
[HUD-2741](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2741.pdf),
Instructions for Applications for Insurance Benefits

(Multifamily Mortgages)

B. HUD-2747, Application for Insurance Benefits (Multifamily Mortgage)

C.
[HUD-2537](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2537.pdf),
Mortgagee\'s Application for Partial Settlement

(Multifamily Mortgage)

D.
[HUD-434](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/434.pdf),
Statement of Taxes

E.
[HUD-2742](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2742.pdf),
Fiscal Data in Support of Claim for Insurance Benefits

(Multifamily Mortgage)

F.
[HUD-2744A](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-a.pdf),
Allocation of Mortgagee Receipts and Disbursements, Schedule A

G.
[HUD-2744B](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-b.pdf).
Mortgagee\'s Report of Project Collections, Schedule B

H.
[HUD-2744C](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-c.pdf),
Mortgagee\'s Report of Project Disbursements, Schedule C

I.
[HUD-2744D](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-d.pdf),
Other Disbursements by Mortgagee

J.
[HUD-2744E](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/2744-e.pdf),
Mortgagee Report of Special Escrows, Schedule E

Appendix 6 Civil Money Penalties, Final Rule: 24 CFR Part 30

Appendix 7 Selected Mortgagee Letters

TABLES

Table 1 Mortgage Insurance Programs 1-12

Table 2 Default Dates and Related Deadlines 2-31

ix 6/96