FHA Single Family Insurance Claims

[]{#TABLEOFCONTENTS .anchor}HUD Handbook 4330.4 REV-1 CHG-1

#### Table of Contents {#table-of-contents .unnumbered}

[FOREWORD 8](#foreword)

[CHAPTER 1: GENERAL 10](#chapter-1-general)

[1-1 CLAIM TYPES 10](#CH1)

[1-2 THE APPLICATION 11](#__RefHeading___Toc167867563)

[1-3 CLAIM PROCESSING 12](#__RefHeading___Toc167867564)

[1-4 CLAIMS ASSISTANCE 14](#__RefHeading___Toc167867565)

[1-5 METHOD OF PAYMENT 14](#__RefHeading___Toc167867566)

[1-6 EXTENSION OF TIME REQUIREMENTS 15](#__RefHeading___Toc167867567)

[1-7 MORTGAGE INSURANCE CERTIFICATE 21](#__RefHeading___Toc167867568)

[1-8 MORTGAGOR\'S SOCIAL SECURITY NUMBER
21](#__RefHeading___Toc167867569)

[1-9 MORTGAGE DEFAULT 22](#__RefHeading___Toc167867570)

[1-10 ATTORNEY\'S FEES 22](#__RefHeading___Toc167867571)

[1-11 DEFICIENCY JUDGMENTS 25](#__RefHeading___Toc167867572)

[1-12 CLAIM FILE AND RETENTION OF RECORDS
26](#__RefHeading___Toc167867573)

[1-13 NEGATIVE CLAIM AMOUNT 27](#__RefHeading___Toc167867574)

[1-14 REASSIGNMENT AND RECONVEYANCE 27](#__RefHeading___Toc167867575)

[1-15 QUALITY ASSURANCE 28](#__RefHeading___Toc167867576)

[1-16 REVIEW OF CLAIMS 29](#__RefHeading___Toc167867577)

[CHAPTER 2: CONVEYED HOME PROPERTIES
30](#chapter-2-conveyed-home-properties)

[2-1 GENERAL 30](#__RefHeading___Toc167867579)

[2-2 TIME REQUIREMENTS 31](#__RefHeading___Toc167867580)

[2-3 EXTENSION OF TIME REQUIREMENTS 36](#__RefHeading___Toc167867581)

[2-4 CLAIM PAYMENT 36](#__RefHeading___Toc167867582)

[2-5 DEBENTURE INTEREST COMPUTATION 36](#__RefHeading___Toc167867583)

[2-6 TITLE REQUIREMENTS 41](#__RefHeading___Toc167867584)

[2-7 DEEDS-IN-LIEU OF FORECLOSURE 43](#__RefHeading___Toc167867585)

[2-8 DIRECT CONVEYANCE 43](#__RefHeading___Toc167867586)

[2-9 OCCUPANCY AND POSSESSION OF PROPERTY
44](#__RefHeading___Toc167867587)

[2-10 CONDITION OF PROPERTY AT CONVEYANCE
45](#__RefHeading___Toc167867588)

[2-11 PROTECTION AND PRESERVATION OF PROPERTIES
47](#__RefHeading___Toc167867589)

[2-12 EVICTION COSTS 53](#__RefHeading___Toc167867590)

[2-13 HAZARD INSURANCE 54](#__RefHeading___Toc167867591)

[2-14 DEMOLITION NOTICES 56](#__RefHeading___Toc167867592)

[2-15 FORECLOSURE AND ACQUISITION COSTS
56](#__RefHeading___Toc167867593)

[2-16 TAX BILLS 57](#__RefHeading___Toc167867594)

[2-17 BANKRUPTCY OF THE MORTGAGOR 57](#__RefHeading___Toc167867595)

[2-18 FUNDS HELD BY MORTGAGEE 59](#__RefHeading___Toc167867596)

[2-19 RENTAL OF PROPERTIES 60](#__RefHeading___Toc167867597)

[2-20 SPECIAL FORBEARANCE 60](#__RefHeading___Toc167867598)

[2-21 SECTION 235 ASSISTANCE PAYMENTS 62](#__RefHeading___Toc167867599)

[2-22 DOCUMENTS TO BE SUBMITTED 62](#__RefHeading___Toc167867600)

[2-23 CLAIM PREPARATION - CONVEYANCES 64](#__RefHeading___Toc167867601)

[CHAPTER 3: ASSIGNED HOME MORTGAGES
82](#chapter-3-assigned-home-mortgages)

[3-1 GENERAL 82](#__RefHeading___Toc167867603)

[3-2 TIME REQUIREMENTS 82](#__RefHeading___Toc167867604)

[3-3 EXTENSION OF TIME REQUIREMENTS 83](#__RefHeading___Toc167867605)

[3-4 ASSIGNMENT REQUIREMENTS 83](#__RefHeading___Toc167867606)

[3-5 TITLE EVIDENCE 84](#__RefHeading___Toc167867607)

[3-6 OCCUPANCY OF PROPERTY 85](#__RefHeading___Toc167867608)

[3-7 CONDITION OF PROPERTY AT ASSIGNMENT
85](#__RefHeading___Toc167867609)

[3-8 PROTECTION AND PRESERVATION OF PROPERTIES
86](#__RefHeading___Toc167867610)

[3-9 HAZARD INSURANCE 86](#__RefHeading___Toc167867611)

[3-10 ASSIGNMENT COSTS 86](#__RefHeading___Toc167867612)

[3-11 NOTICE TO MORTGAGOR 87](#__RefHeading___Toc167867613)

[3-12 NOTICE TO TAXING AUTHORITY 87](#__RefHeading___Toc167867614)

[3-13 CLAIM PAYMENT 87](#__RefHeading___Toc167867615)

[3-14 DOCUMENTS TO BE SUBMITTED 88](#__RefHeading___Toc167867616)

[3-15 CLAIM PREPARATION - ASSIGNMENTS 89](#__RefHeading___Toc167867617)

[CHAPTER 4: AUTOMATIC ASSIGNED 100](#__RefHeading___Toc167867618)

[4-1 GENERAL 100](#__RefHeading___Toc167867619)

[4-2 INELIGIBLE MORTGAGES 101](#__RefHeading___Toc167867620)

[4-3 TIME REQUIREMENT 101](#__RefHeading___Toc167867621)

[4-4 EXTENSION OF TIME REQUIREMENTS 101](#__RefHeading___Toc167867622)

[4-5 ASSIGNMENT REQUIREMENTS 101](#__RefHeading___Toc167867623)

[4-6 TITLE EVIDENCE 101](#__RefHeading___Toc167867624)

[4-7 PREPAYMENTS 102](#__RefHeading___Toc167867625)

[4-8 ESCROW FUNDS 102](#__RefHeading___Toc167867626)

[4-9 HAZARD INSURANCE 102](#__RefHeading___Toc167867627)

[4-10 NOTICE TO MORTGAGOR 102](#__RefHeading___Toc167867628)

[4-11 NOTICE TO TAXING AUTHORITY 103](#__RefHeading___Toc167867629)

[4-12 CLAIM PAYMENT 103](#__RefHeading___Toc167867630)

[4-13 DOCUMENTS TO BE SUBMITTED 103](#__RefHeading___Toc167867631)

[4-14 CLAIM PREPARATION - AUTOMATIC ASSIGNMENTS
104](#__RefHeading___Toc167867632)

[CHAPTER 5: COINSURED MORTGAGES 113](#chapter-5-coinsured-mortgages)

[5-1 GENERAL 113](#__RefHeading___Toc167867634)

[5-2 PERIOD OF COINSURANCE 113](#__RefHeading___Toc167867635)

[5-3 TIME REQUIREMENTS 113](#__RefHeading___Toc167867636)

[5-4 EXTENSION OF TIME REQUIREMENTS 114](#__RefHeading___Toc167867637)

[5-5 ACQUISITION OF TITLE 114](#__RefHeading___Toc167867638)

[5-6 PROTECTION AND PRESERVATION OF PROPERTY
115](#__RefHeading___Toc167867639)

[5-7 REPAIRS TO THE PROPERTY 115](#__RefHeading___Toc167867640)

[5-8 SALE OF THE PROPERTY 115](#__RefHeading___Toc167867641)

[5-9 UNSOLD PROPERTIES 115](#__RefHeading___Toc167867642)

[5-10 COSTS 115](#__RefHeading___Toc167867643)

[5-11 INTEREST 115](#__RefHeading___Toc167867644)

[5-12 CLAIM PAYMENT 116](#__RefHeading___Toc167867645)

[5-13 DOCUMENTS TO BE SUBMITTED 117](#__RefHeading___Toc167867646)

[5-14 CLAIM PREPARATION - COINSURANCE 117](#__RefHeading___Toc167867647)

[CHAPTER 6: CLAIMS WITHOUT CONVEYANCE OF TITLE
132](#__RefHeading___Toc167867648)

[6-1 GENERAL 132](#__RefHeading___Toc167867649)

[6-2 COMMISSIONER\'S ADJUSTED FAIR MARKET VALUE
132](#__RefHeading___Toc167867650)

[6-3 OBTAINING THE CAFMV 132](#__RefHeading___Toc167867651)

[6-4 POSTPONED SALES AND REINSTATEMENT
134](#__RefHeading___Toc167867652)

[6-5 BIDDING AND ACQUISITION 135](#__RefHeading___Toc167867653)

[6-6 TIME REQUIREMENTS 137](#__RefHeading___Toc167867654)

[6-7 EXTENSION OF TIME REQUIREMENTS 138](#__RefHeading___Toc167867655)

[6-8 DEFICIENCY JUDGMENT FEES AND COSTS
138](#__RefHeading___Toc167867656)

[6-9 DAMAGED PROPERTY 138](#__RefHeading___Toc167867657)

[6-10 HAZARD INSURANCE 138](#__RefHeading___Toc167867658)

[6-11 TITLE REQUIREMENT 138](#__RefHeading___Toc167867659)

[6-12 SPECIAL FORBEARANCE 139](#__RefHeading___Toc167867660)

[6-13 CLAIM PAYMENT 139](#__RefHeading___Toc167867661)

[6-14 DEBENTURE 139](#__RefHeading___Toc167867662)

[6-15 DOCUMENTS TO 139](#__RefHeading___Toc167867663)

[6-16 CLAIM PREPARATION 140](#__RefHeading___Toc167867664)

[CHAPTER 7: SUPPLEMENTAL CLAIMS/REMITTANCE
159](#chapter-7-supplemental-claimsremittance)

[7-1 GENERAL 159](#__RefHeading___Toc167867666)

[7-2 ONE SUPPLEMENTAL 160](#__RefHeading___Toc167867667)

[7-3 ATTORNEY FEES 161](#__RefHeading___Toc167867668)

[7-4 CLAIM FORM 162](#__RefHeading___Toc167867669)

[7-5 TIME REQUIREMENTS 162](#__RefHeading___Toc167867670)

[7-6 EXTENSION OF TIME 163](#__RefHeading___Toc167867671)

[7-7 CLAIMS FOR ADDITIONAL 163](#__RefHeading___Toc167867672)

[7-8 FUNDS DUE 164](#__RefHeading___Toc167867673)

[7-9 DOCUMENTS TO BE SUBMITTED 165](#__RefHeading___Toc167867674)

[7-10 CLAIM PREPARATION 165](#__RefHeading___Toc167867675)

[A. Instructions for the Completion of HUD Form 27011, Part A,
166](#instructions-for-the-completion-of-form-hud-27011-part-a-initial-application.)

[B. Instructions for the Completion of HUD Form 27011, Part B
168](#instructions-for-the-completion-of-form-hud-27011-part-b-fiscal-data.-do-not-complete-part-b-if-the-required-changes-relate-only-to-part-a-however-if-there-are-changes-relating-only-to-part-b-the-required-items-of-part-a-must-be-completed.-use-the-same-instructions-to-complete-the-supplemental-claim-that-were-used-to-complete-the-original-claim.)

[C. Instructions for the Completion of HUD Form 27011, Parts C, D and
170](#instructions-for-the-completion-of-form-hud-27011-parts-c-d-and-e-support-documents-continuations-1-and-2.)

[E, Support Documents (Continuations 1 and 2).
170](#instructions-for-the-completion-of-form-hud-27011-parts-c-d-and-e-support-documents-continuations-1-and-2.)

[CHAPTER 8: PRE-FORECLOSURE SALES 170](#chapter-8-pre-foreclosure-sales)

[8-1 GENERAL 170](#__RefHeading___Toc167867681)

[8-2 PROGRAM COORDINATOR 171](#__RefHeading___Toc167867682)

[8-3 RESPONSIBILITIES OF MORTGAGEE IN THE PRE-FORECLOSURE SALES
171](#__RefHeading___Toc167867683)

[8-4 MARKETING THE PROPERTY 172](#__RefHeading___Toc167867684)

[8-5 SALES PROCEEDS 172](#__RefHeading___Toc167867685)

[8-6 DEED-IN-LIEU OF FORECLOSURE 172](#__RefHeading___Toc167867686)

[8-7 CLAIM TYPE 173](#__RefHeading___Toc167867687)

[8-8 TIME REQUIREMENTS 173](#__RefHeading___Toc167867688)

[8-9 EXTENSION OF TIME REQUIREMENTS 173](#__RefHeading___Toc167867689)

[8-10 TITLE REQUIREMENT 174](#__RefHeading___Toc167867690)

[8-11 INCENTIVE PAYMENTS AND COMPENSATION
174](#__RefHeading___Toc167867691)

[8-12 DISCHARGE OF LIENS 175](#__RefHeading___Toc167867692)

[8-13 PROTECTION AND PRESERVATION OF PROPERTIES
175](#__RefHeading___Toc167867693)

[8-14 REIMBURSABLE COSTS AND EXPENSES 176](#__RefHeading___Toc167867694)

[8-15 HAZARD INSURANCE 176](#__RefHeading___Toc167867695)

[8-16 SPECIAL FORBEARANCE 176](#__RefHeading___Toc167867696)

[8-17 DEFICIENCY JUDGMENTS 177](#__RefHeading___Toc167867697)

[8-18 DEBENTURE INTEREST ALLOWANCE 177](#__RefHeading___Toc167867698)

[8-19 CLAIM PAYMENT 177](#__RefHeading___Toc167867699)

[8-20 DOCUMENTS TO BE SUBMITTED 178](#__RefHeading___Toc167867700)

[8-21 CLAIM PREPARATION - PRE-FORECLOSURE SALES
179](#__RefHeading___Toc167867701)

[Appendix 1 Single-Family Application for Insurance Benefits
193](#__RefHeading___Toc167867702)

[Appendix 2: Conveyance Partial Payment
194](#__RefHeading___Toc167867703)

[APPENDIX 3: ERRORS FREQUENTLY MADE IN PREPARING CLAIMS
199](#__RefHeading___Toc167867704)

[APPENDIX 4: DEBENTURE INTEREST RATES 201](#__RefHeading___Toc167867705)

[Appendix 5: Mortgagee\'s Request for Extensions of Time
203](#__RefHeading___Toc167867706)

[APPENDIX 6: AS THE FIRST LEGAL ACTION TO COMMENCE (INSTITUTE)
FORECLOSURE 203](#__RefHeading___Toc167867707)

[APPENDIX 7: FORECLOSURE TIME FRAMES 206](#__RefHeading___Toc167867708)

[Appendix 8: DAILY INTEREST RATE FACTORS NORMAL YEAR
207](#__RefHeading___Toc167867709)

[Appendix 9: JULIAN DATE CALENDAR 209](#__RefHeading___Toc167867710)

[Appendix 10: CONVEYANCES 209](#__RefHeading___Toc167867711)

[Appendix 11: ATTORNEY\'S CERTIFICATE OF TITLE
210](#__RefHeading___Toc167867712)

[File Not Available 210](#__RefHeading___Toc167867713)

[Appendix 12: Mortgagee Notice of Foreclosure Sale
210](#__RefHeading___Toc167867714)

[Appendix 13: HUD REGIONAL OFFICES 210](#__RefHeading___Toc167867715)

[Current information at http://www.fha.gov.
210](#__RefHeading___Toc167867716)

[Appendix 14: REQUEST TO EXCEED COST LIMIT(S) FOR PRESERVATION AND
PROTECTION 210](#__RefHeading___Toc167867717)

[APPENDIX 15: SHORT RATE METHOD 211](#__RefHeading___Toc167867718)

[Appendix 16: TITLE SUBMISSION CERTIFICATION
212](#__RefHeading___Toc167867719)

[Appendix 17: LETTER 213](#__RefHeading___Toc167867720)

[Appendix 18: LETTER 213](#__RefHeading___Toc167867721)

[Appendix 19: PRE-FORECLOSURE SALE PROGRAM INSTRUCTIONS TO MORTGAGEE
215](#__RefHeading___Toc167867722)

[Appendix 20: PRE-FORECLOSURE SALE PROGRAM TITLE SEARCH \\ DISCHARGE OF
LIEN(S) 216](#__RefHeading___Toc167867723)

[Appendix 21: PRE-FORECLOSURE SALE PROGRAM SALES CONTRACT REVIEW
217](#__RefHeading___Toc167867724)

[Appendix 22: PRE-FORECLOSURE SALE PROGRAM CLOSING WORKSHEET\\RECAP
218](#__RefHeading___Toc167867725)

[Appendix 23 TERMINATION OF PARTICIPATION
220](#__RefHeading___Toc167867726)

[Appendix 24: REQUEST FOR DEED-IN-LIEU OF FORECLOSURE
220](#__RefHeading___Toc167867727)

[Appendix 25: Submitting Single Family Claims For Insurance Benefits
Form 221](#__RefHeading___Toc167867728)

[Appendix 26: SPECIAL FORBEARANCE CHECKLIST
222](#__RefHeading___Toc167867729)

[Appendix 27: Compliance Inspection Report
223](#__RefHeading___Toc167867730)

U.S. Department of Housing and Urban Development

H O U S I N G

Special Attention of: Transmittal for Handbook No.:

4330.4 REV-1 CHG-1

All Approved Mortgagees

(ATTN: Servicing Managers) Issued: April 28, 1995

Directors of Housing

Directors of Single Family Housing Divisions

Supervisory Single Family Loan Specialists

Property Disposition Chiefs, Single Family

1.  This Transmits

> CHANGE 1 to Handbook 4330.4 REV-1, \"FHA Single Family Insurance
> Claims,\" dated September 23, 1994.

2.  Explanation of Material Transmitted:

> This CHANGE transmits a number of non-substantive corrections and
> updates to the Revision 1 of the Handbook.

a)  On Page 1-7, Paragraph 1-5B is revised to reflect that, in
    accordance with the Final Rule issued September 30, 1994 (59 FR
    49813 ff.) and Mortgagee Letter 95-9, FHA debentures are now issued
    in book-entry form and in the full amount of the settlement.

b)  On Page 1-10, Paragraph 1-6F.1 is revised to refer mortgagees to
    Paragraph 2-2A for a full discussion of extensions to the deadline
    to initiate foreclosure when a bankruptcy stay or State law delays
    the initiation of foreclosure.

c)  Page 1-19 is reprinted to delete a duplication of a half-page of
    text from the previous page, and to provide a half-page of text that
    had been omitted.

d)  Pages 1-25 and 7-6 are revised in accordance with Mortgagee Letter
    95-10, which provides the new addresses to which remittances
    accompanying Supplemental claims are sent.

e)  The spelling of \"assigns\" is corrected on Pages 2-15 and 3-3.

f)  Explanations of Items 2 and 3 on the claim form are revised to
    clarify how FHA Case Numbers are to be entered on the claim, whether
    the claim is submitted on paper or through electronic data
    interchange (EDI).

g)  Explanations of Items 2 and 3 on the claim form are revised to
    clarify how FHA Case Numbers are to be entered on the claim, whether
    the claim is submitted on paper or through electronic data
    interchange (EDI).

h)  The name of Item 33 of the claim form, form HUD-27011, has been
    revised to include \"SSN\" (Mortgagor\'s Social Security Number) to
    conform to existing claims instructions for this item. See
    replacement Page 1 of the HUD-27011 (Appendix 1). Each reference to
    the name Security Number) to conform to existing claims instructions
    for this item. See replacement Page 1 of the HUD-27011 (Appendix 1).
    Each reference to the name of Item 33 has likewise been revised.

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3.  Filing Instructions: In Handbook 4330.4 REV-1,

  -------------------------------- ------ --------------------------------
  **Remove:**                             **Insert:**

  Pages 1-7 through 1-10, 1-19 and        Pages 1-7, 1-10, 1-19, 1-25,
  1-20, 1-25 and 1-26, 2-15 and           2-15, 2-48, 2-57, 3-3, 3-12,
  2-16, 2-47 and 2-48, 2-57 and           3-20, 4-8, 4-14, 5-14, 6-12,
  2-58, 3-3 and 3-4, 3-11 and             6-18, 7-6, 7-8, 8-11 and 8-16
  3-12, 3-19 and 3-20, 4-7 and            dated, and Pages 1-8, 1-9, 1-20,
  4-8, 4-13 and 4-14, 5-13 and            1-26, 2-16, 2-47, 2-58, 3-4,
  5-14, 6-11 and 6-12, 6-17 and           3-11, 3-19, 4-7, 4-13, 5-13,
  6-18, 7-5 through 7-8, 8-11 and         6-11, 6-17, 7-5, 7-7, 8-12 and
  8-12, 8-18 and 8-16 (all dated          8-15 dated 9/94, and Page 1 of 7
  9/94) and Pages 1 and 2 of 7 of         (dated) of Appendix 1 and Page 2
  Appendix 1 of Handbook 4330.4           of 7 of Appendix 1.
  REV-1 dated September 23, 1994.         
  -------------------------------- ------ --------------------------------

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

Nicolas P. Retsinas,

Assistant Secretary for Housing-

Federal Housing Commissioner

U.S. Department of Housing and Urban Development

H O U S I N G

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

Special Attention of: Transmittal for Handbook No.: 4330.4 REV-1

> Issued: September 23, 1994

All Approved Mortgagees,

\[ATTN: Servicing Managers (Single Family)\]

Directors of Housing

Directors, Housing Management Divisions

Field Office Managers/Chiefs

Supervisory Single Family Loan Specialists

Property Disposition Chiefs, Single Family

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

1.  This Transmits Handbook 4330.4, \"FHA Single Family Insurance
    Claims\" REV-1.

2.  Explanation:

This revision incorporates the regulatory amendments that were published
in the Federal Register on October 20, 1992, the Mortgagee letters
relating to single family insurance claims that were not incorporated in
Handbook 4330.4 dated November 10, 1992, and provides some additional
clarifications. It is important that this revision be transmitted to
your \"Single Family Servicing Managers\" since it contains a major
update.

The following identifies significant changes for your attention:

(1) In Chapter 1:

    a.  In Paragraph 1-2A the items to be added to form HUD-27011 (dated
        12/84) have been deleted because form HUD-27011 was reprinted on
        5/93 incorporating the changes. If the 12/84 form is used, the
        additions should be made.

    b.  An additional paragraph on claim accuracy was added as paragraph
        1-2E.

    c.  Additional instructions have been added to paragraph 1-2C
        requiring a copy of a transmittal form when courier mail is
        utilized.

    d.  Information relating to the Payment Advice Letter was added to
        paragraph 1-3.

    e.  Information relating to the interactive voice response
        capability was added to paragraph 1-4.

    f.  The time within which foreclosure must be initiated was reduced
        from one year after the date of default to nine months after the
        date of default in paragraph 1-6F as required in the October 20,
        1992 regulatory amendment. A similar change was made in other
        paragraphs wherever it appears.

    g.  Revised procedures relating to claiming Attorney fees contained
        in Mortgagee Letter 94-24 have been added to paragraph 1-10.

    h.  The new regulatory provisions relating to reimbursement on
        reconveyance of property and the payment of insurance benefits
        on reapplication after reconveyance were added to paragraph
        1-14.

(2) In Chapter 2:

    a.  The new regulatory requirement for initiation of mortgage
        foreclosure on vacant or abandoned property was added to
        paragraph 2-2A. Additional instructions relating to foreclosure
        initiation and prohibition of foreclosure were also added to
        paragraph 2-2.

    b.  The new regulatory requirements relating to the time of
        conveyance of property to HUD was added to paragraph 2-2D.

    c.  Clarifying language was added to paragraph 2-2D.6 allowing for a
        mailing date in item 11 for directly conveyed deeds-in-lieu.

    d.  Clarifying language was added to paragraph 2-4.

    e.  Failure to initiate foreclosure on a timely basis where the
        property is vacant or abandoned was added to the causes for
        curtailment of interest in paragraph 2-5C.

    f.  The new regulatory provisions that HUD\'s decision as to the
        acceptability of title will be final was added to paragraph
        2-6B.

    g.  The new regulatory provision relating to the correction of
        defective title was added to paragraph 2-6D.

    h.  The increased compensation for deeds-in-lieu of foreclosure was
        added to paragraph 2-7.

    i.  The new regulatory provision related to the conveyance of
        damaged property without notice was added to paragraph 2-10.

    j.  The required certificate of property condition was added as
        paragraph 2-10D.

    k.  The new regulatory provision limiting the reimbursement for
        protection and preservation costs if the property was not timely
        conveyed was added to paragraph 2-11A.

    l.  Provisions were added to paragraph 2-13B instructing mortgagees
        to seek hazard insurance proceeds and the method of reporting
        proceeds.

    m.  Instructions contained in Mortgagee Letter 92-21 relating to the
        bankruptcy of the mortgagor were added to paragraph 2-17.

    n.  Instructions relating to the \"Special Foreclosure Checklist\"
        were added to paragraph 2-20.

(3) In all Chapter 7:

> Instructions contained in Mortgagee Letter 94-24 regarding
> supplemental claims have been incorporated.

(4) In all Chapters:

    a.  An additional instruction was added to Item 22 of the claim
        form.

    b.  The regulation citation in Item 25 was changed to comply with
        the regulatory amendment.

    c.  Instructions relating to claims for debenture interest were
        added to Items 409 and 410.

\[Asterisks (\*) have been placed in the right and left hand margins on
each page or pages where a correction or addition has been made\].

Filing Instructions:

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  **Remove:**                             **Insert:**

  Handbook 4330.4 dated November          Handbook 4330.4 REV-1 dated
  1992                                    September 1994
  -------------------------------- ------ --------------------------------

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

Assistant Secretary for Housing -

Federal Housing Commission

Handbook4330.4 REV-1

U.S. Department of Housing and Urban Development

Washington, D.C. 20410

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

Program Participants and Departmental Staff

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

\"FHA Single Family Insurance Claims\"

SEPTEMBER 1994

HSIS: EQUAL HOUSING OPPORTUNITY

Distribution:
W-3-1,W-2(H),W-3(A)(H)(OGC)(ZAS),W-4(H),R-1,R-2,R-3,R-3-1,R-3-2,R-3-3,R-6,
R-6-1,R-6-2,R-7,R-7-1,R-8

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

FOREWORD4330.4

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## FOREWORD

The Department of Housing and Urban Development (HUD) is authorized by
the National Housing Act to insure approved single family housing
mortgages made by HUD-approved lending institutions (mortgagees). A
valid Mortgage Insurance Certificate executed by HUD shall be conclusive
evidence of contract of mortgage insurance, and the validity of any
contract so executed shall be incontestable in the hands of an approved
mortgagee except for fraud or misrepresentation by such mortgagee.

When it becomes necessary for mortgagees to apply for benefits under
this insurance program, HUD attempts to pay all properly filed claims
quickly, fairly and accurately. In order to accomplish this, HUD
implemented an automated payment system for claiming Federal Housing
Administration (FHA) single family mortgage insurance benefits. The
system is designed to speed the payment of mortgagee\'s claims, reduce
paperwork burdens, enhance the level of control and improve service.

Mortgagees do not furnish receipts for expenses with their initial
application for benefits, but are required to maintain a complete claim
file that fully supports their claim. The claim file must contain all
receipts, records, accounts and any other documentation necessary to
verify the accuracy of the claim and is subject to audit by the
Department. HUD has developed quality assurance requirements for
mortgagees to follow in the claim preparation and submission process.
Mortgagees are expected to comply \* with these requirements and use
care in preparing their claims for insurance benefits. When submitting
claims for benefits, HUD requires

that an official of the mortgagee sign the claim certifying that all
information and statements contained in the claim are true and correct.
Mortgagees must ensure that all staff involved in the preparation of the
claim understands the importance of that certification. The claim
payment process relies on the accuracy of the claim application; any
inaccurate information entered for the purpose of avoiding an interest
curtailment or obtaining unauthorized insurance benefits is considered a
serious breach of the contract of insurance.\*

This Handbook 4330.4 REV-1, FHA Single Family Insurance Claims,
incorporates all outstanding single family claim policy listed on pages
I through IV and is designed to provide easy-to-use instructions for the
submission of FHA single family insurance claims (except for Home Equity
Conversion Mortgages). The handbook provides instructions for the
preparation and submission of form HUD-27011, Single Family
\*Application for Insurance Benefits, and the actions to be taken (e.g.,
conveying property or assigning the mortgage to HUD) in order to obtain
insurance benefits. It does not purport to describe requirements for the
origination or servicing of insured mortgages,\* except to the extent
that such requirements affect the application for and payment of
insurance benefits.

i9/94

4330.4 FOREWORD

DEFINITIONS.

Unless otherwise noted, the following definitions are applicable
throughout

this Handbook:

  ------------------ --- -------------------------------------------------
  **EXPRESSION**         **DEFINITION**

  24 CFR                 Title 24 Code of Federal Regulations for Housing
                         and Urban Development

  CAFMV                  Commissioner\'s Adjusted Fair Market Value

  CHUMS                  Computerized Homes Underwriting Management System

  CWCOT                  Claims Without Conveyance of Title

  FHA                    Federal Housing Administration

  FNMA                   Federal National Mortgage Association

  GNMA                   Government National Mortgage Association

  HIP                    Hazard Insurance Premium

  HUD                    Department of Housing and Urban Development

  Local HUD Office       The HUD Office in which jurisdiction a mortgaged
                         property is located

  MIC                    Mortgage Insurance Certificate

  MIP                    Mortgage Insurance Premium

  PFS                    Pre-Foreclosure Sales Program

  S/F                    Single Family

  Section                Section in the National Housing Act or 24 CFR

  Secretary              The Secretary of the Department of Housing and
                         Urban Development
  ------------------ --- -------------------------------------------------

PRIVACY ACT.

A.  Authority. The U.S. Department of Housing and Urban Development is
    authorized to solicit the information requested by virtue of Title
    12 USC, 1701 and regulations promulgated there under at Title 24,
    Code of Federal Regulations.

B.  Purpose. The information requested in this form is to be used by the
    Department in processing your request for mortgage insurance
    benefits under the applicable sections of the National Housing Act,
    as amended.

C.  Use. This information will be used to verify claimant\'s entitlement
    to benefits and support the request sent to the U.S. Department of
    the Treasury for issuance of a check. It will not be disclosed or
    released outside the U.S. Department of HUD without your consent,
    except as noted and as required by law.

# CHAPTER 1: GENERAL {#chapter-1-general .unnumbered}

[]{#CH1 .anchor}1-1 CLAIM TYPES. [**(TOP)**](#TABLEOFCONTENTS)

All claims for single family mortgage insurance benefits must be

submitted on form HUD-27011, Single Family Application for Insurance

Benefits. There are seven types of single family claims:

  --------- -- ----------------------------------------------------------
  **TYPE       **TYPE**
  \#**         

  01           Conveyance - The mortgagee obtains the property through
               foreclosure or by deed-in-lieu after mortgage default and
               deeds the property to HUD.

  02           Assignment - The mortgagee, with HUD approval, assigns a
               mortgage in default to HUD, and HUD becomes the mortgagee.

  03           Automatic Assignment Under Section 221 (g)(4) - Mortgagees
               may elect to assign certain mortgages to HUD. These
               mortgages must not be in default on the 20th anniversary
               and the election to assign must be made before the 21st
               anniversary. Upon assignment, HUD becomes the mortgagee.

  04           Coinsurance - Certain FHA approved mortgages are
               coinsured. The mortgagee acquires a property after default
               and sells it rather than conveying or assigning. Any loss
               on the sale is shared by HUD and the mortgagee on a
               90%:10% basis, respectively.

  05           Supplemental Claims/Remittances - A supplemental claim is
               the only tool for mailing adjustments after payment of the
               initial claim has been made. Such adjustments are subject
               to strict time limitations and are made only when
               additional amounts are owed or due.

  06           Claims Without Conveyance of Title - The property is sold
               at foreclosure and is not conveyed to HUD. Currently, this
               claim type is limited to claims involving deficiency
               judgments.

  07           Pre-foreclosure Sales - Under certain circumstances the
               Department may provide relief to a mortgagor where the
               property\'s fair market value is less than the outstanding
               indebtedness. The terms of the sale and the minimum sales
               price are pre-authorized by the Department. If the sale is
               successful, a foreclosure is avoided and the mortgagee may
               file a claim to recover the shortage between the sales
               proceeds and the total indebtedness.
  --------- -- ----------------------------------------------------------

Chapter 1 of this Handbook relates to procedures which are applicable to
all seven types of claims listed above. The remaining chapters relate to
specify procedures for each of these claim types.

[]{#__RefHeading___Toc167867563 .anchor}1-2 THE APPLICATION (FORM
HUD-27011, SINGLE FAMILY APPLICATION FOR

INSURANCE BENEFITS) [**(TOP)**](#TABLEOFCONTENTS)

A.  Form Description. The application form consists of five parts. The
    parts to be submitted vary depending on the type of claim
    submission. All claim types will require submission of Parts A
    and B. The supporting information required for each claim type will
    vary as will the time frame requirements. The specific requirements
    for each claim type are provided in detail in a separate chapter for
    each claim type.

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1.  Part A, Initial Application. Provides the initial case data. Part A
    is the first part of the claim prepared and contains information
    relating to the mortgage, property, property condition, mortgagee,
    payment history and the foreclosure or assignment process.

2.  Part B, Fiscal Data. Contains fiscal data consisting of allowable
    expenses and accrued interest. It provides summary information
    relating to receipts and disbursements by the mortgagee which affect
    the amount of the insurance claim. With the exception of
    conveyances, Part B is submitted with Part A for all claim
    submissions. The supporting documents (Parts C, D and E) are all
    prepared prior to completing Part B.

3.  Part C - Support Document. Contains itemized information relating to
    disbursements for the protection and preservation of the property.

4.  Part D - Support Document (Continuation 1). Contains itemized
    information relating to such items as taxes, hazard insurance
    premiums, MIP, foreclosure costs, etc.

5.  Part E - Support Document (Continuation 2). Contains itemized
    information relating to closing costs and amounts due from and to
    the buyer at closing. It is used for coinsurance claims, claims
    without conveyance of title (CWCOT), Pre-Foreclosure Sales claims
    (PFS), and for claiming certain (e.g., appraisal and deficiency
    judgment) costs where appropriate on conveyance claims.

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B.  Where to Obtain Forms. form HUD-27011 may be obtained from the local
    HUD office, or if not available, copies of the forms in Appendix 1
    may be used. A computer generated form or facsimile may be used only
    if it is substantially identical to the HUD form in size and format.
    Any forms submitted that do not comply with the HUD format or that
    are illegible or incomplete will be returned.

C.  Where to Submit Forms. To ensure good and timely receipt of the
    claim, submit the claim as follows:

    1.  The original (not copy) of the HUD-27011 Parts A and/or B with
        required attachments should be mailed to:

> U.S. Department of Housing and Urban Development
>
> Office of Mortgage Insurance Accounting and Servicing
>
> Single Family Mortgage Insurance Claims Branch
>
> P. O. Box 23998
>
> Washington, D.C. 20036-3998
>
> \* If courier/express mail or registered or certified mail is used,
> send the claim with required attachments to:
>
> U.S. Department of Housing and Urban Development
>
> Single Family Mortgage Insurance Claims Branch Systems
>
> Management and Control Section, Room 6137
>
> 451 Seventh St., S.W.
>
> Washington, D.C. 20410

A completed copy of a transmittal form (Appendix 25) should accompany
all Forms HUD-27011 sent by courier/express mail. NOTE: See Par. 7-8
regarding a supplemental claim with a payment to HUD.\*

2.  Copies of Parts A and B and the originals of Parts C, D and E,
    together with required attachments should be sent to the local HUD
    office having jurisdiction over the mortgaged property. These must
    be forwarded to the local HUD office on the same date that the
    original Part A and Part B are sent to Washington requesting
    payment. Mailing addresses for local HUD offices can be obtained
    from correspondence received from such office or by consulting local
    telephone directories. Include the FHA Case Number on all
    correspondence and documents sent to HUD. Detailed instructions on
    claim submission requirements are provided in Chapters 2 through 8
    of this Handbook.

3.  A copy of all parts of the form, schedules and attachments must be
    retained in the claim file.

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D.  Who May Submit a Claim Application. A claim may be submitted by
    either the holder or the servicer of the mortgage. It must be signed
    by an official of the organization submitting the claim. In either
    case the settlement check will be made payable to the holder of the
    mortgage, as listed in Item 12 of the form HUD-27011.

> HUD will not honor requests for claim payment checks to be delivered
> to any entity other than the holder. The form submitted to HUD
> Headquarters must bear the original signature.

E.  Certification of Claim Accuracy. The mortgagee official signing the
    form HUD-27011 is certifying that all information and statements
    contained in the claim are true and correct. Entering information
    that is inaccurate for the purpose of avoiding an interest
    curtailment or obtaining unauthorized insurance benefits is in
    direct conflict with the certification that statements and
    information on the claim are true and correct. HUD will prosecute
    false claims and statements. Convictions may result in criminal
    and/or civil penalties. Additionally HUD may refer any cases to the
    mortgagee review board where evidence is found to indicate
    intentional misrepresentation on a claim submission.\*

[]{#__RefHeading___Toc167867564 .anchor}1-3 CLAIM PROCESSING.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Pre-screening. Applications are pre-screened prior to processing to
    determine whether certain essential data are missing or incomplete.
    If any of the following discrepancies (or similar deficiencies) are
    found, the unprocessed claim will be returned to the mortgagee:

    -   Invalid/incomplete case number;

    -   Signature missing or not an original (copied or stamped
        signatures are not acceptable);

    -   Illegible document;

    -   Missing Part B (except for conveyance claims);

    -   Missing original MIC;

    -   Missing original Title Approval Letter;

    -   Missing title submission certifications (assignments only);

    -   Missing holding mortgagee number (Part A);

    -   Missing mortgagor\'s social security number; or

    -   Computer generated forms using unacceptable format or form

    -   size.

The above data is essential to claim processing. Claim submissions
returned because of one or more of the above discrepancies will not be
edited for other errors. Therefore, they will be returned a second time
if additional errors are detected.

Claims returned for correction will be considered received on the date
the final corrected form is received. This will normally result in a
loss of interest because the time limitation will be exceeded.

B.  Automated Processing. form HUD-27011, Parts A and B, are processed
    by computer at HUD Headquarters. If the information provided on the
    form passes all system edits and control checks, the system will
    compute and generate payment to the mortgagee. The system edits are
    designed to permit prompt payment of most claims by accepting costs
    encountered in routine claims. If unusually high disbursements are
    reported, the claim payment will be reduced and the mortgagee may
    file a supplemental claim for the amount of the claim disallowed,
    with documentation to support the amount of, and the need for, the
    higher payment. The advice of payment with the initial claim
    reimbursement will identify amounts and reasons for a reduced claim
    payment (See Appendix 2). If other disbursements are unusually high
    the claim may be returned for additional documentation.

> Although a claim may be processed and paid by the computer, HUD may,
> upon review, require reimbursement of any amounts which are found to
> be excessive or not supported by appropriate documentation (See
> Appendix 3, Errors Frequently Made In Preparing Claims).

C.  Payment Advice Letter. Within a few days of receipt of payment the
    mortgagee will receive a letter giving detailed information on the
    payment of the claim (Appendix 2).

D.  Capitalized Accounting. If the mortgagee uses the \"capitalization\"
    method of applying mortgage payments or any of the several
    variations thereof, the Part A must be accompanied by a worksheet
    showing the allocation of all mortgage payments in accordance with
    the terms of the mortgage, i.e., to escrow, interest and principal,
    in that order. The re-computation is necessary for the system to
    accept the claim and to permit entry of the correct due date of the
    last complete installment paid (Item 8) and the unpaid loan balance
    (Item 17).

[]{#__RefHeading___Toc167867565 .anchor}1-4 CLAIMS ASSISTANCE.
[**(TOP)**](#TABLEOFCONTENTS)

General questions concerning the use of the claim form (HUD-27011) may
be addressed to the local HUD office. Specific inquiries to confirm
HUD\'s receipt of claim or to request the status of a claim may be
directed to the Single Family Claims Support Service Center at (703)
235-9102.

This service center is equipped with an interactive voice response
capability. Basic claim payment data may be obtained by using a
touch-tone telephone. Enter the first five digits of the holder or
servicer number and the FHA Case Number to find out whether a claim was
paid, the amount of the payment, when it was paid, and the

mortgagee number of the payee. Up to 15 claims may be researched per
call. The option to transfer to an operator for further assistance is
also available.

The local HUD Office should be contacted concerning questions regarding
title evidence and title approval for specific cases. For conveyances,
please direct your questions to the Single Family Property Disposition
Branch. For assignments, please direct your questions to the Single
Family Loan Management Branch who will coordinate with their Counsel\'s
office depending upon the nature of your question.

[]{#__RefHeading___Toc167867566 .anchor}1-5 METHOD OF PAYMENT.
[**(TOP)**](#TABLEOFCONTENTS)

HUD has authority to reimburse the mortgagee for the unpaid principal
balance of the mortgage and allowable costs and advances in cash or
debentures (24 CFR 203.401).

A.  Cash Payment. All claims for single family insurance benefits
    (except those assigned pursuant to Section 221(g)(4)) are settled in
    cash.

B.  Debentures. Effective January 4, 1995, FHA/HUD debentures are issued
    in book-entry form in the full settlement amount. They are valid and
    binding obligations of the mortgage insurance fund under which the
    mortgage was insured and are issued in accordance with the
    regulations (24 CFR 203.400-411) in settlement of mortgagee\'s
    application for insurance benefits.

> Principal and interest are fully and unconditionally guaranteed by the
> United States. Interest is paid semiannually on January 1 and July 1.
> The Federal Reserve Bank of Philadelphia is the fiscal agent for the
> Treasury Department, who is HUD\'s agent, in the issue, transfer,
> exchange, redemption, payment, purchase, payment of semiannual
> interest and retirement of debentures.

C.  Debenture Interest Payment. When the mortgage insurance claim is
    paid in cash, the settlement includes the interest the claim would
    have earned, as of the date such payment is made, if it had been
    paid in debentures.

D.  Debenture Interest Rate (General). Debenture interest rates are
    established from time to time by the Secretary with the approval of
    the Secretary of the Treasury. The rates from 1941 to December 31,
    1994, are shown in Appendix 4. The rate applicable to a claim is the
    higher of the rate in effect on (i) the date the mortgage was
    endorsed for insurance, or (ii) the date of firm commitment, except
    for Direct Endorsements, Coinsured Loans and Automatic Assignments.

E.  Debenture Interest Rate (Direct Endorsement, Coinsurance Programs).
    For applications involving mortgages originated under the Single
    Family Direct Endorsement or Coinsurance Programs, the debenture
    interest rate is the rate in effect as of the date the mortgage was
    endorsed for insurance. (Appendix 4)

F.  Debenture Interest Rate for Automatic Assignments. For Automatic
    Assignments the rate is the \"going Federal rate\" at the date of
    assignment. (Appendix 4)

[]{#__RefHeading___Toc167867567 .anchor}1-6 EXTENSION OF TIME
REQUIREMENTS [**(TOP)**](#TABLEOFCONTENTS)

The mortgagee is required to take specific actions or to submit specific
documents to HUD within time limits specified in the regulations. The
Secretary is authorized to establish time limitations by Sections 211
(12 USC 1715b) and 204(a)(12 USC 1710) of the National Housing Act. The
time within which specific actions are to be taken vary with the type of
claim and are discussed in detail in the following chapters relating to
the respective claim types. Failure to comply with the time requirements
may result in a loss of debenture interest. \[24 CFR 203.402(k)\]

If the mortgagee cannot comply with the time requirements for a
particular action because of circumstances beyond its control, a request
should be submitted to the local HUD office for an extension of time.
The request should be made as soon as possible, but before the time
limit for that action expires. Time extension requests should be made as
follows:

A.  Extension Request Format. All extension requests must be submitted
    on form HUD-50012, Mortgagee\'s Request for Extensions of Time (See
    Appendix 5).

    1.  Oral requests for extension will not be accepted.

    2.  Mortgagees may submit their requests via facsimile in emergency
        situations.

B.  Submission of Extension Requests. The request must be submitted to
    the local HUD field office having jurisdiction over the property.

    1.  For conveyance claims, (unless directed otherwise by the local
        office) requests to extend the time limit for conveying title to
        HUD, submitting title evidence, submitting fiscal data or
        submission of supplemental claims on conveyances must be
        submitted to the local HUD office, ATTN: Single Family Property
        Disposition Branch.

    2.  All other extension requests must be submitted to the local HUD
        office, ATTN: Single Family Loan Management Branch.

C.  Time Requirements For The Submission Of Extension Requests.

    1.  Mortgagees must submit all extension requests prior to the
        expiration of the time limit.

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a.  In order to ensure timely receipt by the local HUD Office, avoid
    potential disputes and allow adequate response time, mortgagees
    should submit their requests as early as possible.

b.  Extension requests submitted after expiration of the time limit will
    be denied. HUD will allow ten days for receipt of requests sent via
    first class mail through the United States Postal Service and will
    verify the date submitted by the date of the postmark.

> The date of submission will also be verified for all courier delivered
> requests.

c.  Internal controls have been established in each of HUD\'s local
    Offices to ensure that all extension requests received are properly
    logged in and responded to in a timely manner. In the event a
    dispute arises concerning the actual date of the mortgagee\'s
    submission or the date of HUD\'s receipt of an extension request,
    the dispute will be resolved on a case-by-case basis by the local
    HUD Office. If the mortgagee can demonstrate to the local HUD
    Office\'s satisfaction that the extension request was submitted
    timely, the local Office will review the request for extension.

    1.  Extensions will not be granted retroactively, unless the delay
        is directly related to the action of the HUD local office.

    2.  A time requirement is not extended until the extension has been
        approved in writing by HUD.

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a.  An extension will not be granted verbally.

b.  Failure of the field office to meet a response time limit set by the
    mortgagee will not be interpreted as an extension approval.

c.  HUD\'s direction to a mortgagee to take action, or HUD\'s approval
    of a mortgagee\'s action, does not extend a time requirement unless
    HUD extended the expiration date in writing.

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D.  Basis For The Extension Request.

    1.  All extension requests must provide a valid reason to support
        the need for an extension of time. Mortgagees must clearly
        define the circumstances and reason(s) for the request. Vague or
        unclear requests will be denied.

    2.  Extension requests based on the following reasons will be
        denied.

        a.  Investor or holder delay in obtaining required documents.

        b.  Staffing constraints.

        c.  Errors of the servicer, holder and/or of any of the previous
            holders or servicers.

        d.  Delays caused by the mortgagee\'s staff, agent or
            contractor.

        e.  Failure by the mortgagee\'s staff, agency or contractor to
            take appropriate, necessary or required action.

E.  Extensions Will Not Be Approved For The Following.

    1.  Time requirement for the submission of Part A, form HUD-27011,
        Single Family Application for Insurance Benefits Part A (any
        claim type except pre-foreclosure sales claims). Mortgagees must
        submit their Claim for Insurance Benefits on the date the deed
        or assignment is filed for record. (24 CFR 203.360, 203.351).

    2.  Time requirement for recordation and submission of automatic
        assignment claims. The mortgagee must exercise its option under
        Section 221(g)(4) by filing the assignment for record within one
        year following the twentieth anniversary of the date the
        mortgage was endorsed for insurance. The claim must be submitted
        on the date the assignment is filed for record. (24 CFR 221.251,
        221.255).

F.  Mortgagees Are Not Required To Request Prior Written Approval From
    The Local HUD Office For Extensions Of Time Under The Following
    Circumstances.

    1.  Bankruptcy or State law. HUD Regulations (24 CFR 203.355)
        provide that if a mortgagee was prohibited by State law or
        Federal bankruptcy law from instituting foreclosure within nine
        months from the date of default, the mortgagee has 60 days from
        the date such prohibition was lifted to institute foreclosure.
        In addition, in certain circumstances, the mortgagee may have an
        extension longer than 60 days: see Paragraph 2-2A for a complete
        discussion.

> The date of the bankruptcy release must be entered in Item 21 form
> HUD-27011, Part A and a date 60 days after that date must be entered
> in Item 19, in order to receive this extension.\*

NOTE: This instruction is applicable only if the bankruptcy action, or
local law prohibition, actually prevented the initiation of foreclosure
action within the nine month requirement. If the bankruptcy did not
preclude the institution of foreclosure within the nine month time
frame, do not enter an extension date in Item 19, unless approved by the
local HUD Office.\*

> If more than 60 days are needed to initiate foreclosure, mortgagees
> must request an extension from the local HUD Office on form HUD-50012.

2.  Assignment Rejection. (24 CFR 203.355) Local HUD Offices will
    provide mortgagees (attached to the final assignment rejection
    letter) form HUD-50012 which will grant a 60-day extension from the
    date of the final assignment rejection letter under the following
    circumstances:

    a.  The mortgagee sent either the HUD #2 or the HUD #3 Letter a
        minimum of twenty days prior to the expiration of the nine month
        time limitation, unless the mortgagee was prohibited from doing
        so by State Law (or bankruptcy); and

    b.  The mortgagee had been prevented from initiating foreclosure
        within nine months from the date of default because the local
        HUD Office was reviewing the case for Assignment.\*

> NOTE: If the only reason the mortgagee did not meet the time limit to
> institute foreclosure was due to the mortgagee\'s failure to begin the
> assignment process in a timely manner (issue HUD #2 or HUD #3 letter
> at least twenty days prior to the expiration of the time limit), no
> extension will be given by the local HUD Office.

3.  Time Frames for completion of Foreclosure. (24 CFR 203.356)
    (Reasonable Diligence).

At the present time, the Department is not requiring that mortgagees
obtain prior written approval to exceed the state time limits for the
completion of foreclosure.

However, an extension of time to complete foreclosure is not automatic.
Supporting documentation such as attorney\'s correspondence or copies of
court records must be retained in the Claim Review File. In areas where
recording delays are excessive, mortgagees must document efforts to
follow- up with the recording authority.

Compliance with the foreclosure time limits will be monitored through
the Department\'s post claims review process and Headquarters claim
processing staff, as appropriate.

4.  Certain Supplemental Claims. (CFR 203.401(c)) Mortgagees have a six
    month limitation to submit a supplemental claim. Supplemental claims
    submitted after the six month limitation will not be honored, except
    under the following circumstances.

    a.  Hazard Insurance Refund Adjustments. A supplemental claim for a
        hazard insurance refund adjustment (beyond the six month time
        limit), will automatically be honored up to one year from the
        date of final settlement of the initial Part B, Single Family
        Claim Form, HUD-27011, under the following conditions:

        1.  All hazard insurance costs when known, where included in the
            initial submission of form HUD-27011, Part B, or to the
            extent possible, are claimed, within six months from the
            date of final settlement of Part B.

        2.  The mortgagee diligently followed up with the hazard
            insurance carrier to confirm any necessary adjustment.

        3.  The supplemental claim is submitted within 14 calendar days
            from the date of the insurance carrier\'s notification of an
            adjustment.

> NOTE: The supplemental claim must be received within 24 calendar days
> from the date of the carrier\'s notification.

4.  A copy of the carrier\'s notification is attached to the
    mortgagee\'s supplemental claim.

5.  The mortgagee has adequately indicated in the mortgagee\'s comment
    section that the supplemental claim is being filed to recover an
    adjustment to the hazard insurance premium refund.

> If more than one year is needed to make HIP adjustments, mortgagees
> must request an extension from the local HUD Office on form HUD-50012.
> Only hazard insurance adjustments will be honored with this type of
> approved extension. Mortgagees may not include other types of costs
> they may have failed to include in earlier claim submissions.

b.  Deficiency Judgment Costs. For cases where a deficiency judgment was
    pursued, a supplemental claim for the additional costs related to
    the pursuit of the deficiency judgment may be submitted up to one
    year from the date of final settlement (of the initial Part B) or up
    to 3 months after the deficiency judgment, whichever is later,
    subject to the following conditions.

    1.  All such costs when known, were included in the initial
        submission of form HUD-27011, Single Family Application for
        Insurance Benefits, Part B, or, to the extent possible, are
        claimed within six months from the date of final settlement of
        the initial Part B.

    2.  The mortgagee has adequately indicated in the Mortgagee\'s
        Comment section that the supplemental claim is being filed to
        recover deficiency judgment costs.

> NOTE: Mortgagees must request an extension from the local HUD Office
> on form HUD-50012 if it will be necessary to request reimbursement for
> any costs related to the pursuit of a deficiency judgment after the
> year time limit.
>
> Only deficiency judgment costs will be honored with this type of
> approved extension. Mortgagees may not include other types of costs
> they may have failed to include in earlier claim submissions.
>
> Only one supplemental claim should be filed for deficiency judgment
> costs on any one FHA case. Mortgagees should ensure the deficiency
> judgment has been resolved and that all deficiency judgment costs are
> known and claimed at the time the supplemental is filed.
>
> A supplemental claim for deficiency judgment costs should not be
> submitted until resolution of the deficiency judgment.

c.  Overpayments. Mortgagees must promptly remit any amounts overpaid on
    the claim and must promptly remit any other funds received, within
    thirty calendar days from the date of receipt. The six month
    limitation for supplemental claims does not apply to supplemental
    remittances. Prior written approval is never required to file a
    supplemental for remittance of funds.

> Mortgagees will be monitored as to the promptness of their submission.

5.  Special Forbearance Agreement. If the mortgagee has entered into a
    valid special forbearance agreement with the mortgagor, the
    mortgagee need not request prior written approval from the local HUD
    office for an extension of the timeframe to initiate foreclosure.
    NOTE: The mortgagee must commence foreclosure within 90 days
    following the date the mortgagor fails to meet the requirements of a
    special forbearance under 24 CFR 203.614. Exceeding this 90-day
    timeframe requires prior written approval from the local HUD office.

6.  Pre-foreclosure Sales. If initiation of foreclosure is delayed due
    to a mortgagor being accepted into the pre-foreclosure procedure in
    accordance with HUD Guidelines, the mortgagee need not request prior
    written approval from the local HUD office for an extension of the
    timeframe to initiate foreclosure.

> Mortgagees have nine months from the date default to begin the
> pre-foreclosure sale procedure with a mortgagor (i.e., indicate to the
> mortgagor in writing that he or she is qualified to pursue buyer under
> the PFS procedure, and delay the foreclosure sale date). If the PFS
> procedures commences within the nine-month period, but is not
> completed within that time frame, mortgagees are not required to
> request prior written approval from the local HUD Office for an
> extension. However, commencement of the pre-foreclosure sale procedure
> near the nine-month deadline should be avoided except in cases where
> other types of mortgagor relief have been tried and failed (e.g.,
> application for assignment; special forbearance).
>
> NOTE: If the Pre-foreclosure Sale Procedure is unsuccessful,
> mortgagees have 60 days from the date a mortgagor\'s bona fide
> participation in the pre-foreclosure sale procedure ends either to
> accept a deed-in-lieu of foreclosure or to initiate foreclosure
> proceedings against that mortgagor, if foreclosure had not been
> initiated before the date the mortgagor began participating in the PFS
> procedure, or is legally required to be \"re-initiated\". This 60-day
> period is applicable regardless of whether the nine month timeframe
> has run, so long as the homeowner was participating in the
> pre-foreclosure sale procedure during the affected period. Exceeding
> this 60-day timeframe requires prior written approval from the local
> HUD office.\*
>
> Compliance with all portions of Paragraph F will be monitored through
> the post claims review process and Headquarters claim processing
> staff, as appropriate.

G.  Special Circumstances Which May Require The Mortgagee To Request An
    Extension Of Time To Initiate Foreclosure.

    1.  Drug seizure related cases. Mortgagees will be prohibited from
        initiating foreclosure in situations where the U. S.
        Marshall/Department of Justice (DOJ) seized the property in a
        drug related action. HUD will not become involved if the U. S.
        Marshall/DOJ chooses to retain mortgaged property. Mortgagees
        need not request an extension until the property is released by
        the U. S. Marshall/DOJ and foreclosure action or deed in lieu
        becomes necessary to acquire the property.

> Because of the complexity of these cases, they will be dealt with on a
> case-by-case basis. For cases where the mortgagee needs an extension
> of time to initiate foreclosure, a request should be made promptly to
> the local HUD Office. Please contact the local HUD Office for guidance
> as to the documentation required to be submitted with your extension
> request.

2.  Soldiers and Sailors Civil Relief Act of 1940. (24 CFR 203.346) The
    activation of certain reservists (such as to the Persian Gulf
    in 1990) may require mortgagees to delay the initiation of
    foreclosure because of the requirements of this Act. If an extension
    to initiate foreclosure is needed because of the requirements of the
    Act, an extension request must be made to the local HUD Office. An
    appropriate extension will be approved based upon the specifics of
    the individual case. Please contact the local HUD Office for
    guidance as to the documentation required to be submitted with your
    extension request.

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H.  Claim Review File.

    1.  A copy of HUD\'s written response to each extension request or
        requests to exceed cost limits must be maintained in the
        mortgagees\' claim review file. In addition, appropriate
        documentation to support extensions not requiring prior written
        approval as explained in Paragraph F must be a part of the Claim
        Review File.\*

    2.  If a subsequent claim review finds that an extension or an
        approval to exceed cost limits was granted based upon a
        misrepresentation of the facts, the claim will be considered
        paid in error.\*

[]{#__RefHeading___Toc167867568 .anchor}1-7 MORTGAGE INSURANCE
CERTIFICATE. [**(TOP)**](#TABLEOFCONTENTS)

In all types of claims for mortgage insurance benefits, the mortgagee is
required to attach the original Mortgage Insurance Certificate (MIC) to
the original of Part A when it is submitted to HUD Headquarters. Where
the original MIC is not available, a duplicate MIC may be obtained from
the local HUD office having jurisdiction over

the property. (Additional guidance for obtaining a duplicate MIC may be
found in HUD Handbook 4000.2, Rev-2, Mortgagees\' Handbook, Application
through Insurance dated July 30, 1991.)

A.  All requests for a duplicate MIC must be in writing and forwarded to
    the Chief of Mortgage Credit in the local HUD office. Provide
    documentation that the case is insured (i.e., a copy of the MIC
    reproduced from microfilm or other source), accompanied by a copy of
    the mortgage note and a self addressed, stamped envelope. (This will
    help assure that the duplicate MIC is returned to the requesting
    lender rather than the originator.)

B.  Old Section 221 Mortgages. Mortgage Insurance Certificates were not
    issued for some old Section 221 mortgages. For these mortgages, the
    mortgagee should submit a certification that the mortgage is fully
    insured, that the insurance has not been terminated and that no MIC
    was issued because it was an old Section 221 mortgage. The
    certification must fully identify the mortgage. Include a copy of
    the note showing the endorsement date.

[]{#__RefHeading___Toc167867569 .anchor}1-8 MORTGAGOR\'S SOCIAL SECURITY
NUMBER. [**(TOP)**](#TABLEOFCONTENTS)

All claims must have the mortgagor\'s social security number entered in
Item 33 of Part A, form HUD-27011. Any claim submitted without the
number will be returned for correction and debenture interest will be
curtailed if the corrected claim is not received within the prescribed
time. If a co-mortgagor\'s social security number is available, it
should also be entered. If there are additional mortgagors or additional
space is required, the \"Mortgagee\'s Comments\" space may be used for
this purpose.

If the application for a firm commitment was signed before August 15,
1986 the claim may be accepted without a social security number if:

-   the mortgagee has made the annual requests for the mortgagor\'s
    social security number that are required by the Internal Revenue
    Service (IRS) but the mortgagor has failed to provide the requested
    number;

-   the mortgagee has made an exhaustive search of all available records
    and cannot find the mortgagor\'s social security number in addition
    to attempting direct contact with the mortgagor; and

-   the defaulting mortgagor is either deceased or cannot be located to
    provide the missing number.

Under these circumstances, the following certification, signed by an
authorized official of the mortgagee, must be attached to the claim or
entered in the \"Mortgagee\'s Comments\" section of the application.

\"I certify that no social security number is available for FHA Case
Number \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, upon which this claim
is based. I further certify that I or representatives of my company have
searched for all available records and made all annual requests for the
mortgagor\'s social security number that are required by

the IRS.\"

The following remark, \"See attached\" must be entered in Item 33 in
lieu of the social security number.

[]{#__RefHeading___Toc167867570 .anchor}1-9 MORTGAGE DEFAULT.
[**(TOP)**](#TABLEOFCONTENTS)

A mortgage is in default if the mortgagor fails to make any payment, or
to perform any other obligation under the mortgage, and such failure
continues for a period of 30 days. The date of a monetary default is 30
days after the first failure to make a monthly payment which subsequent
payments are insufficient to cover when applied to the overdue monthly
payments in the order in which they became due. Therefore, the date of
default is either:

A.  Two months from the due date of the last fully paid installment.

Example:

Due date of first installment 04/01/93

Due date of last fully paid installment 07/01/93

Date of first uncorrected payment failure 08/01/93

Date of default 09/01/93

B.  One month from the due date of the first installment if no payments
    are made

Example:

Due date of first installment 04/01/93

Date of first uncorrected payment failure 04/01/93

Date of default 05/01/93

If appropriate origination practices are followed, a situation involving
no payments should only occur in very unusual circumstances.

Although subsequent payments may be sufficient to advance the date of
default when applied to overdue monthly payments, if the time
requirement to initiate foreclosure or record a deed-in-lieu has been
missed, such payments will not change the mortgagee\'s failure to comply
with the time requirement unless the payments are sufficient to cure the
default.

[]{#__RefHeading___Toc167867571 .anchor}1-10 ATTORNEY\'S FEES.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Allowable Fees. HUD will reimburse the mortgagee for reasonable and
    customary fees paid to attorneys and trustees in connection with the
    foreclosure of a mortgage or other acquisition of title, the
    assignment of a mortgage to HUD and with securing possession of the
    property. For routine legal actions, HUD reimburses mortgagees for
    attorney\'s fees based on the FNMA Schedule of Standard Attorney\'s
    and Trustee\'s Fees. Formerly, mortgagees were generally instructed
    to enter the amount actually paid to the attorney, regardless of
    whether the fee exceeded the FNMA fee or whether the amounts were
    reasonable, and the initial claim payment was limited to the
    allowable amount. Mortgagees must now follow the instructions below
    regarding what may be claimed for attorney\'s fees (for all claims
    filed on or after June 25, 1994, except that the 75% reimbursement
    rule discussed below applies only to foreclosures referred to an
    attorney on or after June 25, 1994). Generally, mortgagees may enter
    no more than the FNMA fee for a routine legal action and may enter
    only reasonable amounts for contested foreclosures, contested
    evictions, contested bankruptcies, required probate procedures, etc.
    If the mortgagee complies with the guidance, the need to file a
    supplemental claim for additional funds for attorney\'s fees should
    be eliminated in all but a very few cases. FNMA revises its fee
    schedules from time to time; therefore the mortgagee should use care
    in ensuring the applicable schedule is being used. HUD reserves the
    right to revise amounts which it considers reasonable and customary
    at any time.

> Mortgagees are expected to maintain adequate documentation in the
> claim review files to support all attorney\'s fees. This will be
> subject to verification during the post claim review. If a
> mortgagee\'s claim is more than the amounts allowed by the following
> instructions, it will be considered a monetary finding, and the
> mortgagee will be billed for the statistically calculated overpayment
> for all claims within the review period.
>
> As before, if the mortgagee believes it is entitled to more than the
> amount HUD actually reimbursed in the initial claim payment, the
> mortgagee may file a supplemental claim for attorney\'s fees. However,
> mortgagees may file only one supplemental claim, so any claim for
> additional attorney\'s fees must be included in that one supplemental
> claim. In addition, supplemental claims for attorney\'s fees should no
> longer be sent to the Home Mortgage Division, Room 9258, as had been
> previously directed. The claims should now be sent to the appropriate
> address indicated in Par. 1-2.C. (See Chapter 7 for Supplemental Claim
> Instructions.)
>
> HUD will not reimburse a mortgagee for overhead items such as postage,
> telephone, duplicating, etc. Attorney or trustee overhead costs should
> be included in the attorney\'s fee.
>
> Reimbursement for attorney\'s fees may be claimed by entering the
> amount of the fee in the following Items in Part D of form HUD-27011:

-   Item 305 - Mortgagees may enter in Item 305 an amount up to the
    maximum FNMA fee for routine evictions, and reasonable attorney\'s
    fees for contested evictions.

-   Item 306 - Mortgagees may enter in Item 306:

    -   a maximum of the FNMA fee for attorney\'s fees incurred in any
        completed routine foreclosure and reasonable and customary fees
        for a contested foreclosure.

    -   a maximum of 75% of the FNMA fee incurred for a routine
        foreclosure that was not completed because:

        1.  the mortgagor filed a bankruptcy petition.

        2.  a deed-in-lieu of foreclosure was accepted after the
            foreclosure was initiated.

        3.  HUD directed the mortgagee to terminate foreclosure in order
            to permit assignment consideration, provided the foreclosure
            was properly initiated. \[See HUD Handbook 4330.1, REV-4,
            paragraph 8-7(F)\].

        4.  the mortgagor was accepted into the Pre-foreclosure Sale
            program or procedure.

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    -   a maximum of the FNMA fee for attorney\' fees incurred for
        specific legal services such as \"proceedings subsequent\" for a
        Torrens title in Minnesota.

    -   a maximum of the FNMA fee for attorney\'s fees incurred for a
        deed-in-lieu of foreclosure.

    -   reasonable attorney\'s fees incurred in preparing assignment of
        a mortgage to HUD.

        -   Item 307 - Mortgagees shall not enter attorney\'s fees in
            Item 307.

        -   Item 310 - Mortgagees may enter in Item 310 an amount up to
            the FNMA fee for attorney\'s fees actually incurred for each
            bankruptcy and reasonable and customary attorney\'s fees
            incurred when the bankruptcy was not routine. Mortgagees may
            not claim attorney\'s fees for defending \"cram downs\" in
            bankruptcy.\*

    A.  Full and Two-Thirds Reimbursement. Allowable fees related to
        assignment, and eviction or other possessory actions, are
        reimbursable in full, but only two-thirds of fees paid in
        connection with acquiring title to the property and its
        conveyance to the Secretary are reimbursable. Bankruptcy
        proceedings are related to the foreclosure action and are
        limited to two-thirds reimbursement except in assignment claims.

> In order to properly allocate attorney\'s fees between full and
> two-thirds reimbursement, and permit review and payment, it may be
> necessary to separate attorney\'s fees into six categories:

1.  Fees Related to Acquisition of Title. These fees relate to the
    foreclosure action or deed-in-lieu of foreclosure and are shown in
    Item 306. They are subject to two-thirds reimbursement. Costs paid
    by the attorney and reimbursed by the mortgagee are shown in
    Item 307. If the attorney bills the mortgagee for unallowable costs,
    they should not be listed in either item.

2.  Fees Related to Eviction or Gaining Possession. A separate fee is
    permitted only in jurisdictions where court procedures do not enable
    the foreclosing party to obtain possession as a part of the
    foreclosure action and a separate proceeding must be brought.
    Eviction fees and costs should be shown in Item 305. The fee for
    eviction should not be shown in Item 306 nor should costs be shown
    in Item 307 because eviction fees and costs are fully reimbursable
    (up to amounts approved by HUD) and not limited to two-thirds as in
    foreclosure costs.

3.  Fees Related to Bankruptcy Proceedings. Fees related to bankruptcy
    should be separately stated and shown in Item 310. These fees are
    considered costs of acquisition and subject to two-thirds
    reimbursement.

4.  Fees Related to the Assignment of the Mortgage to the Secretary.
    Fees related to assignment are reimbursable in full and shown in
    Item 306.

5.  Fees for Special Services. Extra costs or fees incurred as a result
    of a defect in the mortgage transaction or a defect in title which
    existed at, or prior to, the time the mortgage was filed for record
    are not reimbursable, unless the mortgage was sold by the Secretary
    or executed in connection with the sale of the property by the
    Secretary.

6.  Fees Related to Deficiency Judgments. Fees related to deficiency
    judgments are reimbursable in full and shown in Item 410. The fee
    for a judicial foreclosure when the mortgage would otherwise be
    foreclosed by power of sale is considered related to the deficiency
    judgment.

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B.  Salaried Employees. Compensation paid to an attorney or trustee who
    is a salaried employee will not be reimbursed. The salary is an
    obligation of the mortgagee unrelated to the foreclosure, therefore,
    it is not a foreclosure cost \"actually paid\" by the mortgagee (24
    CFR 203.402(f)).

[]{#__RefHeading___Toc167867572 .anchor}1-11 DEFICIENCY JUDGMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Pursuit of Judgment. Mortgagees are authorized to seek deficiency
    judgments against mortgagors but costs associated with such actions
    are reimbursable only if HUD requested or required the action or
    approved the mortgagee\'s request to pursue a judgment. The
    mortgagee must use the \"Claims Without Conveyance of Title
    (CWCOT)\" procedure described in Chapter 6 in obtaining a
    Commissioner\'s Adjusted Fair Market Value and in bidding at the
    foreclosure sale. If the mortgagee is the successful bidder and
    conveys title to the property to HUD, the claim for insurance
    benefits must be filed as a conveyance claim (Chapter 2). If the
    mortgagee retains the title or if a third party is the successful
    bidder, the claim for insurance benefits must be filed as a Claim
    Without Conveyance of Title (Chapter 6).

B.  HUD Request. Generally, deficiency judgments will be sought against
    mortgagors who retain significant assets or income after foreclosure
    and can be expected to pay all or part of a deficiency judgment
    within a reasonable time.

C.  Collection. If a deficiency judgment is obtained, it must be
    assigned to HUD within 30 days. The mortgagee shall not engage in
    any collection activity.

D.  Fees and Costs. Fees and costs are reimbursable only when HUD
    requested or required the deficiency judgment action or when HUD has
    approved the mortgagee\'s request to pursue the judgment. If the
    costs of seeking a deficiency judgment are reimbursable, they are
    100% reimbursable. They should be entered in Item 410 of Part E and
    must be described in detail.

Allowable costs and fees are as follows:

1.  Attorney fees which relate only to the deficiency judgment.

2.  Additional filing or recording fees which relate only to the
    deficiency judgment.

3.  Costs related to a judicial foreclosure if local law requires a
    judicial foreclosure in order to obtain a deficiency judgment and
    the foreclosure would otherwise be by power of sale.

> The time limit for filing a supplemental claim will be extended, if
> necessary, for reimbursement of the cost of seeking a deficiency
> judgment (See paragraphs 1- F.4b and 7-5).\*

[]{#__RefHeading___Toc167867573 .anchor}1-12 CLAIM FILE AND RETENTION OF
RECORDS. [**(TOP)**](#TABLEOFCONTENTS)

A.  Claim File Maintenance. A claim file with complete records must be
    maintained by the mortgagee on all cases for which a claim for
    insurance benefits has been filed. Insurance claims are paid through
    an automated payment system with control exercised primarily on an
    exception basis. Since mortgagees are not required to furnish
    receipts for reimbursable expenses with their claims, the integrity
    of the system is dependent on mortgagee compliance with claim
    processing requirements. Claim reviews are conducted by HUD after
    payment to verify the accuracy of claim submissions, and if
    inaccurate or inappropriate claims are found, repayment is required.
    If a question arises regarding the support of an amount reimbursed
    on an insurance claim, the burden of proof is on the mortgagee to
    show the amount is valid and reimbursable. Amounts charged to the
    mortgagee by any third party (over and above allowable fees) and
    claimed for reimbursement are subject to the same documentation
    requirements the mortgagee is expected to meet if the mortgagee
    expended the funds directly.\*

> The mortgagee must be able to show support for all information entered
> on the application for insurance benefits. Claim files must be
> maintained for a period of three years after the date of the last
> check received by the mortgagee in payment of a claim. If the last
> notification from HUD was a billing then all records must be
> maintained for a period of three years after resolution of such
> billing. If the mortgagee is notified within the three year period
> that its claims will be reviewed by HUD or its agent, all claim files
> must be maintained until completion and final settlement of the
> review. Claim files must be made available for review within 24 hours
> of HUD\'s request. Mortgagees must be able to retrieve claim files
> using the FHA case numbers. If mortgagees wish to file according to
> their own internal numbering system, they must maintain a cross
> reference with the FHA case number. If a supplemental claim is filed,
> its resolution becomes the last action for the purpose of establishing
> the 3-year retention period. Documents may be stored on microfilm,
> provided a legible hard copy can be produced within 24 hours of
> request.

The following records must be retained:

1.  Copy of Parts A through E of form HUD-27011.

2.  All records, loan payment history, documents, papers and accounts
    relating to the mortgage transaction including all collection and
    foreclosure notes relating to each FHA case maintained in the system
    database.\*

3.  Copies of the conditional commitment for insurance (if applicable),
    the firm commitment (if applicable), the mortgage insurance
    certificate (face and reverse), the mortgage, and the mortgage note.

4.  The credit worksheet signed by the mortgagee\'s approved underwriter
    (if applicable).\*

5.  Copy of Deed or assignment with date of recordation.

6.  A copy of transmittal letter, if deed or assignment is sent to
    recording authority.

7.  HUD letters of approval or disapproval with respect to assignments,
    extensions, protection and preservation expenses and damaged
    properties.

8.  Foreclosure initiation document.

9.  Bankruptcy supporting documentation.

10. Title Approval letter.

11. Title Submission Certification (for assignments only).

12. Receipts supporting all disbursements for which reimbursement is
    claimed. (Canceled checks are not considered receipts.)

13. Inspection reports (initial, occupied and vacant).

14. Any photographs needed to support protection and preservation
    expenses.

15. Copy of buy-down and rental agreements.

16. Payment advice letters.

17. Copy of the Hazard Insurance Policy and Flood Insurance Policy (if
    applicable).

18. Any additional information or data required by HUD regulation,
    handbook, or mortgagee letter.

> This is not intended to be an all-inclusive list. Mortgagees must
> ensure the claim file contains documentation for all information
> entered on the claim form.

B.  Missing Claim Files. Claim files must be maintained for a period of
    three years after final claim payment. If a claim file is missing
    and cannot be produced for review, the Department may consider all
    amounts for expenses and interest to have been paid in error. HUD
    may charge a fee for the review of claim files that are not provided
    to HUD when requested.

[]{#__RefHeading___Toc167867574 .anchor}1-13 NEGATIVE CLAIM AMOUNT.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Original Claim. If the Net Claim Amount in Part B (Item 137) of the
    original claim is a negative amount, do not send HUD a check. HUD
    will calculate the claim making the necessary adjustments for the
    costs of foreclosure and will bill the mortgagee for the amount due.
    The date of HUD\'s billing letter is the date used for the 3-year
    documentation-retention requirement.\*

B.  Supplemental Claim. If the Net Claim Amount in Part B of a
    Supplemental Claim is a negative amount, follow the instructions in
    Paragraph 7-8.

[]{#__RefHeading___Toc167867575 .anchor}1-14 REASSIGNMENT AND
RECONVEYANCE. [**(TOP)**](#TABLEOFCONTENTS)

A.  Reassignment and Re-conveyance. (24 CFR 203.364) If the mortgagee
    conveys a property or assigns a mortgage to HUD which is ineligible
    for insurance benefits or otherwise fails to comply with the
    regulations, the mortgagee must promptly correct the defect or HUD
    will re-convey the property or reassign the mortgage to the
    mortgagee. If this occurs the mortgagee must reimburse HUD for all
    expenses incurred in connection with the acquisition, re-conveyance
    or reassignment. If reimbursement is not made promptly after notice,
    HUD will collect the debt by administrative offset. The
    reimbursement must include the amount of the insurance settlement,
    interest on such amount from the date the insurance benefits were
    paid to the date of refund at an interest rate set in conformity
    with the Treasury Fiscal Requirements Manual, all expenses incurred
    in connection with the acquisition and re-conveyance and HUD\'s cost
    of holding the property, accruing on a daily basis, from the date
    the deed was filed for record to the date of re-conveyance. The
    holding costs shall be based on HUD\'s estimate of the taxes,
    maintenance and operating expenses of the property and
    administrative expenses.\*

B.  Reapplication. Upon reassignment or re-conveyance the application
    for insurance benefits shall be considered as canceled without
    prejudice to the right of the mortgagee to reapply for insurance at
    a subsequent date. Reapplication, however, does not extend the time
    periods for the performance of any required action. The claim will
    be considered received at the time of reapplication. This will
    result in a loss of interest in most cases because the time
    limitation will not be met.\*

> For mortgages insured under firm commitments issued on or after
> November 19, 1992 or under direct endorsement processing where the
> credit worksheet was signed by the mortgagee\'s approved underwriter
> on or after November 19, 1992, if the mortgagee reapplies for
> insurance benefits the mortgagee will not be reimbursed for any
> expenses incurred in connection with the property after it has been
> re-conveyed by the Secretary or paid any debenture interest accruing
> after the date of the initial conveyance or after the date conveyance
> was required by 24 CFR 203.359 of the regulations (see paragraph
> 2-2.D) whichever is earlier and there will be deducted from the
> insurance benefits any reduction in the Secretary\'s estimate of the
> value of the property occurring from the time of re-conveyance to the
> time of reapplication (24 CFR 203.363).\*

C.  Damage or Defective Title. On discovery of damage to the property or
    defective title, the field office will notify the mortgagee to
    repair the damage within 90 days or correct the defective title
    within 30 days in order to avoid reassignment or re-conveyance. One
    30 day extension may be granted by the field office if requested
    within the 90 or 30 day time frame.

> If the damage or defect reduces the value of the property by a
> measurable amount but does not prevent its sale, HUD may agree to
> accept the property and reduce the insurance benefits in an amount
> which will compensate the mortgage insurance fund for any anticipated
> loss.
>
> For mortgages insured under a firm commitment issued on or after
> November 19, 1992, or under Direct Endorsement processing where the
> credit worksheet was signed by the mortgagee\'s approved underwriter
> on or after November 19, 1992 if the title to a property conveyed to
> the Secretary is not good and marketable, the mortgagee will be
> required to correct the defect within 60 days after receiving notice
> from the Secretary or within such further time as the Secretary may
> approve in writing. In this case, the mortgagee may retain the
> insurance benefits already paid, but it will not be reimbursed for any
> costs involved in correcting the title (24 CFR 203.402(f)) (See
> paragraph 2-6D).
>
> For specific requirements relating to the condition of the property at
> the time of conveyance, see paragraph 2-10.\*

D.  Uninsured Mortgages. If the mortgagee submits a claim on a mortgage
    which was not insured by HUD, the property will be re-conveyed or
    the mortgage will be reassigned and the mortgagee will be required
    to reimburse HUD as above. If the property has been sold, HUD will
    remit to the mortgagee the property\'s sales price less the expenses
    of sale and expenses incurred while the property was in HUD\'s
    inventory (taxes, utilities, repairs, management fees, etc.).

[]{#__RefHeading___Toc167867576 .anchor}1-15 QUALITY ASSURANCE.
[**(TOP)**](#TABLEOFCONTENTS)

HUD Regulation 24 CFR 202.12(j) requires approved mortgagees to have a
written Quality Control Plan for loan origination and servicing. HUD has
established minimum requirements which must be met for a Quality Control
Plan to be acceptable to HUD. Mortgagees\' policies, procedures and
practices with respect to origination and servicing have a direct impact
on the number of claims filed, the amount of loss to the government, and
quality and accuracy of claim submissions. Following are some of the
determinations relating to claims which mortgagees must make in order to
meet HUD\'s minimum requirements. A complete listing of HUD\'s Quality
Control Plan minimum requirements can be found in Handbook 4060.1,
Mortgagee Approval Handbook.

Mortgagees must determine that:

A.  Insurance claims are properly calculated and claim amounts are fully
    supported.

B.  A thorough review of the claim application has been accomplished to
    verify that supporting documentation exists for all information
    entered on the claim form.

C.  A thorough review is accomplished when filing a supplemental claims
    to ensure that no other adjustments are needed.

D.  Deeds-in-lieu are pursued where appropriate and deficiency judgments
    are taken where required.

E.  Property inspections are performed when the mortgagor fails to make
    a mortgage payment and no contact is possible within 45 days of the
    due date, or if the mortgage is in foreclosure and the property is
    vacant (see 2-11B for more detailed inspection requirements).

F.  HUD-FHA monthly reporting requirements under the Single Family
    Default Monitoring System are complied with.

G.  Foreclosure proceedings are initiated and completed on a timely
    basis and in accordance with HUD-FHA requirements.

H.  Sufficient controls exist to assure that preparation of insurance
    claims are complete, accurate and timely, in order to minimize any
    loss to HUD.

[]{#__RefHeading___Toc167867577 .anchor}1-16 REVIEW OF CLAIMS.
[**(TOP)**](#TABLEOFCONTENTS)

The automated system for the payment of insurance benefits relies on the
accuracy of the information provided by the mortgagee on the claim form.
Therefore all information entered on the claim form must be supported by
documentation in the claim file.

In order to verify the accuracy and appropriateness of amounts claimed,
HUD or its agent may conduct a review of the claim file at any time
within three years after the claim is paid. The mortgagee who files the
claim as the Servicing Mortgagee is responsible for the completeness and
accuracy of the claim submission. It is the responsibility of the
Servicing Mortgagee to remit any overpayments identified on claim
payments made by HUD. Statistical sampling may be used to select claims
for review and determine the amount due HUD for overpayments. Denial of
access to a file will be grounds for withdrawal of the mortgagee\'s
approved lender status, debarment by the Secretary, or immediate
suspension of all claim payments to the mortgagee.

Mortgagees must promptly reimburse HUD for any amount overpaid because

of incorrect, unsupported or inappropriate information provided by the
mortgagee.

A.  Frequency of Reviews. The Department may review any claim file at
    any time during the required claim file retention period. See
    paragraph 1-12.

B.  Notification to Mortgagee. The Department will notify mortgagees by
    letter prior to the commencement of a claims review. Upon request by
    the Department, the mortgagee will make available for review, hard
    copy claim files for any paid claim within 24 hours of such a
    request.

C.  Evaluation of Results. The result of a claims review will be
    evaluated prior to the issuance of a report. Any discrepancies
    resulting from inaccuracies, omissions, unsupported claim
    information will be identified and provided to the mortgagee in the
    initial report.

D.  Reporting Process. After completion of the reviews, the Department
    will issue the initial report identifying the errors found, the
    mortgagee\'s potential liability, and whether or not the mortgagee
    is in compliance with Department guidelines.

E.  Billing. The mortgagee\'s potential liability will be identified in
    the initial report. Mortgagees will have 45 days from the date of
    the report to provide any additional documentation that could affect
    the review results. If no additional documentation is provided
    within 45 days, the report will be considered final and the
    potential liability identified will become the amount owed.

> If additional information is provided, it will be reviewed and
> adjustments to the potential amount owed will be made. Once the final
> amount is determined, the mortgagee will be billed and required to pay
> within 14 days. If payment is not received within 30 days, interest
> will accrue from the date billed on the amount owed. If payment is not
> received within 90 days, a penalty plus administrative costs will be
> assessed.

F.  Administrative Offset. If reimbursement is not made promptly after
    the final amount is determined HUD may collect the debt by
    administrative offset or other means.

# CHAPTER 2: CONVEYED HOME PROPERTIES {#chapter-2-conveyed-home-properties .unnumbered}

[]{#__RefHeading___Toc167867579 .anchor}2-1 GENERAL.
[**(TOP)**](#TABLEOFCONTENTS)

A.  The procedures set forth in this chapter are applicable to claims
    involving:

    1.  The conveyance of a property to HUD.

    2.  Conveyance of properties formerly subject to coinsured mortgages
        which have become fully insured (when 60 payments are made).
        (See Chapter 5 for instructions for Coinsurance claims.)

    3.  Cases where the Claims Without Conveyance of Title procedures
        were followed but the mortgagee was the successful bidder at the
        foreclosure sale for an amount not in excess of the
        Commissioner\'s Adjusted Fair market value and has elected to
        convey the property to HUD. (See Chapter 6 for CWCOT
        instructions).

B.  In order to receive mortgage insurance benefits, the mortgagee must
    convey the property to HUD unless:

    1.  The mortgagee assigned the mortgage to HUD pursuant to the
        assignment program (24 CFR 203.650) or the assignment option (24
        CFR 221.255).

    2.  The loan is actively co-insured (less than 60 payments were
        made) \[24 CFR 204.251(k)\].

    3.  The property was sold by the mortgagor with HUD authority under
        the Pre-foreclosure Sales Program.

    4.  HUD has requested or required the mortgagee to use Claims
        Without Conveyance of Title procedures (24 CFR 203.368).

    5.  The mortgagee assigned the mortgage to HUD pursuant to Section
        248 of the National Housing Act (Indian land), Section 247 of
        the National Housing Act (Hawaiian homelands) or Section 203g of
        the National Housing Act (Allegheny Reservation of the Seneca
        Nation of Indians).

C.  The authority for the payment of mortgage insurance claims and the
    conditions of eligibility for mortgage insurance benefits on
    conveyance of home mortgage properties are contained in Section 204
    of the National Housing Act (12 USC 1710)\*

[]{#__RefHeading___Toc167867580 .anchor}2-2 TIME REQUIREMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

The mortgagee must comply with the following time requirements when
submitting a claim involving conveyance of a property (24 CFR 203.355).
Failure to comply will result in curtailment of debenture interest to
the date action should have been taken or to the date to which it was
extended by HUD \[24 CFR 203.402(k)\].

A.  Institution of Foreclosure.\*

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1.  Default. \[24 CFR 203.355(a)\] Institute foreclosure (or obtain and
    record a deed-in-lieu of foreclosure) to acquire the mortgaged
    property within nine months from the date of default. (One year if
    the date of default was prior to December 1, 1992)\* Note: Although
    subsequent payments may be sufficient to advance the date of default
    when applied to overdue monthly payments, if the time requirement to
    initiate foreclosure or record a deed-in-lieu has been missed such
    payments will not change the mortgagee\'s failure to comply with the
    time requirement unless the payments are sufficient to cure the
    default.

2.  Vacancy. \[24 CFR 203.355(b)\]

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(a) If the mortgage is in default and the property has been determined
    to be vacant or abandoned (for vacancies on or after August 1, 1993)
    foreclosure must be instituted (or a deed-in-lieu of foreclosure
    must be obtained and recorded) by the earlier of:

    1.  nine months after the date of default; or

    2.  120 days after the date the property became vacant, was
        discovered vacant, or should have been discovered vacant.

(b) Generally a mortgagee will discover that a property is vacant when
    it is inspected pursuant to 24 CFR 203.377 (see paragraph 2-11 B).
    If the mortgagee failed to inspect the property within the specified
    time period, or failed to discover the vacancy, the vacancy date
    will be considered to be the last date on which the mortgagee should
    have performed the inspection under the regulation.

(c) If the property became vacant prior to an inspection and the
    mortgagee has knowledge of such vacancy, then the date the property
    became vacant will be considered the vacancy date. A mortgagee may
    acquire knowledge of vacancy by complaints of an unkempt and
    apparent vacant condition of the premises, condemnation or other
    notices requesting that the mortgagee secure the property, notice of
    utility disconnection or billings from the local jurisdiction for
    debris removal, snow removal or lawn cuttings resulting from local
    code violations.

(d) If the mortgage on a vacant property is not in monetary default
    there is no requirement that the mortgagee initiate foreclosure.
    However, if the mortgage later goes into monetary default, the
    120-day time requirement begins on the date of default, not the date
    of vacancy.

(e) If the property has more than one unit (e.g., 2, 3 or 4 units) the
    time period begins when all units have become, or should have been
    discovered to be, vacant or abandoned.

(f) Foreclosure on vacant or abandoned property should not be delayed
    because of the notice requirements of 24 CFR 203.650 and 203.651
    (the Assignment Program) or due to pre-foreclosure sales under 24
    CFR 203.606.\*

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3.  Foreclosure Initiation Date. HUD considers foreclosure instituted
    when the mortgagee takes the first public action required by law
    such as filing a complaint or petition, recording a notice of
    default, or publication of a notice of sale. Merely posting notice
    on the property is not sufficient. The action must be established as
    a public record through a filing, recording, or a publication in a
    newspaper of general circulation as required by law. See Appendix 6
    for a state by state listing of the first public actions considered
    by HUD to be required to commence (initiate) foreclosure.\*

4.  Foreclosure Prohibition. If the mortgagee is unable to initiate
    foreclosure or obtain and record a deed-in-lieu within the required
    time because:

    a.  state or local law prevents or delays action;

    b.  bankruptcy has been instituted; or,

    c.  HUD notified the mortgagee to delay initiation pending a
        determination of assignment acceptability; then up to 60
        calendar days after the release of these actions to initiate
        foreclosure is allowed. A request for an extension of time to
        institute foreclosure is not required under these conditions,
        provided foreclosure is instituted within 60 days from the date
        of release of such actions or does not exceed nine months from
        the date of default. An additional extension may be allowed if
        the mortgagee must send the letters under the assignment program
        or send notices required by State law after the mortgage is
        released from bankruptcy stay (See paragraph 2-17A). The date of
        release must be entered in Item 21 form HUD 27011 and the
        expiration date of the extension must be entered in Item 19.\*

> NOTE: This time requirement is also applicable if foreclosure has been
> initiated and interrupted by a bankruptcy, and state law requires a
> new foreclosure to be initiated.\*

5.  Assignment Letter. Prior to the institution of foreclosure,
    mortgagees are required to send certain notification letters to the
    mortgagor (see Handbook 4330.1 for specific requirements) who
    provides the mortgagor with an opportunity to cure the default or
    request HUD to accept an assignment of the mortgage if the mortgagee
    has not made such a recommendation. Mortgagees are expected to meet
    these notification requirements within the nine month time frame.
    HUD #2 or #3 letter should be issued at least 20 days prior to the
    expiration of the nine months limit or the limit will not be
    extended.\*

6.  Combined Extensions. Additional extensions for both assignment
    letters and State law notices will not be permitted unless State law
    prohibits taking the two actions simultaneously. See paragraph 2-17
    A.\*

7.  Special Forbearance. The mortgagee must commence foreclosure within
    90 days following the date the mortgagor fails to meet the
    requirements of a special forbearance under 24 CFR 203.614. See
    paragraph 1-6.

8.  Pre-foreclosure Sales. If the pre-foreclosure sale is unsuccessful,
    mortgagees have 60 days from the date a mortgagor\'s bona fide
    participation in the pre-foreclosure sale procedure ends either to
    accept a deed-in-lieu or initiate foreclosure. See paragraph 1-6.\*

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B.  Notice of Foreclosure. (24 CFR 203.356) Provide written notice to
    HUD that foreclosure has been instituted. The notice must be
    furnished within 30 calendar days of the institution of foreclosure.
    This requirement is satisfied only by submission of a complete and
    correct form HUD 92068A, the monthly Single Family Default
    Monitoring System (SFDMS) report.

C.  Prosecuting Foreclosure. (24 CFR 203.356) Regulation 203.356
    requires the mortgagee to \"exercise reasonable diligence in
    prosecuting the foreclosure proceedings to completion and in
    acquiring title to and possession of the property\". Differences in
    state procedures and redemption periods will affect the length of
    time required to complete foreclosure, therefore, the required time
    will depend on the location of the mortgaged property.\*

    1.  HUD will consider the mortgagee to have exercised \"reasonable
        diligence\" when the time frames shown in Appendix 7 are met in
        routine completed uncontested foreclosures. These time frames
        may be revised from time to time by mortgagee letter as local
        circumstances may require.

    2.  The time frames are measured from the initiation to the
        completion of foreclosure. Initiation of foreclosure is the
        first public action required by law, such as filing a complaint
        or petition, recording a notice of default, or publication of a
        notice of sale. Completion of foreclosure is the date on which
        the Sheriff\'s, Trustee\'s, etc. deed or certificate of title is
        recorded. The deed is generally executed after the expiration of
        the redemption period and before eviction of the occupant.
        Therefore, the time frame includes redemption but not eviction.

> NOTE: Where state law allows, mortgagees are encouraged to take
> available actions to reduce the redemption period on vacant or
> abandoned property. If the expense to reduce the redemption period
> will exceed \$250, local HUD office approval should be requested.\*

3.  Debenture interest will not be curtailed if the time frame is
    exceeded for reasons beyond the control of the mortgagee or the
    mortgagee\'s agent. Examples of such circumstances are: bankruptcy
    petition filed after foreclosure initiation; contested foreclosures;
    overcrowded court calendars; delays in obtaining service of process,
    etc. A valid cause for exceeding the time frame may arise where the
    title is conveyed directly to HUD (see paragraph 2-8). HUD
    recognizes that prior approval to exceed this time frame would be
    burdensome or unfeasible for both mortgagee and field office and
    therefore it will not be required.

> NOTE: If bankruptcy interrupts the completion of foreclosure and a new
> foreclosure is not required after the lifting of the bankruptcy stay,
> and some action is required by the court to continue or recommence the
> foreclosure, the mortgagee is expected to take such action to
> recommence the foreclosure within 60 days of the bankruptcy stay being
> lifted. Reasons (beyond the mortgagee's control) for exceeding the 60
> days must be adequately documented.\*

4.  When the time frame is missed for reasons within the mortgagee\'s
    control, mortgagees must enter a date in Item 31 on the claim form
    to curtail interest.

5.  If the mortgagee is of the opinion that there is justification for
    exceeding the time frame, a brief note of the cause of delay should
    be entered in the Mortgagee\'s Comment section of Part A and
    supporting documentation must be placed in the claim file.

> The cause of delay and the documentation will be examined for
> justification at the time of the post claims review. If not justified,
> the mortgagee will be required to refund to HUD any overpaid debenture
> interest.

6.  Supporting documentation such as attorney\'s correspondence or
    copies of court records must be retained in the claim review file.
    It would be impossible to attempt to identify all types of
    documentation which HUD would consider acceptable. However, there
    are several examples where the claim review file must contain
    specific documentation other than the attorney\'s correspondence.
    Several obvious examples are as follows: where the mortgagee
    identifies the pursuit of a deficiency judgment at HUD\'s request as
    the cause of the delay, the claim review file must contain a copy of
    HUD\'s request; and for bankruptcy delays maintain copies of the
    bankruptcy court\'s notifications.

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D.  Conveyance to HUD. (24 CFR 203.359) After acquiring good and
    marketable title to and possession of the property the mortgagee
    shall transfer the property to the Commissioner.

    1.  For mortgages insured under a firm commitment issued prior to
        November 19, 1992, or under Direct Endorsement processing where
        the credit worksheet was signed by the mortgagee\'s approved
        underwriter prior to November 19, 1992\*:

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    a.  within 30 days after acquiring possession of the property by
        foreclosure or other means; or

    b.  within such further time as may be necessary to complete the
        title examination and perfect the title.

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    2.  For mortgages insured under a firm commitment issued on or after
        November 19, 1992, or under Direct Endorsement processing where
        the credit worksheet was signed by the mortgagee\'s approved
        underwriter on or after November 19, 1992, within 30 days of the
        later of:

        a.  filing for record the foreclosure deed;

        b.  recording date of a deed-in-lieu of foreclosure;

        c.  acquiring possession of the property;

        d.  expiration of the redemption period; or

        e.  such further time as HUD may approve in writing.\*

    3.  This time may be extended with written HUD Field Office
        approval, if it becomes necessary to correct a title defect or
        some other legitimate event delays conveyance.

    4.  The mortgagee must certify that the property contains no
        personal property at the time of conveyance (unless the
        secretary has agreed to accept occupied conveyance) so the
        mortgagee must act promptly to assure that all personal property
        has been removed within 30 days after acquiring title and
        possession. For mortgages insured under a firm commitment issued
        on or after November 19, 1992, or under Direct Endorsement
        processing where the credit worksheet was signed by the
        mortgagee\'s approved underwriter on or after November 19, 1992,
        the mortgagee will not be reimbursed for the cost of protecting,
        operating, preserving or inspecting the property or removing
        debris from the property incurred after the deadline for
        conveyance of the property. \[24 CFR 203.402(g)(2)\]\*

    5.  In some areas the foreclosure deed may convey title directly to
        the Secretary instead of the mortgagee. This practice is
        encouraged by HUD because it avoids payment of additional
        transfer taxes by the insurance fund. (See paragraph 2-8 for
        claim procedures in direct conveyance cases.) In such direct
        conveyance cases the property must be transferred to HUD within
        30 days after the reasonable diligence time frame for completion
        of foreclosure and acquisition of title and possession specified
        in paragraph 2-2 C above.\*

    6.  HUD will accept the date the deed (to the Secretary) is mailed
        to the recording authority (not to the attorney) as the date the
        deed is filed for record. If the mortgagee elects to use the
        mailing date that date will be \* considered as the filing date
        for all claim purposes. In the event a deed-in-lieu of
        foreclosure is directly conveyed to HUD, the mortgagee may use
        the mailing date for both items 10 and 11 on the claim.\*

    7.  Submit Claim to HUD Headquarters. (24 CFR 203.360) Submit the
        original Part A of form HUD-27011 to the Department of Housing
        and Urban Development on the date the deed to the Secretary is
        filed for record (or the date the deed is mailed to the
        recording authority). The original of the Mortgage Insurance
        Certificate (MIC) must accompany Part A of form HUD-27011 to be
        considered a complete Part A submission. Part A and the MIC must
        be mailed on the date the deed to the Secretary is filed for
        record (or the date the deed is mailed to the recording
        authority) and must be received in Headquarters within 10 days
        of the date the deed is filed. Failure to meet these submission
        requirements will result in an interest curtailment.\*

    8.  Submit Claim to Field Office. (24 CFR 203.360) Submit a copy of
        Part A of form HUD-27011 to the local HUD office on the date the
        deed to the Secretary is filed for record. The copy must be
        accompanied by all required attachments.

> Note: This guidance is intended to ensure that both HUD Headquarters
> and the HUD field office are notified of the conveyance at the same
> time. Field office receipt of the form HUD 27011 verifies that the
> property is received into HUD\'s inventory. Failure to timely submit
> the Part A may result in an interest curtailment or other
> administration sanctions.\*

A.  Submit Title Evidence. (24 CFR 203.365) As soon as possible, but no
    later than 45 calendar days after the deed is filed for record, send
    to the local HUD office a copy of the mortgage and the original
    title evidence reflecting ownership vested in the Secretary. This
    must be received by the local HUD office within 55 calendar days
    after the deed is filed for record.

B.  Submit Fiscal Data to HUD Headquarters. (24 CFR 203.365) Submit the
    original Part B of form HUD-27011 to HUD Headquarters accompanied by
    the original title approval letter. This part of the form must be
    mailed within 45 days of the date the deed is filed for record, or
    received in HUD Headquarters within 15 calendar days after the date
    of the title approval letter, whichever is later.

C.  Submit Fiscal Data to Field Office. (24 CFR 203.365) Submit a copy
    of Part B of form HUD-27011 and the original of Parts C, D and E to
    the local HUD office on the date the original Part B is submitted to
    HUD Headquarters.

[]{#__RefHeading___Toc167867581 .anchor}2-3 EXTENSION OF TIME
REQUIREMENTS. [**(TOP)**](#TABLEOFCONTENTS)

If the mortgagee cannot comply with the above time requirements for a
particular action because of circumstances beyond its control, it should
submit a request for an extension of time on form HUD-50012 to the local
HUD office. (See paragraph 1-6).

[]{#__RefHeading___Toc167867582 .anchor}2-4 CLAIM PAYMENT.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Initial Payment. Upon receipt of an acceptable Part A and required
    attachments, HUD will promptly pay the unpaid principal balance plus
    debenture interest. Before debenture interest is calculated, the
    unpaid principal balance will be reduced by the greater of any
    damage or insurance recovery reported in Item 27. The automated
    system will determine the amount of debenture interest earned on the
    balance from the date of default to the date of the initial
    settlement or to the date of interest curtailment.

B.  Final Payment. Upon receipt of an acceptable Part B and required
    attachments, HUD will promptly pay the mortgagee\'s expenses and
    allowances, plus debenture interest. The mortgagee computes the
    interest for each item in Parts C and D, from the date of
    disbursement (or default if later) to the date the claim is prepared
    or curtailed. HUD will compute any additional interest earned after
    that date.

C.  Payment Advice Letter. Within a few days of receipt of payment, the
    mortgagee will receive a letter giving detailed information on the
    payment of the claim. The letter is generated by the system. A copy
    of the letter must be retained in the audit file.

[]{#__RefHeading___Toc167867583 .anchor}2-5 DEBENTURE INTEREST
COMPUTATION. [**(TOP)**](#TABLEOFCONTENTS)

A.  By HUD. HUD will compute the debenture interest on the unpaid
    principal balance from the date of default to the date of settlement
    of Part A and on expenditures from the date of the submission of
    Part B to the date of settlement of Part B, provided all time
    requirements have been met. If the mortgagee fails to meet a time
    requirement, HUD will compute debenture interest only to the date
    the action should have been taken or to the date to which the time
    was extended by HUD.

B.  By the Mortgagee. The mortgagee will compute the debenture interest
    due on each disbursement itemized in Parts C and D from the date of
    disbursement (or default if later) to the date Part B is prepared or
    to the curtailment date, whichever is earlier.

C.  Curtailment of Interest. (24 CFR 203.402 (k)) HUD regulations
    require the mortgagee to take certain actions within specified time
    periods. If these time requirements are not met, debenture interest
    allowance will be curtailed. The only exception is when an extension
    of time has been approved by HUD in writing. This means that if a
    required action is not taken within the time allowed, interest will
    be computed only to the date that action should have been taken or
    to which it was extended.

> If the mortgagee fails to perform several actions within the specified
> time periods, interest will be curtailed to the applicable date of the
> earliest failure.
>
> For example, if the mortgagee fails to institute foreclosure within
> nine months of default and fails to submit the title evidence within
> 45 days after the deed to the Secretary is filed for record and
> neither time frame was extended by HUD, debenture interest on the
> unpaid principal balance and on all expenditures is computed only to
> the date on which foreclosure should have been initiated.
>
> In most circumstances, HUD\'s automated system can measure the time
> between two dates entered on the form, determine if time requirements
> have been met and calculate the date to which debenture interest
> should be paid. However, there are four circumstances where it is
> necessary for the mortgagee to calculate the curtailment date because
> HUD\'s system is unable to do so when mortgagees fail to take an
> action within the specified time period or an approved extension. In
> one of the following four circumstances, the mortgagee must determine
> the date on which an action should have been taken (curtailment date)
> and enter this date in Item 31 of Part A.\*

1.  Failure to initiate foreclosure within nine month of default and
    subsequent payments advance the default date. \[24 CFR 203.355(a)\]
    When a loan is in default, and more than nine months have elapsed
    before foreclosure is initiated with no intervening circumstances
    such as a bankruptcy or an approved HUD extension of time, the time
    requirement to initiate foreclosure is considered to have been
    missed, regardless of whether subsequent payments advance the
    default date.\*

2.  Failure to initiate foreclosure on a timely basis where the property
    is vacant or abandoned. \[24 CFR 203.355(b)\] When a loan is in
    default and the property is vacant or becomes vacant and more than
    120 days have elapsed from default or vacancy (whichever is later)
    before foreclosure is initiated with no intervening circumstances
    such as a bankruptcy or an approved HUD extension of time, the time
    requirement to initiate foreclosure has been missed.\*

3.  Failure to Give Notice of Foreclosure. (24 CFR 203.356) Within 30
    calendar days of institution of foreclosure, written notice must be
    provided to HUD. This requirement is satisfied only by submission of
    a complete and correct form HUD 92068A, the monthly Single Family
    Default Monitoring System (SFDMS) report. HUD will not accept any
    other method of reporting as meeting this requirement. Mortgagees
    are considered to be in compliance with this requirement when the
    institution of foreclosure (status B) in a given month is reported
    on that month\'s end SFDMS report 92068-A (the next required SFDMS
    report), or that of the next following month.\*

4.  Failure to Exercise Reasonable Diligence. (24 CFR 203.356) When the
    reasonable diligence time frame is exceeded without a valid reason.
    (See Appendix 7 for state by state listing of time frames.)

> The date in Item 31 should never be equal to or later than the date in
> Item 9.\*
>
> The date on which an action should have been taken (curtailment date)
> should be entered in Items 204 Part C and 304 Part D and 404 Part E.
> Item 104 Part B will show the actual date Part B was prepared and not
> the curtailment date.

D.  Expenditures Prior to the Date of Default. It is possible that
    expenditures or advances will be made by mortgagees prior to the
    date of default. The regulations do not permit the payment of
    debenture interest on expenses prior to the date of default \[24 CFR
    203.410(a)\]. If an expenditure or advancement is made prior to the
    date of default, debenture interest is computed from default date.
    When completing Parts, C, D and E of form HUD-27011, the mortgagee
    should enter the date of default in the \"Date Paid\" column if the
    expense was paid prior to default. In addition, place the actual
    date paid in parenthesis following the description.

E.  Interest Computations. Enter in Item 204 and Item 304 the date to
    which interest is calculated. Only when no time requirement or
    approved extension has been missed will this be the same date as
    entered in Item 104, Part B. If one or more time requirements have
    been missed enter the earliest date on which a required action
    should have been taken (the curtailment date). See Appendix 10. When
    a curtailment date is entered in Item 204 Part C and 304 Part D,
    enter an asterisk in Item 104 after the date on which Part B is
    prepared and submitted to HUD and indicate on the form the reason
    for the curtailment.

> The amount of interest to be claimed for an expenditure is to be
> calculated as follows:

1.  Multiply the daily interest rate factor by the amount paid.

2.  Multiply this result by the number of days from the date paid (or
    default date, if later) for each line Item to the earlier of: (i)
    date in Item 104 (submission date for Part B), or (ii) the date of
    the earliest time requirement missed. (Item 204 and 304)

> Daily Interest Rate Factor tables are provided in Appendix 8 to assist
> in converting the debenture interest rates to factors. 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
> (or default date, if later) to the date the claim was prepared, Item
> 104 (or the curtailment date if earlier).
>
> The following three examples are provided to illustrate how debenture
> interest must be calculated on reimbursable expenses. In the first
> example, all time requirements were met; in the second example, the
> requirement to institute foreclosure within nine months of default was
> missed; and in the third example, the property was not conveyed to HUD
> within 30 days of possession and marketable title. In all of the
> examples a debenture interest rate of 8.5% is used with a daily
> interest rate factor of .0002328767. Alternatively, the annual
> interest rate may be divided by 365. (For a leap year, divide by 366.)

Example 1: All Time Requirements Met.

> In this example, all time requirements have been met. The default date
> was January 1, 1993. Interest on expenditures is calculated from the
> date of each expenditure (or default date if later) to the date the
> Part B claim form was prepared. See the Julian Date Calendar (Appendix
> 9) to calculate the number of days. The following expenditures were
> Itemized on Parts C and D and included in the amounts claimed on Part
> B of form HUD-27011 (Items 110 and 111) submitted June 15, 1994.

  ------------------- -- -------------------------------------------------
  December 10, 1992      \$100 paid for Hazard Insurance Premium (Escrow
                         has been fully depleted)

  May 22, 1994           \$25 paid for lawn moving

  June 9, 1994           \$156 paid for debris removal
  ------------------- -- -------------------------------------------------

> Amount of Interest to

  --------- -------------------------- --------------------- --------------
  Amount    Daily Interest Rate Factor Days Covered          Be Claimed on
  Paid                                                       Part C

  \$100     x .0002328767 x 531        (1/01/93 - 6/15/94)   = 12.37

  \$25      x .0002328767 x 24         (5/22/94 - 6/15/94)   = .14

  \$156     x .0002328767 x 6          (6/09/94 - 6/15/94)   = .22
  --------- -------------------------- --------------------- --------------

> In this example, the mortgagee is entitled to interest on the expenses
> from the date they were paid (or default date if later) up to the date
> the claim is settled. The mortgagee calculates the interest up to the
> date the claim form was prepared and submitted, and HUD calculates the
> interest up the settlement date.
>
> Example 2: Mortgagee Failed to Institute Foreclosure Within Nine
> Months from the Date of Default.
>
> In Example 2, the mortgagee failed to initiate foreclosure within nine
> months of the date of default and no extension was requested or
> granted. As a result, interest does not accrue on any part of the
> claim beyond the date foreclosure should have been instituted.
>
> Interest must be calculated from the date of the expenditure to the
> date by which foreclosure should have been instituted. The date of
> default was January 1, 1993, however foreclosure was not instituted
> until March 15, 1994. In order for the mortgagee to have met the time
> requirement, foreclosure should have instituted by October 1, 1993.
> Interest on reimbursable expenses may only be claimed and paid to
> October 1, 1993.
>
> The following expenditures were Itemized on Part C and included in
> Part B (Item 110), form HUD-27011, submitted June 15, 1994. Since
> these expenditures were incurred after October 1, 1993, interest is
> not payable on these amounts.

  ------------------- -- -------------------------------------------------
  May 22, 1994           \$25 paid for lawn moving

  June 9, 1994           \$156 paid for debris removal
  ------------------- -- -------------------------------------------------

  --------- -------------------------- --------------------- --------------
  Amount    Daily Interest Rate Factor Days Covered          Be Claimed on
  Paid                                                       Part C

  \$25      x .0002328767 x 0          (5/22/94 - 1/1/93)    = 0.00

  \$156     x .0002328767 x 0          (6/09/94 - 1/1/93)    = 0.00
  --------- -------------------------- --------------------- --------------

> In this case the mortgagee must asterisk the date in Item 104 (June
> 15, 1994\*) and place a notation on the form as follows:
>
> \* Failure to institute foreclosure within nine months of the date of
> default (January 1, 1993). Interest calculated to October 1, 1993.
>
> Example 3: Mortgagee Failed to Convey the Property to HUD Within 30
> Days of Possession and Marketable Title.

In Example 3, the mortgagee met the time requirements to institute and
to complete foreclosure, but did not convey the property to HUD within
30 days of possession and marketable title.

> In this example, the mortgagee had possession of and marketable title
> to the property on July 2, 1993. The time limit to convey ended August
> 1, 1993. However, the property was not conveyed, and Part A of the
> claim was not filed until August 15, 1993. Therefore, interest is
> calculated from the date of the expenditure (date paid) to the date
> the time allowed for conveyance expired (August 1). The following
> expenditures were Itemized on Part C and included in the amount
> claimed in Item 110 of Part B, form HUD-27011 submitted September 15,
> 1993.

  ------------------- -- -------------------------------------------------
  May 22, 1994           \$25 paid for lawn moving

  June 9, 1994           \$156 paid for debris removal
  ------------------- -- -------------------------------------------------

  --------- -------------------------- --------------------- --------------
  Amount    Daily Interest Rate Factor Days Covered          Be Claimed on
  Paid                                                       Part C

  \$25      x .0002328767 x 10         (7/22/93 - 8/1/93)    = .06

  \$156     x .0002328767 x 0          (8/09/93 - 8/1/93)    = .00
  --------- -------------------------- --------------------- --------------

> In this case the mortgagee should asterisk the date in Item 104
> (September 15, 1993\*) and place a notation on the form as follows:
>
> \*Failure to convey within 30 days of the date in Item 9 (July 2,
> 1993). Interest calculated to August 1, 1993 (Item 9 plus 30 days).
>
> In addition to these examples, a table is attached (App. 10 -
> Conveyances: Earliest Time Requirement Missed), which may be used to
> help determine the appropriate beginning and ending dates for the
> calculation of debenture interest. Mortgagees should review their copy
> of Part A and the Advice of Payment letter (if available) in
> determining whether a time frame was missed.

[]{#__RefHeading___Toc167867584 .anchor}2-6 TITLE REQUIREMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Date of Acquisition of Title. The date of acquisition of title is
    the date the deed or other document conveying title to the mortgagee
    is filed for record. The deed may be the Sheriff\'s, Trustee\'s,
    etc. deed or certificate of title, or a deed-in-lieu of foreclosure.
    This date is entered in Item 9, Part A, unless the mortgagee does
    not yet have possession of the property. If title does not pass
    through the mortgagee, as in a direct conveyance, the date to be
    entered in Item 9 is the date the deed to the Secretary is filed for
    record (same date as Item 10).

B.  Acceptable Title. Title conveyed to the Secretary must be good and
    marketable, and clear of all encumbrances except easements and
    restrictions of record which have been approved by HUD. The title
    evidence must show that according to the public records there are no
    outstanding prior liens, including any past due and unpaid ground
    rents, general taxes or special assessments.

> HUD\'s decision will be final as to the acceptability of title and
> title evidence. Notwithstanding a defect in title, HUD may, at its
> option, accept defective title if the mortgagee agrees to a reduction
> in benefits.
>
> Deeds shall be recorded in the name of the \"Secretary of Housing and
> Urban Development, his successors and assigns\" with the address of
> the local field office and \"Attention: Single Family Property
> Disposition Branch\". The purpose of this instruction is to assure
> that taxing authorities will send tax bills to the local office for
> payment rather than HUD Headquarters.

C.  Types of Title Evidence. Submit one of the following types of title
    evidence of recorded title to the Secretary:

    1.  Fee or owner\'s title policy. A fee or owner\'s policy of title
        insurance, a guaranty or guarantee of title, or a certificate of
        title, issued by a title company, duly authorized by law and
        qualified by experience to issue such instruments. If an
        owner\'s policy of title insurance is forwarded, it shall show
        title in the name of the Secretary and insure to the benefit of
        his/her successors in office.

    2.  Mortgagee policy of title insurance. A mortgagee\'s policy of
        title insurance supplemented by an Abstract and an Attorney\'s
        Certificate of Title covering the period subsequent to the date
        of the mortgage. The terms of the policy shall be such that the
        liability of the title company will continue in favor of the
        Secretary after title is conveyed to him/her \[24 CFR
        203.385(b)\].

    3.  Abstract and legal opinion. An abstract of title prepared by an
        abstract company or individual engaged in the business of
        preparing abstracts of title and accompanied by the legal
        opinion as to the quality of such title signed by an
        attorney-at-law experienced in examination of titles. The
        Attorney\'s Certificate of Title, form HUD-2319 (see
        Appendix 11) should be used for this purpose.

    4.  A Torrens or similar title certificate.

    5.  Title Standard of U.S. or State government. Evidence of title
        conforming to the standards of a supervising branch of the
        government of the United States or of any state or territory
        thereof.

D.  Title Approval. The original title evidence must be sent to the
    local HUD office no later than 45 days after the date the deed was
    filed for record, together with a copy of Part A of form HUD-27011,
    a copy of the mortgage instrument containing a complete legal
    description of the property and a copy of the recorded deed.

> The field office will review the title evidence for approval or
> denial. If the title evidence has been approved, HUD will forward to
> the mortgagee a title approval letter which must be submitted to HUD
> Headquarters with Part B of form HUD-27011 within 45 days after the
> date the deed was filed for record or received at HUD Headquarters
> with Part B of form HUD-27011 within 15 days after the date of the
> approval letter, whichever is later.\*
>
> If the title or title evidence is faulty or incomplete, it will be
> returned to the mortgagee for correction or completion. The title
> evidence will not be considered as having been submitted until it is
> returned with the required corrections. Fees or costs incurred as a
> result of a defect in the mortgage transaction or a defect in title
> are not reimbursable unless the mortgage was sold by the Secretary or
> executed in connection with the sale of the property by the Secretary
> \[24 CFR 203.366(b)\].
>
> If the corrections are not made within a reasonable time, the local
> office may re-convey the property to the mortgagee by quit-claim deed.
> If this occurs HUD will cancel the claim for insurance benefits and
> will require prompt reimbursement to HUD for the amount of the
> insurance settlement and any expenses incurred by HUD during the
> period of its ownership. These expenses will include but are not
> limited to HUD\'s expenditures for taxes, maintenance of the property
> and administrative expenses related to the preservation of the
> property. When the objection to the title has been corrected, the
> mortgagee may then resubmit the claim (See paragraph 1-14).
>
> For mortgages insured under a firm commitment issued on or after
> November 19, 1992, or under Direct Endorsement processing where the
> credit worksheet was signed by the mortgagee\'s approved underwriter
> on or after November 19, 1992 if the title to a property conveyed to
> the Secretary is not good and marketable, the mortgagee will be
> required to correct the defect within 60 days after receiving notice
> from the Secretary or within such further time as the Secretary may
> approve in writing \[24 CFR 203.366(b)\]. In this case, the mortgagee
> may retain the insurance benefits already paid, but it will not be
> reimbursed for any costs involved in correcting the title \[CFR
> 203.402(f)\].

1.  If a title defect is not corrected within 60 days after receiving
    notice (or within an approved extension of time), the mortgagee will
    be required to reimburse the Secretary for holding costs and
    interest on the paid insurance benefits at a rate set in conformity
    with the Treasury Fiscal Requirements Manual from the date of the
    notice to the date the defect is corrected or to the date the
    Secretary re-conveys the property.

2.  If the defect is not corrected within a reasonable time, the
    Secretary will re-convey the property and the mortgagee will be
    required to reimburse the Secretary as provided in 24 CFR 203.363
    and 24 CFR 203.364. The Department will determine on a case by case
    basis as to what will constitute \"reasonable time\" for purposes of
    correcting title defects.

3.  The contract of mortgage insurance (Subpart B of 24 CFR Part 203)
    stipulates that the mortgagee, not HUD, must bear the cost of
    correcting title defects and property expenses pending correction,
    because HUD did not participate in obtaining or maintaining the
    mortgage lien nor in acquiring title to the property. (HUD accepts
    responsibility only where the Secretary had sold the mortgage or the
    property with the senior adverse interest that causes the title
    defect \[24 CFR 203.390)\].

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E.  Amount of Title Insurance. When a title policy is submitted as
    evidence of good and marketable title, the amount of title insurance
    coverage must be equal to the unpaid principal balance of the
    mortgage.

Exception:

> If the mortgagee uses the Claims Without Conveyance of Title procedure
> and has a copy of \"form HUD-91022, Mortgage Notice of Foreclosure
> Sale\" available, the amount of title insurance coverage should be the
> amount of the Commissioner\'s Fair Market Value entered in line 5 of
> Part B, form HUD-91022. (Note: Do not use the Adjusted Fair Market
> Value in line 7.) (See Appendix 12.)

[]{#__RefHeading___Toc167867585 .anchor}2-7 DEEDS-IN-LIEU OF
FORECLOSURE. [**(TOP)**](#TABLEOFCONTENTS)

A.  General. (24 CFR 203.357) When the mortgage is in default, the
    mortgagee should consider accepting a voluntary conveyance to avoid
    foreclosure and are encouraged by HUD to do so in all appropriate
    cases. HUD approval is required prior to accepting a deed in lieu
    when the mortgagor owns more than one property subject to FHA
    insurance or if the mortgagor is a corporation. Deeds must not be
    accepted from mortgagors when HUD has requested the mortgagee to
    pursue a deficiency judgment or where it is clear to the mortgagee
    that acceptance of a deed is simply a matter of convenience from a
    mortgagor clearly able to make the mortgage payments.

B.  Form of Conveyance. The conveyance may be either (i) directly from
    the mortgagor to HUD, or (ii) from the mortgagor to the mortgagee
    and then from the mortgagee to HUD. Under either method HUD must
    receive good and marketable title.

C.  Compensation. (24 CPR 203.402(p)) The mortgagee may pay the
    mortgagor up to \$500 consideration for execution of the deed unless
    the property is conveyed occupied or the mortgage was co-insured
    under 24 CFR Part 204. The amount paid to the mortgagor may be
    included as an acquisition cost in Item 305.\*

[]{#__RefHeading___Toc167867586 .anchor}2-8 DIRECT CONVEYANCE. (24 CFR
203.358) [**(TOP)**](#TABLEOFCONTENTS)

A.  When To Use Direct Conveyance. Where State law permits mortgagees
    should have the property deeded directly to HUD, without taking
    title in its own name first, in order to save time and avoid double
    payment of transfer taxes in states where:

    1.  the property is vacant; or

    2.  the eviction process takes place simultaneously as a part of the
        foreclosure action; or

    3.  the eviction action can be processed before the deed is recorded
        and there is no delay; or

    4.  HUD has agreed to accept the property occupied pursuant to the
        occupied conveyance regulation (24 CFR 203.679).

B.  When Not To Use Direct Conveyance. Direct conveyance should not be
    used when it will result in HUD having recorded title to properties
    that are occupied without its prior approval. This violates HUD
    regulations and causes serious problems. It becomes uncertain as to
    who (the lender or HUD) should be paying taxes, liens, assessments,
    utilities, etc.; local HUD offices are unable to fully market
    properties although the property has been officially deeded to HUD;
    lenders are routinely incurring expenses after the date the deed is
    filed for record; and HUD is unable to properly monitor mortgagee
    compliance with respect to conveyance of damaged properties.
    Mortgagees may not file their claim until such properties are
    vacant.

C.  Claim Form Adjustments.

    1.  If the property is vacant at the time the direct conveyance deed
        is executed, one month may be added to the foreclosure
        (reasonable diligence) time frame.

    2.  If the property is occupied and an eviction action is necessary
        to obtain possession, if the eviction action was initiated in a
        timely manner, the time frame will be extended until possession
        is obtained and an additional month may be added to the
        foreclosure (reasonable diligence) time frame. The cause for the
        delay must be explained in the Mortgagee\'s Comment section of
        Part A.\*

[]{#__RefHeading___Toc167867587 .anchor}2-9 OCCUPANCY AND POSSESSION OF
PROPERTY. [**(TOP)**](#TABLEOFCONTENTS)

A.  Occupancy. The property may not be occupied at the time of
    conveyance unless HUD agrees to accept it occupied as provided in 24
    CFR 203.670 through 203.681. Under these regulations the mortgagee
    is required to notify the mortgagor of the potential acquisition by
    HUD. The mortgagee must provide such notice (with a copy to HUD) at
    least 60 days but not more than 90 days before the date on which it
    reasonably expects to acquire title to the property. See HUD
    Handbook 4330.1.

> The mortgagee shall be allowed to convey the property occupied if HUD
> agreed to accept the property occupied or if HUD notified the
> mortgagee that it was considering a request for continued occupancy
> and no subsequent notification from HUD has been received within 90
> days after the mortgagee\'s notice referred to in subparagraph A above
> \[24 CFR 203.670(c)\].

B.  Possession. HUD considers the property to be in the possession of
    the mortgagee (for insurance claim purposes) when the property was
    first discovered to be vacant by the mortgagee or its agent, or
    would have been discovered if the mortgagee was making regularly
    scheduled inspections. The date of possession is not dependent on
    securing the property, changing the locks, etc.

C.  Keys. Keys for the property must be forwarded to the local HUD
    office as soon as they are obtained, preferably at the time a copy
    of Part A is submitted. Include the FHA case number and property
    address with each set of keys. Do not send keys to HUD Headquarters,
    and do not delay submission of the copy of Part A to the HUD local
    office.

[]{#__RefHeading___Toc167867588 .anchor}2-10 CONDITION OF PROPERTY AT
CONVEYANCE. [**(TOP)**](#TABLEOFCONTENTS)

A.  Repairs by Mortgagee. (24 CFR 203.379 and 203.380)

    1.  Before conveying the property to HUD, the mortgagee must repair
        at its own cost:

        a.  any damage caused by fire, flood, earthquake, tornado,
            hurricane, (or boiler explosion \[24 CFR 234.270(a)\] in the
            case of condominium); and,

        b.  any damage caused by the mortgagee\'s failure to take
            reasonable action to inspect, protect and preserve a vacant
            or abandoned property if the mortgage was insured on or
            after January 1, 1977. \"Reasonable action includes the
            commencement of foreclosure of a defaulted mortgage on
            vacant or abandoned property within the time required by
            paragraph 2-2A.\*

    2.  After repairs have been completed and the mortgagee is satisfied
        that they are adequate, the mortgagee may (at its option) ask
        for assurance that the repairs are acceptable to HUD so that a
        later claim for mortgage insurance benefits will not be
        surcharged because of the damage. The following procedure
        applies to such requests:

        a.  Contact the Loan Management Branch of the local HUD Field
            Office having jurisdiction over the property when the
            repairs have been completed to the mortgagee\'s
            satisfaction. That office will arrange for assignment of a
            member of the Fee Inspection Panel and the mortgagee will be
            notified of the assignment.

        b.  The mortgagee assumes full responsibility for payment of the
            inspection fee, which may not be passed on to the mortgagor
            or included in a later claim for insurance benefits.

        c.  Send the inspection\'s completed report on form HUD-92051,
            Appendix 27) to the HUD Field Office having jurisdiction
            over the property, where it is counter-signed before the
            original is returned to the mortgagee. The inspection report
            of the fee inspector should attest that he is a duly
            qualified member of the Field Office Panel.

        d.  Retain a copy of the signed report in the mortgagee\'s
            files.

> NOTE: If the report documents that the repairs are satisfactory, it
> represents HUD\'s assurance that the claim will not be surcharged for
> the damage.\*

3.  The mortgagee is not required to repair damage resulting from causes
    other than those itemized above unless the repairs are requested in
    writing by HUD, or the repairs are necessary to protect and preserve
    the property until its conveyance to HUD and the local HUD office
    has approved any expenditures over and above the jurisdictional
    limit for preservation and protection.

4.  If repairs for which the mortgagee is not responsible are made at
    HUD\'s request, or if the repairs are necessary to protect and
    preserve the property until conveyance to HUD, the cost should be
    entered on Part C (Disbursements for Protection and Preservation) in
    accordance with HUD regional protection and preservation costs
    limits.

5.  HUD will not reimburse the mortgagee for repairs to or maintenance
    of property occupied by the mortgagor.

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B.  Unrepaired Conveyance. \[24 CFR 203.379(a)\]

    1.  If the prior approval of HUD is obtained, property damaged by
        the causes itemized in paragraph A-1 may be conveyed in an
        unrepaired condition and there will be deducted from the
        insurance benefits, HUD\'s estimate of the cost to repair the
        damage or any insurance recovery received by the mortgagee,
        whichever is greater. The deduction will be limited to the
        amount of insurance recovery if the property has been damaged by
        fire and the mortgagee certifies that the conditions of 24 CFR
        203.379 (a)(2) relating to cancellation or reduction of
        insurance coverage are met. The mortgagee should request from
        the local HUD office their estimate of the cost of repairing the
        damage, and permission to convey the property without repairs.
        HUD\'s estimate must be entered in Item 27, Part A. Item 24 must
        be marked \"yes\".

    2.  If the property is conveyed damaged by causes other than those
        itemized in paragraph A-1, Item 24 must be marked \"No\" and the
        mortgagee must:

        a.  identify such damage in the Mortgagee\'s Comment Section of
            form HUD-27011, Part A;

        b.  provide to the local HUD office copies of all documentation
            necessary to verify that the mortgagee met its requirement
            to take reasonable action to inspect, protect and preserve
            the property. All documents must identify the specific
            property by FHA case number. All documentation must also be
            maintained in the audit file; and

        c.  in the event a property is conveyed damaged, but is not
            identified as such on the claim form, HUD will not make any
            further reimbursement until the local HUD office has made an
            evaluation of the mortgagee\'s responsibility.

C.  Unrepaired Conveyance Without Notice.\*

> HUD is deferring implementation of the notification requirement
> identified in the new paragraph 24 CFR 203.379(b) and (c).
>
> The new requirement would only affect those mortgages insured under a
> Firm Commitment issued on or after November 19, 1992, or under Direct
> Endorsement processing where the credit worksheet was signed by the
> mortgagee\'s approved underwriter on or after November 19, 1992.
>
> HUD will issue implementing procedures for the new requirement of 24
> CFR 203.379(b) and (c) in the future. Until that time, mortgagees
> shall continue to follow the requirements of Chapter 2-10B with regard
> to Unrepaired Conveyance.\*

D.  Certificate of Property Condition. (24 CFR 203.380)\*

    1.  The mortgagee shall either:

        a.  Certify that as of the date of the filing of the deed for
            record, or assignment of the mortgage to HUD, the property
            was:

            1.  Undamaged by fire, flood, earthquake, hurricane, or
                tornado; and

            2.  As to mortgages insured or for which commitments to
                insure were issued on or after January 2, 1977,
                undamaged due to failure of the mortgagee to take action
                as required by 24 CFR 203.377, and

            3.  As to mortgages insured under firm commitments issued on
                or after November 19, 1992, or under Direct Endorsement
                processing where the credit worksheet was signed by the
                mortgagee\'s approved underwriter on or after November
                19, 1992, undamaged while the property was in the
                possession of the mortgagee; or

        b.  Attach to its claim a copy of HUD\'s authorization to convey
            the property in a damaged condition.

    2.  In the absence of evidence to the contrary the mortgagee\'s
        certificate or description of the damage shall be accepted by
        HUD as establishing the condition of the property as of the date
        of the filing of the deed or assignment of the mortgage.\*

> NOTE: The certification is accomplished through the accurate
> completion of form HUD-27011.

[]{#__RefHeading___Toc167867589 .anchor}2-11 PROTECTION AND PRESERVATION
OF PROPERTIES. [**(TOP)**](#TABLEOFCONTENTS)

A vacant property must be protected and preserved while it is in the
possession of the mortgagee so that it will not be damaged at the time
of conveyance. A prudent mortgagee will protect and preserve a vacant
property to avoid potential damage to the property and surcharges to its
claim. HUD will reimburse the mortgagee for required preservation and
protection costs within regionally or locally established limits when
these expenditures are adequately documented. Protection and
preservation work should not delay conveyance. The mortgagee should also
determine whether the property is vacant and whether protective action
is necessary. HUD will reimburse the mortgagee for appropriate periodic
inspections for this purpose.

A.  Mortgagee Responsibility. For mortgages insured on or after January
    1, 1977, mortgagees will be held responsible for any damage to a
    vacant mortgaged property resulting from the mortgagee\'s failure to
    take reasonable protection and preservation action. \"Reasonable
    action\" includes the commencement of foreclosure within 120 days
    after the mortgagee discovers or should have discovered that the
    property was vacant or abandoned (see paragraph 2-2A).\*

> For mortgages insured under a firm commitment issued on or after
> November 19, 1992, or under Direct Endorsement processing where the
> credit worksheet was signed by the mortgagee\'s approved underwriter
> on or after November 19, 1992 the mortgagee will not be reimbursed for
> the costs of protecting, operating or preserving the property or
> removing debris from the property after the time the property should
> have been conveyed to HUD \[24 CFR 203.402(g)\] (see paragraph 2-2
> D).\*
>
> Failure to inspect, protect and preserve the property will be
> considered mortgagee neglect. If the property is damaged because of
> mortgagee neglect, the mortgagee must repair the damage at its own
> cost or obtain permission from HUD to convey the property damaged.
>
> If permission is given to convey a property in a damaged condition,
> the greater of any insurance recovery or HUD\'s estimate of the cost
> of repairs shall be deducted from the mortgage insurance benefits.
> Where the claim is to be adjusted for damages, Item 24 of Part A, form
> HUD-27011, should be marked \"Yes\" and Items 25, 26 and 27 must be
> completed \[24 CFR 203.379(a)(1)\].
>
> Mortgagees must provide the local HUD offices any documentation,
> including copies of all inspection reports, which they feel will
> verify that appropriate action was taken to preserve and protect the
> mortgaged property from the time of vacancy to conveyance.
>
> This documentation must accompany the copy of Part A, form HUD-27011,
> which is sent to the local HUD office. Ensure that all such
> documentation includes the FHA case number, is securely fastened to
> the claim form, and is legible. Without adequate documentation to
> support the mortgagee\'s position, local HUD offices shall deem such
> damage as being due to the mortgagee\'s failure to take appropriate
> action to preserve and protect the mortgaged property.
>
> HUD reserves the right to deduct from the mortgage insurance claim the
> greater of the hazard insurance benefits or HUD\'s estimate to repair
> the property.

B.  Inspections. (24 CFR 203.377)

    1.  Inspections are identified as initial, occupancy and vacant.

        a.  Initial. When the mortgage is in default and a payment is
            not received within 45 days of the due date and efforts to
            reach the mortgagor or occupant have been unsuccessful, the
            mortgagee must inspect the mortgaged property to determine
            if it has become vacant or abandoned. The initial inspection
            must be made within 60 days of the due date.

        b.  Occupancy. If the mortgage remains in default and the
            inspector cannot verify that the property is vacant, the
            mortgagee must perform at least one follow-up to determine
            whether the property remains occupied. This follow-up must
            be documented whether it was by letter, telephone or means
            other than on-site inspection. When the mortgagee is unable
            to determine the occupancy status by telephone or
            correspondence, an inspection and adequate follow-up must be
            made within 30 days of the last inspection or follow-up.

> This inspection serves three purposes: first, it promptly apprises the
> mortgagee when it has acquired possession because the property is
> vacant; second, it apprises the mortgagee when it is time to take
> reasonable protection and preservation action; and third, it permits
> more timely foreclosure of an abandoned property.
>
> During bankruptcy actions and assignment processing, mortgagees should
> be able to verify the status of the property without performing an
> on-site inspection. (Occupancy information during bankruptcy can
> usually be obtained by contacting either the bankruptcy trustee or the
> filing attorney.) Reimbursement in a mortgage insurance claim normally
> will not be made for occupancy inspections if the mortgagor has filed
> bankruptcy until the bankruptcy is released, discharged or the
> property is formally abandoned by the bankruptcy trustee.
>
> Mortgagees may communicate with the HUD office and/or counseling
> agency to determine the mortgagor\'s status while a case is being
> processed for assignment. For this reason there should be few cases
> where an occupancy inspection is warranted and reimbursable during
> assignment processing.

c.  Vacant. When the mortgage is in default and the mortgagee has
    established that the mortgaged property is vacant, mortgagees shall
    inspect the mortgaged property every 25 to 35 days.

> Generally, reimbursement will be limited to one inspection for each
> 30-day cycle. This inspection should not be earlier than 25 days after
> the last inspection or later than 35 days after the last inspection.
> Only where a local HUD office has identified a need to inspect more
> frequently, and has made this a requirement, will reimbursement is
> allowed for those additional inspections.

2.  For all inspections, mortgagees shall document the general condition
    of the property as well as any actions which would be required to
    adequately protect and preserve the property. Many of the inspection
    forms currently used by the industry meet or exceed HUD
    requirements. The purchase or use of a specific form will not be
    required.

> However, at a minimum, the following Items must be documented on each
> inspection report. Of course, where the property is occupied, some of
> the Items listed would be identified as not applicable (n/a).

a.  Date of the inspection.

b.  Identity of the inspector.

c.  Is the property occupied?

d.  Is the house locked or secured?

e.  Is the grass mowed and/or shrubs trimmed?

f.  Is there any apparent damage?

g.  Is any exterior glass broken?

h.  Are there any apparent roof leaks?

i.  Does the house contain personal property and/or debris?

j.  Are any doors or windows boarded?

k.  Is the house winterized?

l.  Are there any repairs necessary to adequately preserve and protect
    the property?

m.  Are appliances present and operable?

> For purposes of reimbursement, proper documentation must be maintained
> by the mortgagee on the performance of inspections and follow-up
> activities. HUD defines proper documentation as evidence of payment
> and copies of all completed inspection forms with any accompanying
> follow-up documentation for occupancy inspections. This documentation
> shall be available for verification and shall be maintained in each
> claim file.

C.  Debris Removal.

    1.  Debris and personal property must be removed before the property
        is conveyed to HUD unless otherwise directed by the local HUD
        office, but this should not delay conveyance. The regulations
        require conveyance within 30 days after acquisition of
        possession. This should be ample time to remove debris and
        personal property. Any debris removed per local code is also
        subject to the established limits on debris removal. Costs for
        removal of debris and personal property are considered
        protection and preservation expenses, unless removal of the
        personal property is required by the sheriff as a part of the
        eviction proceedings. Cost of Debris removal is considered a
        protection and preservation cost with the following exceptions:

        a.  If the debris is removed by local law enforcement or crews
            under the control of local law enforcement where the
            mortgagee has no control over the removal, the cost of
            removal is considered an eviction cost;

> Costs may be claimed within the parameter of the Regional Protection
> and Preservation guidelines (i.e. amount per cubic yard, etc.) but
> hours of labor should not be claimed in addition to allowable debris
> cost limits, as labor is included in determining these amounts.\*

b.  if the items removed can not be distinguished from personal property
    and taken to storage, the cost of removal are considered an eviction
    cost; and

c.  if the items are required by the sheriff to be placed on or near the
    street during the eviction, with no distinction between debris and
    personal property, the cost of removal is considered an eviction
    cost.

> If personal property is removed as a part of normal eviction
> proceedings, enter the cost in Item 305 of Part D.

1.  Broom sweeping is considered a part of interior debris removal and
    should not be listed as a separate cost.

2.  Dump fees should not be listed as a separate cost. Regional
    guidelines for costs per cubic yard or per ton will include dump
    fees.

3.  Exterior cleaning, which may include debris, normally has to be
    conducted only once. Inspections will determine if re-cleaning is
    necessary. Permission is necessary to exceed the published limit.

4.  Appliances which appear to be in operable condition should not be
    removed from the property. The presence and condition of the
    appliance should be documented in the inspection report.

5.  If the debris includes hazardous waste, local health and
    environmental agencies should be consulted regarding proper
    disposition.

6.  If it is necessary to exceed the published cost limits for debris
    removal the mortgagee must submit bids obtained pursuant to Regional
    instructions and request field office approval. The request should
    indicate the purpose of the bid, the type of debris to be removed
    and the amount of protection and preservation expenditures made to
    date. The bidder\'s name, address and telephone number must appear
    on the bid.

> Mortgagees will not be reimbursed for the cost of obtaining bids. HUD
> Field Offices will provide, on request, a list of vendors who will
> provide free estimates. The mortgagee\'s field service company may
> obtain bids and may be a bidder.
>
> Regional guidelines will instruct mortgagees to obtain one bid or two
> bids. If two bids are required they must be independent competitive
> bids and must be submitted to HUD separately. The local HUD Office may
> also obtain one or more bids from its vendor list.
>
> The local HUD Office will take one of the following actions after
> receiving the bids:

a.  Notify the mortgagee to accept one of the bids submitted.

b.  Notify the mortgagee of the name and bid amount of a bid the local
    HUD Office received. In this event the mortgagee may:

    1.  Contract directly with HUD\'s bid source at the stated bid
        amount, or

    2.  Contract with its source at the amount stated by HUD\'s bid
        source.

c.  Notify the mortgagee to convey the property without removing the
    debris.

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D.  Cost Limits.

    1.  Limits on the amount HUD will reimburse mortgagees for specific
        items which are considered as protection and preservation (P&P)
        actions will be published by HUD regional offices. To the extent
        feasible, these limits will be established on a regional basis
        but some local variations may be necessary. However, local
        office variations are published in the Regional P&P Schedule.
        Appendix 13 provides a listing of HUD\'s ten regional offices.
        Any Regional P&P Schedule which have not been received should be
        immediately requested directly from the respective office.

    2.  Generally, mortgagees may expend up to the maximum amount
        specified in the applicable Regional P&P Schedule for protection
        and preservation work for a one unit single family property
        without HUD\'s prior approval, provided individual expense
        limits have not been exceeded. The costs of required inspections
        and authorized boarding will not be included in the maximum
        amount.

    3.  Expenses above the allowable published cost limits or the total
        maximum property amount per property must have prior written
        approval of the local HUD office where the property is located.
        Appendix 14 provides a sample format which may be used in
        requesting approval to exceed a cost limit. All requests must
        contain justification to support them. If the total cost entered
        in Item 110 exceeds the maximum amount specified in the Regional
        P&P Schedule a copy of Part C (and a copy of the local HUD
        office approval to exceed limits, if applicable) must be
        attached to the Part B submitted to HUD Headquarters.

    4.  In order to control costs, mortgagees are encouraged to seek
        competitive bids for the required work. Requests to exceed
        regional debris removal limits must be supported by cost
        estimates.

> If a written response has not been received from the local HUD office
> within 10 days, mortgagees must follow up until a written response is
> received. In emergency situations, mortgagees may fax their requests
> to the local HUD office and confirm receipt of these requests
> verbally. The local HUD offices will respond to your emergency
> requests via facsimile, if requested. Mortgagees are responsible to
> confirm receipt and legibility of all requests sent via facsimile.
>
> Failure to receive a response from the local office does not
> constitute an extension of time or approval of the request (see
> paragraph 1-6).
>
> A copy of the local HUD office approval and a copy of Part C must be
> attached to the Part B submitted to HUD Headquarters:

a.  For all cases where the total for Item 110, Schedule B, exceeds the
    Regional maximum property amount.

b.  For all cases where the local HUD office issued an approval to
    exceed a published cost limit (individual or maximum property
    amount).

Copies of both the mortgagee\'s request and HUD\'s response must be
retained in the Claim File.

5.  Although a claim payment may include reimbursement for more than the
    Regional cost limit for property protection and preservation
    expenses, the Department will require reimbursement for any amounts
    not supported by appropriate documentation. It is not necessary to
    submit receipts for disbursements with the initial submission of
    form HUD-27011. However, receipts must be available upon request
    from the Department and these receipts from vendors must itemize the
    service provided in sufficient detail to allow a review for
    compliance with the limits published by the HUD regional office.
    Charges must be made and itemized in accordance with the standards
    of measurement as set forth in the regional limits.

6.  The purpose of protection and preservation action is to protect the
    property from vandalism and the elements until it is conveyed to
    HUD. Expenditures made after conveyance, (unless the work was
    performed before conveyance) or for repairs which do not protect and
    preserve the property before conveyance are not reimbursable unless
    requested by the local HUD office in writing. The amount of such
    reimbursement must also be approved by the local HUD office.

7.  For mortgages insured under a firm commitment issued on or after
    November 19, 1992 or under Direct Endorsement processing when the
    credit worksheet was signed by the mortgagees approved underwriter
    on or after November 19, 1992, the mortgagee will not be reimbursed
    for the cost of protecting, operating, preserving or inspecting the
    property or removing debris from the property incurred after the
    deadline to convey the property (24 CFR 203.359). See paragraph 2-2D
    for more detail on conveyance requirements \[24 CFR 203.402(g)\].\*

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E.  Other Protection and Preservation Actions.

    1.  Boarding. Mortgagees shall not board up vacant properties unless
        prior approval of the local HUD office is obtained. This
        approval may be provided on a case by case basis, or prior
        approval may be provided in the regional guidelines (i.e., city,
        county, zip code, street, block, etc.). The Regional Protection
        and Preservation Schedules provide policy on this matter.

> Although boarding will be restricted and approved on only a case by
> case basis, mortgagees shall continue to secure all windows and doors
> in accordance with regional guidelines.
>
> Properties which suffer severe fire damage must be secured for safety
> reasons and to prevent unauthorized entry. This requires that all
> lower floor windows and doors will be secured according to the
> specifications identified in the appropriate regional P&P guidelines.
>
> The additional costs of securing a severely fire damaged property are
> not included in the Regional cost limitation for customary protection
> and preservation expenses. However, mortgagees must request prior
> written approval from the local HUD office if the costs of the
> securing will exceed \$450. Local HUD offices have been advised to
> respond to all requests promptly.

2.  Winterizing. Specific regional guidelines provide policy on
    winterization. If regional guidelines do not state a range of months
    during which winterizing must be completed, then the intent is that
    winterizing should be done all year.

3.  Photographs. Any additional photographs beyond the allowable photo
    expenditures in the regional guidelines are the responsibility of
    the mortgagee (and are not reimbursable), unless specifically
    allowed (in writing) by a local HUD office on a case by case basis.

4.  Grass Cutting/Snow Removal. A mortgagee is required to include grass
    cutting and/or snow removal in the maximum limit. As the mortgagee
    approaches the ceiling, an estimate of the total grass cutting
    and/or snow removal should be made and a one time request to exceed
    the maximum limit if needed. This will significantly reduce the
    number of approvals needed.

5.  Signs. A sign no larger than 8 1/2 by 11 inches should be attached
    to the inside of a window or front door, providing information
    (including a telephone number) as to who to contact for emergency or
    other purpose.

6.  Request to Exceed Limits/Time Frames. Requests to exceed cost limits
    are considered separately from requests to exceed time frames. A
    mortgagee who falls to meet a time frame should expect an interest
    curtailment unless an extension has been requested and granted on
    form HUD-50012. Failure to receive a response from a local HUD
    office to exceed cost limits does not constitute either an extension
    to convey title and file Part A, or an extension to submit title
    evidence and submit fiscal data, Part B. A separate request for each
    extension of time must be submitted by the mortgagee. All requests
    for extensions and all responses must be in writing (see paragraph
    1-6 and Appendix 13).\*

[]{#__RefHeading___Toc167867590 .anchor}2-12 EVICTION COSTS - 24 CFR
203.402 [**(TOP)**](#TABLEOFCONTENTS)

Provides for the reimbursement of reasonable costs incurred in evicting
occupants and in removing personal property from the properties. It is
the mortgagee's responsibility to adequately document and support all
evictions costs claimed for reimbursement. The following guidelines for
eviction costs must be followed in order to establish such costs as
reasonable and customary for the purposes of reimbursement on FHA
insurance claims.

A.  Photographs. If debris is removed as part of the eviction, before
    and after photographs as required by the Regional Preservation and
    Protection Guidelines must be maintained in the claim review file.
    Debris removal is generally not an eviction expense, and will be
    disallowed as such, unless it can be clearly demonstrated that one
    of the conditions of Paragraph 2-11 C 1 a, b or c are met.

B.  Eviction Crews. Costs of eviction crews actually necessary to
    accomplish the eviction will be reimbursable provided that those
    costs are customary and reasonable for the area. If a Sheriff or
    local law or statute requires a certain number of persons to be
    present, documentation to verify that requirement must be maintained
    in the claim review file.

C.  Eviction on Unoccupied Property. Evictions should not normally occur
    on unoccupied properties. However, certain local conditions may
    require that evictions be performed on unoccupied properties. If
    possessory action is initiated on an unoccupied property, the
    mortgagee must sufficiently document in the claim file the reasons
    why such action is necessary to be eligible for reimbursement of the
    cost relating to such action.\*

[]{#__RefHeading___Toc167867591 .anchor}2-13 HAZARD INSURANCE.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Hazard Insurance Premiums. HUD will reimburse the mortgagee for
    hazard insurance sufficient to protect the mortgagee\'s interest up
    until the date the deed to the Secretary is filed for record \[24
    CFR 203.402(c)\]. The reimbursement may not exceed the reasonable
    rate for the area. A reasonable rate is a rate not in excess of the
    rate or advisory rate set by the principal State-licensed rating
    organization for essential property insurance in the voluntary
    market or the FAIR Plan rate if such coverage is available \[24 CFR
    203.379(a)\]. HUD may establish from time to time acceptable
    reimbursement rates.

> All hazard insurance policies on the mortgaged property must be
> canceled as of the date the deed to the Secretary was filed for record
> (24 CFR 203.382). Do not delay submission of form HUD-27011, Part B,
> pending receipt of premium refunds resulting from the cancellations.
> Part B must be prepared within the required time limits. If the amount
> of the actual premium refund is not known at the time the Part B is
> prepared, calculate an estimate on the \"short rate\" basis.
>
> To calculate the refund using the \"short rate\" method, determine the
> number of days the policy was in effect. This is the period from the
> effective date of the policy to the earlier of the cancellation date
> or the date the deed to the Secretary was filed for record. The Julian
> Date Calendar in Appendix 9 may assist in this determination. The
> Short Rate Table in Appendix 15 is then used to determine the
> percentage of the premium utilized. This figure is subtracted from 100
> to determine the percentage of premium remaining. The total premium is
> multiplied by the remaining percentage of premium to determine the
> estimated amount of the premium refund.
>
> Example: A \$250 insurance policy is effective from 8/10/92 through
> 8/10/93. The property is conveyed to the Secretary on 9/15/92. The
> policy was in force for 36 days (from 8/10/92 to 9/15/92). The Short
> Rate Table shows that 20% of the premium was utilized, therefore 80%
> of the premium is remaining.

\$250 x 80% = \$200 is the estimated hazard insurance refund

> Include the estimated refund amount in Item 109, Part B. If the actual
> premium return differs, you may be entitled to either a refund or be
> required to remit the difference to HUD. File a supplemental form (see
> Chapter 7) to claim a refund or remit the difference (\$10 or less
> should be ignored). Any claimed difference between the calculated
> estimate and actual return premium must be supported by the insurance
> carrier\'s statement of the return premium. A copy of this statement
> should be retained by the mortgagee in the claim file.
>
> Under the following circumstances, the mortgagee may submit (i) a Part
> B claim without including an estimated HIP refund; or (ii) a
> supplemental claim for reimbursement, if a HIP refund was estimated
> but no refund was received:

1.  the mortgagee can demonstrate that the insurer remitted the refund
    to the mortgagor, or

2.  the mortgagee can demonstrate that the insurer has a policy of not
    remitting refunds to the mortgagee in that jurisdiction.

> If the hazard insurance premium is estimated and a refund is due, file
> a supplemental claim. If an additional remittance is due HUD, file a
> supplemental remittance (see Chapter 7 of these instructions).\*

B.  Hazard Insurance Recovery. (24 CFR 203.379) Mortgagees are expected
    to seek hazard insurance proceeds for all situations where the
    property has sustained casualty, theft or vandalism damage, not just
    for damages sustained in fire, flood, earthquake, tornado,
    hurricane, boiler explosion or where the mortgagee failed to take
    proper action to preserve and protect the property (mortgagee
    neglect). However, the application of insurance proceeds on form
    HUD-27011 will differ for those cases where the damage was not fire,
    flood, earthquake, boiler explosion, tornado or mortgagee neglect.

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1.  If the property is damaged by fire, flood, earthquake, tornado,
    hurricane, boiler explosion (condominium units only) or mortgagee
    neglect, the property may be conveyed damaged only with prior HUD
    approval \[24 CFR 203.379(a)(1)\]. If such a property is conveyed
    with HUD approval, the greater of the hazard insurance recovery or
    HUD\'s estimate of damage will be entered in Part A, item 27 and
    will be deducted from the insurance benefits (24 CFR 203.379). If
    Part A is submitted before the insurance proceeds are received, the
    mortgagee may have to estimate the recovery. When the proceeds are
    received, they may be less than the amount estimated. In this event,
    the mortgagee is entitled to reimbursement of the difference between
    the amount of proceeds expected and the proceeds received if both
    are greater than HUD\'s estimate of damage \[24 CFR 203.382(b) and
    (c)\]. The adjustment is made on line 119 of Part B. The mortgagee
    is not entitled to a reimbursement which would reduce the deduction
    in insurance benefits to less than HUD\'s estimate of damages.

2.  Where the damage was other than fire, flood, earthquake, tornado,
    hurricane, boiler explosion or mortgagee neglect, the amount of the
    hazard insurance recovery must be shown on Part B, line 118. Do not
    report these funds received on Part A, item 27, as it will cause
    your claim to suspend and delay your payment.\*

[]{#__RefHeading___Toc167867592 .anchor}2-14 DEMOLITION NOTICES.
[**(TOP)**](#TABLEOFCONTENTS)

Mortgagees must advise the local HUD office having jurisdiction when a
demolition notice is received. In some cases, the property could be
salvaged with limited repairs. Usually, these repairs would be too
extensive to be considered as \"protection and preservation costs\"
which HUD has authority to reimburse the mortgagee.

A copy of the demolition notice must be sent immediately to the local
HUD office to the attention of the Chief Property Officer (CPO). The
condition of the property will be evaluated and the mortgagee will be
notified whether to allow the demolition or request it to be delayed.
The mortgagee will be reimbursed for the cost of compliance with local
HUD office instructions. If an extension to meet any time requirement is
needed, a request should be submitted pursuant to paragraph 1-6.

[]{#__RefHeading___Toc167867593 .anchor}2-15 FORECLOSURE AND ACQUISITION
COSTS. \[24 CFR 203.402(f)\] [**(TOP)**](#TABLEOFCONTENTS)

HUD regulations authorize the reimbursement to mortgagees of two-thirds
of the foreclosure costs or costs of acquiring a property by other means
(including costs of conveying and evidencing title to the Secretary).
Such costs must be actually paid by the mortgagee and must be approved
by HUD.

A.  Allowable Costs. A complete listing of allowable or unallowable
    costs would not be practical because procedural requirements and
    terminology vary in different jurisdictions. Generally, HUD will
    reimburse a mortgagee for:

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1.  Fees which must be paid to public officials such as sheriffs, clerks
    of court, recorders of deeds or public trustees.

2.  Costs which are required by law, such as private service of process,
    required publication, or certified copies of documents.

3.  Fees and costs which are necessarily incurred and are reasonable and
    customary in the area such as attorney fees, title search, title
    policy, auctioneer\'s fee, trustee fees and required costs related
    to eviction.

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B.  Costs Not Reimbursable. HUD will not reimburse a mortgagee for:

    1.  Fees and costs which exceed reasonable and customary fees for
        the area. If a fee exceeds the customary fee for the area, for
        adequate reason, such as a contested foreclosure or eviction,
        the excess may be claimed and appropriate documentation to
        support the amount claimed must be retained in the claim file
        (see paragraph 1-10).

    2.  Costs which are not necessarily incurred or are required because
        of dilatory service, such as courier service or express mail or
        property inspection by attorneys.

    3.  Costs which are overhead items such as postage, telephone,
        duplicating, or collection services. The attorney\'s or
        trustee\'s overhead costs should be included in their fee.

    4.  Extra costs incurred in the foreclosure as a result of a defect
        in the mortgage transaction or the mortgage foreclosure or a
        defect in title which existed at or prior to the time the
        mortgage was filed for record. These costs are reimbursable only
        if the mortgage was sold by the Secretary or was executed in
        connection with the sale of the property by the Secretary after
        August 1, 1969 \[24 CFR 203.402(f)\].

C.  Full and two-third Reimbursement.

    1.  Full Reimbursement.

        a.  Costs of eviction or other possessory actions are not
            considered foreclosure costs and are reimbursable in full
            within reasonable and customary limits.

        b.  Costs of eviction crews, furniture storage or relocation
            expenses are reimbursable only if required under state or
            local law.

    2.  Two-Third Reimbursement.

> Fees and costs related to foreclosure, conveyance and title evidence
> are limited to two-thirds reimbursement. HUD will calculate the
> two-thirds allowance based on the amounts entered on the claim form.

-   Item 306 -Attorney fee for foreclosure.

-   Item 307 -All foreclosure, conveyance and title evidence costs other
    than fees, guardianship and intestacy proceedings (including related
    attorney fees); Torrens title acquisition costs, and bankruptcy
    costs other than attorney fees.

-   Item 310 -Attorney fees related to bankruptcy.

[]{#__RefHeading___Toc167867594 .anchor}2-16 TAX BILLS. \[24 CFR
203.402(a) and (b)\] [**(TOP)**](#TABLEOFCONTENTS)

The mortgagee must secure from the taxing authorities all available tax
bills prior to conveyance of the property to HUD. Such bills, regardless
of due date, must be paid by the mortgagee prior to conveying a property
to HUD. In effect, no tax bills available from the taxing authorities
should remain unpaid as of the date the deed is

filed for record whether the taxes are payable before or after
conveyance.

Do not pay tax bills received after the date the deed is filed for
record. Send these tax bills to the local HUD office, identified by the
FHA case number and the taxing authority identification number.

As indicated in paragraph 2-6, the recorded deed should contain the
address of the local HUD office \"ATTN: Single Family Property
Disposition Branch\" to assure that the taxing authority sends tax bills
to the appropriate office for payment. Do not delay submitting an
application while awaiting a copy of the tax receipt to attach to the
local office copy of the claim form. A copy of the tax bill, the
disbursement document or other type of information which identifies the
tax and indicates that it was paid or sent for payment is acceptable.

The mortgagee will not be reimbursed for interest or penalties for late
payment of taxes or assessments.

[]{#__RefHeading___Toc167867595 .anchor}2-17 BANKRUPTCY OF THE
MORTGAGOR. (24 CFR 203.355) [**(TOP)**](#TABLEOFCONTENTS)

The filing of a bankruptcy petition by the mortgagor may prevent or
suspend the foreclosure action so that the action may not be initiated
or completed within the specified time requirement.

A.  Delay of Foreclosure Initiation.

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1.  If the filing of a bankruptcy petition prevents the initiation of
    foreclosure within the nine months time requirement, the time limit
    is extended to 60 days after the release of the bankruptcy stay. The
    extension will avoid the curtailment of debenture interest. In order
    to extend the time limit the date of filing the bankruptcy petition
    must be entered in Item 40, the date of release of the bankruptcy
    stay must be entered in Item 21 and a date 60 days after the date of
    release must be entered in Item 19.

> The extension of time begins when the court releases the bankruptcy
> stay or otherwise makes it possible to foreclose, not when the
> mortgagee learns of the court\'s action. Mortgagees and their agents
> should monitor and follow-up on court proceedings where bankruptcies
> are delaying the initiation of foreclosure so required actions can be
> taken within the permitted time frame.\*
>
> If the time limit expired before the bankruptcy petition was filed, or
> if foreclosure was not initiated within 60 days after the release of
> the bankruptcy stay, debenture interest will be curtailed as of the
> date the action should have been taken. Under these circumstances an
> extension date of 60 days should not be entered in Item 19.

2.  A 60-day extension may not be adequate if the mortgagee must send
    the letters under the assignment program or send notices required by
    State law after the mortgage is released form bankruptcy stay.

> Mortgagees are authorized an additional extension of time for
> foreclosure initiation without prior HUD approval to permit compliance
> with HUD\'s assignment and State law requirements.

a.  HUD Requirements to Send Assignment Letters. If the mortgagee is
    required by HUD Handbook 4330.1, REV-3, Paragraph 8-7A.1.a to send
    the HUD assignment letters after the bankruptcy stay has been
    released, the mortgagee is authorized a 90-day extension of time to
    initiate foreclosure (60-day extension as discussed in the first
    paragraph plus an additional 30 days) in order to allow sufficient
    time for dispatch and response to the assignment letters. The
    mortgagee must be very prompt in sending the assignment letters so
    that there will be sufficient time remaining to initiate foreclosure
    if appropriate.

b.  State Law Requirement to Send a Demand Letter or Similar Notice. If
    State law requires that a demand letter or similar notice be sent
    after bankruptcy stay has been released and before foreclosure is
    instituted, the mortgagee is authorized an additional extension of
    the minimum length of time for the notice (for example, if State law
    requires that a demand letter be sent not less than 30 but not more
    than 90 days before publication of sale, the additional extension
    will be 30 days).

c.  In some states the filing of a bankruptcy petition voids or
    nullifies the foreclosure action and foreclosure must be
    reinitiated. If this occurs the date of the reinitiated action, not
    the date of the nullified action, will be considered the date of
    foreclosure initiation. The foreclosure action must be reinitiated
    within sixty days after the release of the bankruptcy stay or within
    nine months of default.

d.  Application for Insurance Benefits. In applying for mortgage
    insurance benefits where an additional 30-day extension is
    authorized, the mortgagee should enter in Item 19 of form HUD-27011
    an expiration date which includes both the 60-day bankruptcy
    extension and the additional extension. The reason for the
    additional 30-day extension must be given in the Mortgagee comment
    section of Part A, form HUD-27011.

e.  Bankruptcy Stay Requirement. The mortgagee is authorized an
    extension for compliance with an assignment or State law requirement
    in addition to a 60-day bankruptcy extension only if foreclosure
    could not be initiated within nine months of default because of the
    bankruptcy action. NOTE: If processing of an assignment request
    prevents the mortgagee from initiating foreclosure within the nine
    months time frame, the local HUD Offices will continue to grant a
    60-day extension on assignment rejections.

f.  Claim Review File. Mortgagees must fully document the claim file to
    support the use of the additional 30-day extension. This
    documentation may consist of dated copies of the court\'s release
    from the bankruptcy stay; dated copies of each HUD assignment letter
    sent before and after their bankruptcy; and dated copies of any
    demand letters or notices sent together with a reference to the
    applicable State law. These documents will be examined as part of
    HUD\'s claim review to determine their accuracy and the
    appropriateness of the additional extension.\*

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A.  Delay of Foreclosure Completion. If the filing of one or more
    bankruptcy petitions after initiation prevented completion of
    foreclosure within the specified time frame a brief note of the
    cause of delay should be entered in the Mortgagee\'s Comment section
    of Part A and supporting documentation must be placed in the claim
    file (See paragraph 2-2).

B.  Fees and Costs. After a decision has been made to foreclose, and the
    mortgage has been referred for foreclosure, certain fees and costs
    related to bankruptcy of the mortgagor may be considered costs of
    property acquisition. Therefore, HUD will reimburse the mortgagee
    two-thirds of such costs (subject to the reasonable and customary
    limits for the jurisdiction). If there are multiple bankruptcies,
    the fees and costs for each filing will be included.

[]{#__RefHeading___Toc167867596 .anchor}2-18 FUNDS HELD BY MORTGAGEE.
[**(TOP)**](#TABLEOFCONTENTS)

A.  General. Funds held by the mortgagee are deducted from the insurance
    benefits, therefore, they should not be sent to HUD. Such funds
    shall be reported by making the following entries:

    -   Unapplied Section 235 Assistance Payments - Item 123, Part B,
        Column A.

    -   Funds Held Pursuant to a Buy down Agreement - Item 109, Part B,
        Column A.

    -   Rental Income - Item 115, Part B, Column A.

    -   Hazard Insurance Recovery - Item 118, Part B, Column A, if not
        reported on Part A.

    -   Hazard Insurance Recovery - Item 27, Part A, and Item 119, Part
        B, column A if the entry in Part A is an estimate.

    -   All other funds - Identify the nature and the amount of the
        funds and enter in Item 109, Part B, Column A.

B.  Escrow Funds. Any funds remaining in the escrow account on the date
    the deed is filed for record must be entered in Item 109, Part B. If
    there are funds in the escrow account, there should be no entries
    for escrow advances in Items 305 or 311.

> If the escrow account is depleted, escrow expenditures must be entered
> as advances in Items 305 or 311, as appropriate. They should not be
> charged to Item 109 so as to create a negative escrow balance.

[]{#__RefHeading___Toc167867597 .anchor}2-19 RENTAL OF PROPERTIES.
[**(TOP)**](#TABLEOFCONTENTS)

If there is a lengthy redemption period and the mortgagee has possession
of the property during that period, the best protection against damage
to the property may be to keep it occupied by tenants. HUD will not
reimburse the mortgagee, however, for costs incurred solely in renting
the property. These costs must be recovered from rental income. Although
rental expenses and rental income will be shown separately on the claim
form, rental expenses are allowable only as an offset to rental income.
If rental produces a net profit, that profit will serve to reduce the
amount of the claim.

[]{#__RefHeading___Toc167867598 .anchor}2-20 SPECIAL FORBEARANCE.
[**(TOP)**](#TABLEOFCONTENTS)

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 payment will include unpaid mortgage interest. \[24 CFR
203.4l0(a)(3)\] The forbearance agreement must be signed by both the
mortgagor and the mortgagee, and must meet the conditions of 24 CFR
203.614. A copy of the executed forbearance agreement must be forwarded
to HUD Headquarters with Part B of the form HUD-27011. A copy must also
be retained in the claim review file maintained by the mortgagee.

\*Any request for mortgage note interest on a claim for insurance
benefits which is not fully supported, will not be honored. The
\"Special Forbearance Checklist\" (Appendix 26) was developed as a tool
to help mortgagees establish if the case meets the minimum requirements
for special forbearance. A signed copy of the

checklist must be submitted with the claim and a signed copy must be
maintained with the claim review file.

A.  Eligibility for Mortgage Interest. The mortgagor must have failed to
    meet the requirements of the agreement for 60 days.

B.  Period for Which Mortgage Interest is Paid. Mortgage interest is
    paid for the period beginning on the due date of the last completely
    paid installment. To determine this date the total amount of funds
    received under the agreement are applied according to the terms of
    the original mortgage, to escrow, principal and interest. If
    sufficient funds were received to total more than one payment,
    advance the due date of the last completely paid installment and
    reduce the unpaid principal balance accordingly. If no payments were
    made under the mortgage, interest is paid for the period beginning
    30 days prior to the date of the first scheduled payment.

Mortgage interest is paid to the earliest of the following dates:

1.  the date of institution of foreclosure proceedings,

2.  the date of acquisition of title and possession by deed in lieu of
    foreclosure,

3.  the date the property was acquired by the Commissioner under a
    direct conveyance from the mortgagor,

4.  90 calendar days following the date the mortgagor fails to meet the
    requirements of the forbearance agreement, or

5.  such other date as the local HUD office may approve in writing prior
    to expiration of the 90-calendar day period (24 CFR 203.402a).

> The claim for this mortgage interest is made on line 121 of Part B of
> the claim form.

A.  Computation Method. To obtain the amount of accrued mortgage
    interest due, multiply the Daily Interest Rate Factor by the amount
    of the unpaid principal balance. The Daily Interest Rate Factor is
    found in the Table 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 above as the \"ending date.\" To
    assist in determining the number of days refers to the Julian Date
    Calendars provided in Appendix 9.

> EXAMPLE: Assume a \$90,000 mortgage financed at 13 1/4% interest rate
> for 30 years involved a broken special forbearance agreement. Prior to
> the agreement the regular monthly payment was \$ 1,400, consisting of
> a principal and interest payment of \$1,013.40 and a monthly escrow
> payment of \$386.60. The last completely paid installment prior to the
> agreement was August 1, 1983, at which time the unpaid principal
> balance was \$82,418.50. On November 14, 1983, a special forbearance
> agreement was entered in which the mortgagor agreed to pay \$250 on
> that date and \$250 on the 17th of each following month, but failed to
> make the payment due August 17, 1984. Since the agreement had been
> broken for 60 days on October 18, 1984, foreclosure proceedings were
> instituted on November 10. After considering the payment received
> during the agreement, which amounted to one complete installment, the
> due date of the last completely paid installment was advanced to
> September 1, 1983, at which time the unpaid principal balance was
> \$82,259. Since one complete escrow payment was also received, the
> amount of escrow was increased by \$386.60. The mortgage interest is
> therefore calculated from September 1, 1983, to November 10, 1984, the
> date foreclosure was instituted.

B.  Period for Which Debenture Interest is Paid. (24 CFR 203.410)
    Debenture interest is paid for the period beginning on one of the
    following dates and ending on the date of the initial payment or the
    date of interest curtailment.

    1.  the date of institution of foreclosure proceedings

    2.  the date of acquisition of title by the mortgagee or by HUD

> HUD will compute the debenture interest at the time of payment of Part
> B and will adjust the amount of interest paid in the Initial Payment,
> if necessary.
>
> Since debenture interest is calculated on the Unpaid Principal Balance
> when Part A is paid, before information about forbearance agreement is
> available, an adjustment in debenture interest is needed when Part B
> is processed. Mortgage Note Interest and debenture interest cannot be
> paid for the same period of time. If Mortgage Note Interest is claimed
> on Part B because of a special forbearance agreement, debenture
> interest already paid for the same period will be subtracted from the
> final settlement.

C.  Extension of Time. (24 CFR 203.355) Although foreclosure may not be
    initiated or title may not be acquired within nine months of default
    because of the existence of a forbearance agreement the mortgagee
    need not request an extension of time. If the insurance claim
    includes a payment of mortgage interest, debenture interest begins
    on the date of foreclosure initiation or title acquisition, not the
    date of default (24 CFR 203.410). Since mortgage interest ceases 90
    days after the mortgagor failed to meet the requirements of the
    agreement and debenture interest does not begin until foreclosure
    initiation or title acquisition, there will be a period of time when
    no interest accumulates if the mortgagee fails to initiate
    foreclosure within the 90-day period.

> Should the mortgagee be prohibited from initiating foreclosure within
> the 90 day period because of bankruptcy or state law, or assignment
> consideration by the local office the mortgagee should request an
> extension of the period for which mortgage note interest is to be
> paid, on form HUD 50012 before the 90-day period expires. The field
> office will extend the time to 60 days after the expiration of the
> bankruptcy or state law prohibition.

[]{#__RefHeading___Toc167867599 .anchor}2-21 SECTION 235 ASSISTANCE
PAYMENTS. [**(TOP)**](#TABLEOFCONTENTS)

A.  Unapplied Payments. Unearned Section 235 assistance is to be
    returned to HUD via the Section 235 billing process. Earned Section
    235 assistance payments should be applied to the mortgagor\'s
    account in full installments to advance the date of default. Partial
    payments which remain unapplied must be reported in line 123 of Part
    B.

B.  Overpaid Assistance. If the mortgagee advanced its own funds to
    repay overpaid Section 235 assistance to HUD and has not recovered
    the full advance from the mortgagor, the un-recovered advance shall
    be entered in Column B line 124 of Part B.

[]{#__RefHeading___Toc167867600 .anchor}2-22 DOCUMENTS TO BE SUBMITTED.
[**(TOP)**](#TABLEOFCONTENTS)

It is very important that all required documentation be forwarded to the
appropriate locations in a timely manner. Failure to meet any of the
documentation requirements could jeopardize all or part of the claim
reimbursement (24 CFR 203.363). 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 a
claim. For example, it is critical that at the time of

the initial application, the appropriate documentation is simultaneously
mailed to the local HUD office. This provides the local office with
timely notice that a property is now in HUD\'s inventory. If such notice
is not provided to the local office at the time of the initial
application, the mortgagee may not receive reimbursement for claimed
expenses and may be liable for subsequent damage to the property.

Following is a listing of the documents which must be submitted on
conveyance claims, the location they must be sent to, and when they must
be sent.

A.  On the Date the Deed is Filed for Record. On the date the deed to
    HUD is filed for record or mailed to the recording authority, all
    required documents must be sent to HUD Headquarters and the local
    HUD office as follows:

    1.  TO HUD HEADQUARTERS

        a.  The original Part A

        b.  The original Mortgage Insurance Certificate

        c.  Worksheet showing reallocation of mortgage payments if
            capitalized method of accounting is used.

    2.  TO THE LOCAL HUD OFFICE

        a.  A copy of Part A

        b.  A copy of the deed to HUD filed for record

        c.  A copy of the Mortgage Insurance Certificate

        d.  Copies of the last tax bills paid to each taxing authority

        e.  A copy of HUD\'s letter approving damaged conveyance of the
            property under 24 CFR 203.379(a), if applicable

        f.  The mortgagee\'s certificate that the conditions of 24 CFR
            203.379(b), relating to fire damage, have been met, if
            applicable

        g.  A copy of documentation that will verify that appropriate
            action was taken to protect and preserve the property, if
            applicable

        h.  Keys to the property, if available

B.  Within 45 Days After the Date the Deed was Filed for Record. (24 CFR
    203.365) Within 45 days after the date the deed to HUD was filed for
    record or mailed to the recording authority, all required documents
    must be sent to the local HUD office as follows:

    1.  TO THE LOCAL HUD OFFICE

        a.  Title evidence reflecting ownership vested in the Secretary

        b.  A copy of the mortgage

        c.  A copy of Part A

        d.  A statement relating to title defects if 24 CFR 203.390
            applies

C.  Within 45 Days After Deed was Filed for Record or upon Receipt of
    Title Approval Letter if later. All required documents must be sent
    to HUD Headquarters and the local HUD office as follows:

    1.  TO HUD HEADQUARTERS

        a.  The original Part B

        b.  The original Title Approval Letter

        c.  A copy of the local HUD office approval of excess costs and
            Part C, if applicable (see paragraph 2-11)

        d.  A copy of the executed special forbearance agreement, if
            applicable

        e.  Payment ledger or other documents supporting loan balance
            difference (line 107, Part B)

    2.  TO THE LOCAL HUD OFFICE

        a.  A copy of Part B

        b.  The original Parts C, D and E

> HUD must receive the required documents within the later of (i) 15
> days after the date of the Title Approval Letter, or (ii) 55 days
> after the date the deed to HUD was filed for record (or mailed to the
> recording authority).
>
> The following Table (Table 2-1) illustrates the document submission
> requirements for conveyance claims.

[]{#__RefHeading___Toc167867601 .anchor}2-23 CLAIM PREPARATION -
CONVEYANCES. [**(TOP)**](#TABLEOFCONTENTS)

The claim must be completed as described below using form HUD 27011,
Single Family Application for Insurance Benefits. To avoid delays in
payment, the claim must be complete and accurate and contain all
information requested. See Par. 1-3 on pre-screening of applications.

A.  Instructions for the Completion of form HUD 27011, Part A, Initial
    Application. The following Item by Item instructions are to be used
    when completing form HUD 27011, Part A, for conveyance claims.

PART A - INITIAL APPLICATION

INITIAL APPLICATION

> Item 1 Claim Type. Place an \"X\" in the space for Claim Type 01 =
> Conveyance.
>
> Items 2 and 3 FHA Case Number and Section of Act Code. 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 or 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. Enter the applicable code number from the
> default reasons listed below. If code 15 is used, explain the reason
> on the reverse of Part A under \"Mortgagee\'s Comments.\"

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 a 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 (explain in Mortgagee comments)
>
> Item 5 Endorsement Date. 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 the form HUD 27011 is
> completed and submitted to HUD. To avoid debenture interest
> curtailment, Part A must be submitted on the same day the deed is
> filed for record, or mailed to the recording authority. See paragraph
> 2-2.
>
> \*Note: Although HUD permits 10 days from this date to receive the
> form HUD-27011 before curtailing interest for late submission, you are
> required to enter in Item 6 the date of the actual submission
> (mailing) date of the form.
>
> Item 7 Due Date of First Payment to Principal and Interest. 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. 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 later of the date the mortgagee acquired good and marketable title
> to the property or the date it acquired possession of the property.
>
> The mortgagee acquires the title to the property on the date of the
> Sheriff\'s or Trustee\'s deed or the deed-in-lieu of foreclosure is
> recorded. If the deed conveys title directly to HUD, rather than to
> the mortgagee, the date the deed is recorded will be considered the
> date the mortgagee acquired title, except that any redemption period
> must have elapsed in order for title to be marketable.\*
>
> The mortgagee acquires possession of the property on the date the
> property was discovered, or should have been discovered, to be vacant
> (see paragraph 2-9).
>
> Exception: If the mortgagee requested permission to convey occupied
> and the request was either approved or unanswered enter either (i) the
> date of HUD\'s approval to convey the property occupied, or (ii) the
> date on which 90 days have elapsed since the mortgagee notified HUD as
> provided in 24 CFR 203.671(c) of the occupied conveyance regulations
> (see paragraph 2-9).
>
> Item 10 Date Deed or Assignment Filed for Record or Date of Closing or
> Appraisal. Enter the date the deed conveying the property to the
> Secretary is filed for record. The date the deed is mailed to the
> recording authority may be entered. Do not enter the date the deed is
> mailed to an attorney.
>
> Note: Whichever date is entered (recording or mailing) will be used in
> evaluating all other related time requirements and cannot be altered.
>
> Item 11 Date Foreclosure Proceedings (a) Instituted or (b) Date of
> Deed In Lieu. Check the appropriate box and enter the date of the
> first public action taken which was required by law to initiate
> foreclosure (e.g., filing a complaint or petition, recording a notice
> of default, or publication of a notice of sale) or the date the
> deed-in-lieu was recorded, whichever is applicable. If foreclosure was
> instituted and a deed in lieu was then obtained, check both blocks and
> enter both dates. If the foreclosure action was nullified under state
> law by the filing of a bankruptcy petition, enter the date on which
> the foreclosure action was re-instituted. If the deed-in-lieu is
> directly conveyed to the Secretary, the date the deed is mailed for
> recording may be used.\*
>
> Item 12 Holding Mortgagee Number (Payee). 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. Enter the complete 10-digit
> mortgagee number of the servicing mortgagee.
>
> Note: This number determines the name and address to which all
> computer generated letters and claim payment data are mailed.
> Information will be mailed only to the holding mortgagee if this Item
> is not completed.
>
> Item 14 Mortgagee Reference Number. 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. 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). 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. 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 the
> suffix code 700 through 799. Do not enter a date here if this is a
> Direct Endorsement or a converted co-insurance loan.
>
> Item 19 Expiration Date of Extension to Foreclose/ Assign. If an
> extension of time is requested by the mortgagee and granted by the
> local HUD office, enter the expiration date of that extension. The
> extension must be in writing. See paragraph 1-6.
>
> If bankruptcy is involved or if state or local laws delay action, the
> mortgagee need not obtain approval to extend the date to begin
> foreclosure. Enter the date 60 days (see note below) after the date of
> the release of bankruptcy, unless an additional extension period is
> approved by the local HUD office. The latest extension date must
> always be entered. This 60 day extension is applicable only when the
> bankruptcy precluded initiation of foreclosure within the timeframe.
> See paragraph 2-17. When an attempt at a Pre-Foreclosure Sale (PFS) is
> unsuccessful, the mortgagee has an automatic 60-day extension from the
> date of the notice of termination from the PFS program to initiate
> foreclosure.
>
> NOTE: In certain circumstances (terms of demand letter or requirement
> to send assignment letters) it may be appropriate to enter more than
> 60 days. See paragraph 2-17A, 2, a.\*
>
> Item 20 Date of Notice/Extension to Convey. If an extension of time to
> file the deed for record to HUD is approved by the local HUD office,
> enter the expiration date of the extension.
>
> Item 21 Date of Release of Bankruptcy. If Applicable. 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 - Check one to indicate the
> occupancy status as of the date in Item 9.\*
>
> Item 23 If Item 22 is \"No.\" Date of Local HUD Office Approval -
> Enter the date the local HUD office approved the occupied conveyance.
>
> If conveyed property is occupied without HUD approval, as indicated
> under 24 CFR 203.671(c), enter the 90th calendar day after mortgagee
> notification to HUD requesting occupied conveyance.
>
> Item 24 Is Property Conveyed Damaged? Yes or No -- Check \"yes\" if
> the damage falls into the categories listed in paragraphs 2-10 and
> 2-11.\*
>
> If there is no damage or if there is damage to the property which is
> not covered by the above sections, check \"no.\" In the latter case,
> specify on the reverse of Part A under \"Mortgagee\'s comments\", the
> type of damage, an explanation of why it does not fall into the
> categories listed in paragraphs 2-10 and 2-11, and if any immediate
> repairs are needed.\*
>
> \*Note: When there is damage to the property and Item 24 is checked
> \"no\", the mortgagee must attach to the copy of the Part A sent to
> the Field Office, copies of documentation relating to all protection
> and preservation work performed on the property.\*
>
> Item 25 If Item 24 is \"Yes,\" Date of (a) Local HUD Office Approval
> \[pursuant to 203.379(a)(1)\] or (b) Certification \[pursuant to
> 203.379(a)(2)\]
>
> Enter the date of the HUD approval letter or the mortgagee
> certification letter, whichever is applicable. Attach a copy of the
> certification letter to Part A (copy 1) which is sent to the local HUD
> office.
>
> Item 26 Type of Damage - Check appropriate box. If more than one type
> of damage, check the type that caused the greatest damage. Do not
> complete this Item if Item 24 is checked \"no.\"
>
> Item 27 Recovery or Estimate of Damage - A figure must be entered here
> if Item 24 is \"yes\" and 25(a) applies. If the local HUD office
> approved conveyance of the property in a damaged condition, enter the
> greater of HUD\'s estimate to repair the damage (obtained from the
> local HUD office) or the amount of the insurance recovery. If the
> insurance recovery is not received when this Item is completed,
> estimate the amount. AN AMOUNT MUST BE ENTERED. If Item 25(b) applies,
> enter the amount of the insurance recovery, if any. If insurance
> recovery has not been received, estimate the amount.

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

> Item 29 Deficiency Judgment Code. Enter the code number 1, 2, 3 or 4
> as appropriate. See below.
>
> Code 1 Enter \"1\" - If HUD authorized you to obtain a deficiency
> judgment, but you did not acquire one.
>
> Code 2 Enter \"2\" - If you obtained a deficiency judgment, but HUD
> did not authorize you to do so.
>
> Code 3 Enter \"3\" - If HUD authorized you to obtain a deficiency
> judgment and you were successful in obtaining one.
>
> Code 4 Enter \"4\" - If HUD did not authorize a deficiency judgment
> and you did not obtain one.
>
> Item 30 Authorized Bid Amount. Enter the amount of the CAFMV, if the
> local HUD office provided one.
>
> Item 31 Mortgagee Reported Curtailment Date - If the mortgagee failed
> to comply with a time requirement for any of the following
> circumstances: (1) reasonable diligence, (2) notice of foreclosure, or
> (3) failure to initiate foreclosure within nine months of default
> (within one year if default occurred prior to December 1, 1992) and
> subsequent payments advance the default date, enter the date the
> action should have been taken. If there was more than one failure,
> enter the earliest date on which a required action should have been
> taken.
>
> Item 32 Schedule of Tax Information. Enter complete information on the
> last amount paid for each type of tax or assessment. If a tax has not
> been paid because it was not available for payment before conveyance,
> show the exact title of the tax or assessment to which it is subject.
> If a tax was not paid because of a Homestead or similar exemption,
> identify the tax and enter the exemption type in the \"Amount Paid\"
> column.

-   Type of Tax/Tax Year. Enter the exact title of the tax or assessment
    with installment information, if applicable (e.g., county tax, first
    half or school district tax, second half) and the year for which the
    tax assessment was levied.

-   Collector\'s Property Identification. Enter the number used by the
    taxing authority to identify the property.

-   Amount Paid. Enter the amount paid for each type of tax or
    assessment (excluding penalties and interest) and attach a copy of
    the bill to the copy of Part A sent to the local HUD office. If no
    tax was paid because of a Homestead or similar exemption, enter the
    exemption type. If the tax was not paid for other reasons, enter
    \"None.\"

-   Period Covered, From - To. Enter the dates covered by the tax
    whether paid or not and without regard for the due date.

-   Date Paid. Enter the date of actual payment. All tax bills available
    before conveyance should be paid regardless of the due date. Tax
    bills received after the date the deed is filed for record should be
    sent to the local HUD office, identified by the FHA case number and
    the taxing authority identification number.

-   Internal Revenue Service (IRS) Lien. If there is an IRS tax lien,
    enter the date and the expiration of the lien on the reverse side of
    Part A under \"Mortgagee\'s Comments.\"

> Item 33 Mortgagor\'s Name, Social Security Number and Property
> Address. 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. See paragraph 1-8 for
> additional information.
>
> Item 34 Brief Legal Description of Property. Enter a brief description
> of the property. This information is found on the mortgage which
> should agree with the deed to HUD.
>
> Item 35 Name and Address of Mortgagee. Enter the name and address of
> the mortgagee, including the ZIP code.
>
> Item 36 Name and Address of Mortgagee\'s Servicer. Enter the name and
> address of the mortgagee\'s servicer, including the ZIP code and the
> name and telephone number of a contact person who can answer questions
> about the claims.
>
> Items 37 and 38 Mortgagee Official Signature, Date and Title, and
> Servicer Signature, Date and Title. 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 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 form HUD-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 last
> bankruptcy filing related to the release shown in item 21. If there is
> more than one bankruptcy, enter the filing and release dates in the
> mortgagee comments section.
>
> Item 41 If Conveyed/Assigned Damaged, Date Damage Occurred. Enter the
> date the mortgagee or its agent first became aware of damage to the
> property. This date should be available in the Inspection Reports. If
> there are no Inspection Reports because the property was occupied and
> the date of damage is not known, enter an estimated date and indicate
> in the Mortgagee Comments section that the date is an estimate.
>
> Item 42 Date HIP Canceled or Refused, if Applicable. Enter the date
> the fire insurance policy was canceled or refused by the insurer, if
> the property was damaged by fire and the mortgagee executes a
> certification pursuant to 24 CFR 203.379(a)(2) (a date will be entered
> in Item 25b).
>
> Item 43 Number of Living Units. Enter the number of living units in
> the property.
>
> Item 44 Status of Living Units. Indicate if the property is vacant or
> occupied for each living unit by checking the appropriate box. If the
> unit is occupied, enter the occupant\'s name. If the unit is vacant,
> enter the date vacated (as best as can be determined) and the date the
> mortgagee secured the property.
>
> Mortgagee\'s Comments, if any. Use this area to justify unusual
> circumstances as well as other information required by the
> instructions.

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

B.  Instructions for the Completion of form HUD 27011, Part B, Fiscal
    Data. The following Item-by-Item instructions are to be used when
    completing form HUD 27011, Part B, for conveyance claims. Prepare
    this Part after Parts C, D and E have been completed. The
    information entered in this Part is transferred from Parts C, D and
    E.

PART B FISCAL DATA

> Item 100 Mortgagor\'s Name and Property Address. Enter the
> mortgagor\'s name and property address as they appear in Item 33 of
> Part A.
>
> Items 101 & 102 FHA Case Number and Section of Act Code. 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. Enter the mortgagee\'s
> Reference Number as it appears in Item 14 of Part A.
>
> Item 104 Date Form Prepared. Enter the date Part B is prepared and
> submitted to HUD (See Paragraph 2-2).
>
> Item 105 Expiration Date to Submit Title Evidence, if applicable. If
> an extension of time to submit title evidence or Part B was requested
> and approved by the local HUD office, enter the date the approval
> expires.

Item 106 Check if Supplemental. Not applicable.

> Item 107 Adjustment to Loan Balance (if different from block 17 on
> Part A). If the amount of the unpaid principal balance reported in
> Item 18 on Part A is incorrect, enter the difference between the
> unpaid principal balance allowed by HUD in the Initial Payment and the
> amount that should have been paid. The adjustment may be a deduction
> (Column A) or an addition (Column B). If there is an adjustment,
> attach copies of the payment ledger or documents supporting the
> adjustment to the original Part B. If the capitalization method was
> used, also include a worksheet showing the re-application of payments
> to principal and interest.
>
> Item 108 Sale/Bid Price or Appraisal Value (for Coinsurance or
> Non-conveyances). Not applicable.
>
> Item 109 Escrow Balance (as of Date in Block 10, Part A). Enter amount
> remaining in escrow account as of the date the deed is filed for
> record. 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, buy down 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.

-   See Item 123 for instructions on how to adjust the claim for
    unapplied Section 235 assistance payments.

-   Payment 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.

-   DO 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.

-   Illustration of Mortgagee Advances:

  ----------- ----------- ----------- ----------- ------------ -------------
  Date Due    Date Paid   Interest    Escrow      Escrow       Balance
                                      Principal   Adjustment   

  Balance                                                      \$151.60
  Forward                                                      

  01/01/83    02/03/83    \$73.32     \$21.09     \$70.69      \$222.29

  08/03/83                                        \$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 \_\_\_\_\_\_\_\_\_\_\_\_\_ First 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. amount of
> disbursements and debenture interest appearing in Part C, Item 264.
> Note on the reverse side of this part any authorization obtained from
> the local HUD office for approvals to exceed allowable amounts.
>
> Item 111 Total Disbursements from Item 305, Part D. Enter the total
> amount paid and debenture interest appearing in Part D, Item 305.
>
> Item 112 Attorney/Trustee Fees Paid From Line 306, Part D. Enter the
> amount and debenture interest appearing in Part D, Item 306. HUD WILL
> CALCULATE THE TWO-THIRDS ALLOWANCE FOR BOTH EXPENSES AND INTEREST.
>
> Item 113 Foreclosure, Acquisition, Conveyance and Other Costs from
> Line 307, Part D. Enter the amount and debenture interest appearing in
> Part D, Item 307. HUD WILL CALCULATE THE TWO-THIRDS ALLOWANCE FOR BOTH
> EXPENSES AND INTEREST.
>
> Item 114 Bankruptcy Fee (if applicable) from Line 310, Part D. Enter
> the amount of bankruptcy fees paid and debenture interest appearing in
> Part D, Item 310. HUD WILL CALCULATE THE TWO-THIRDS ALLOWANCE FOR BOTH
> EXPENSES AND INTEREST.
>
> Item 115 Rental Income. Enter any income from the rent of the property
> between the date foreclosure proceedings were instituted (or property
> otherwise acquired) and the date the property was conveyed to the
> Secretary.
>
> Item 116 Rental Expense. Enter rental expenses incurred, if any. if
> there is no entry in Item 115, make no entry in this Item. This entry
> cannot exceed the amount shown in Item 115.
>
> Item 117 Total Taxes on Deed from Line 308, Part D. Enter the total
> amount paid and the debenture interest shown in Item 308, Part D.
>
> Item 118 Recovery or Damage (if not reported on Part A). Use Line 119
> if Reported on Part A. If not reported in Item 27 of Part A enter the
> amount of HUD\'s estimate of damage, insurance recovery or any other
> recovery the mortgagee may have received in connection with damage to
> the property.
>
> Item 119 Estimate or Recovery from Part A. Complete this Item only if
> the property was damaged at the time of conveyance and an insurance
> recovery has been received. Its purpose is to adjust the amount
> entered in Item 27 to reflect the amount of insurance proceeds
> actually received. However, the adjustment may not result in a
> deduction from insurance benefits of a total amount less than HUD\'s
> estimate of the cost of repairs. See Paragraph 2-12B.
>
> No entry should be made under the following circumstances:

1.  There has been and will be no insurance recovery.

2.  The actual insurance recovery is the same as the amount of recovery
    or HUD\'s estimate of damage reported in Item 27.

> If it is necessary to complete this Item, make the following entries:

1.  Estimate of Recovery from Part A. Enter HUD\'s estimate of the cost
    of repairs or the insurance recovery, whichever is greater, reported
    in Item 27.

2.  Total Insurance Recovery. Enter the total amount of insurance
    proceeds received.

3.  Adjusted Amount (plus or minus). Enter the difference between the
    \"Estimate of Recovery\" and the \"Total Insurance Recovery\". If
    the \"Total Insurance Recovery\" is greater, enter the difference in
    Column A; if it is less, enter it in Column B.

> Example 1. The Total Insurance Recovery is more than HUD\'s estimate
> of repair costs and the mortgagee\'s estimate of recovery.
>
> Assume Insurance Recovery of \$8,820, HUD\'s estimate of \$8,650 and
> an Estimate of Recovery of \$8,500.
>
> Estimate of Recovery from Part A \$8,650
>
> Total Insurance Recovery [\$8,820]{.underline}
>
> Adjusted Amount (enter in Column A) (\$170)
>
> ====
>
> Example 2. The Total Insurance Recovery is less than the mortgagee\'s
> Estimate of Recovery but more than HUD\'s estimate of repair costs.
> Assume Insurance Recovery of \$8,650, HUD\'s Estimate of \$8,350, and
> an Estimate of Recovery of \$8,820.

Estimate of Recovery from Part A \$8,820

> Total Insurance Recovery [\$8,650]{.underline}

Adjusted Amount (enter in Column B) \$170

> ====
>
> Example 3. The Total Insurance Recovery is less than HUD\'s Estimate
> of Repair Costs and the mortgagee\'s Estimate of Recovery, but the
> mortgagee\'s Estimate of Recovery is more than HUD\'s estimate of
> repair costs. Assume Insurance Recovery of \$8,350, HUD\'s Estimate of
> \$8,650, and an Estimate of Recovery of \$8,820.
>
> Estimate of Recovery from Part A \$8,820
>
> Total Insurance Recovery [\$8,350]{.underline}
>
> Adjusted Amount \$470
>
> ====
>
> The adjusted amount of \$470 cannot be entered in Column B because
> this would result in a total deduction from insurance benefits of
> \$8,350 (\$8,820 - \$470 = \$8,350) and at least \$8,650 (HUD\'s
> estimate) must be deducted. Therefore, the
>
> difference between mortgagee\'s estimate (the amount deducted in Part
> A) and HUD\'s estimate (\$8,820 - \$8,650 = \$170) should be entered
> in Column B.
>
> Item 120 Special Assessments (DO NOT USE FOR COINSURANCE) from Line
> 309, Part D. 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. See Paragraph 2-19.

-   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 institution of foreclosure proceedings;

    2.  the date of acquisition of title and possession by deed-in-lieu
        of foreclosure;

    3.  the date the property was acquired by the Commissioner under a
        direct conveyance from the mortgagor;

    4.  90 calendar days following the date the mortgagor fails to meet
        the requirement of the forbearance agreement; or

    5.  such other date as the local HUD office may approve in writing
        prior to expiration of the 90-calendar day period (24 CFR
        203.402a).

        -   Rate. Enter the mortgage interest rate as it appears on the
            mortgage note.

> Compute the amount of mortgage interest due as instructed in Paragraph
> 2-20 and enter in Column C.
>
> Item 122 Mortgage Insurance Premiums. Enter total from Item 311, Part
> D.
>
> Item 123 Unapplied Section 235 Assistance Payments. Enter unapplied
> assistance payments in Column A, if applicable. See paragraph 2-21.
>
> Item 124 Overpaid Section 235 Assistance Payment. 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 -- 128 Not applicable. Any amounts appearing on these lines
> will be disallowed.
>
> Item 129 Additional Closing Costs at Settlement. Enter the Total from
> Line 408 Part E. Do not calculate debenture interest on this amount.
>
> Item 130 Appraisal Fee. Enter total from line 409, part E, if
> applicable. Interest may be entered in Column C.
>
> Item 131 Deficiency Judgment Costs/Fees. Enter the total from Line
> 410, Part E, if applicable. Interest may be entered in Column C.

Item 132 Reserved.

> Item 133 Contact: Holding Mortgagee, Name and Telephone Number; or
> Contact: Servicing Mortgagee, Name and Telephone Number. 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 -- 136 Enter the totals of Columns A - Deductions; B --
> Additions; and C - Interest.
>
> Item 137 Net Claim Amount (Columns B - A + C). The amount HUD actually
> pays will differ from what the mortgagee enters here because of
> possible interest curtailments, disallowed expenses, HUD\'s
> calculation of two-thirds allowances on attorney/trustee fees,
> foreclosure costs and bankruptcy fees, and additional debenture
> interest calculated by HUD to the date of claim settlement.
>
> Items 138 & 139 Mortgagee\'s Official Signature, Date and Title
> (signature not necessary if signed by a servicer) or Servicer
> Signature, Date, and Title. See instructions for Part A, Items 37 and
> 38.

C.  Instructions for the Completion of form HUD 27011, Part C, Support
    Document. The following Item-by-Item instructions are to be used
    when completing form HUD-27011, Part C, for conveyance claims.
    Expenditures may be entered on Part C 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 to the date Part B is filed unless interest
    is curtailed.

> No expenses should be incurred and no work performed on the property
> after the date the deed is filed for record. This does not preclude
> reimbursement for expenses incurred or work completed before
> conveyance but not paid until after conveyance.
>
> If the local HUD office instructs the mortgagee to perform a specific
> service after the date of conveyance, a notation must be made on the
> reverse of the form under \"Mortgagee\'s Comments\".
>
> Each expense listed for reimbursement must be Itemized and sufficient
> information must be provided for computation of debenture interest.
> See Paragraph 1-7.

PART C SUPPORT DOCUMENT

> Item 200 Mortgagor\'s Name and Property Address. Enter the
> mortgagor\'s name and property address as they appear in Item 33 of
> Part A.
>
> Items 201 & 202 FHA Case Number and Section of Act Code. Enter the FHA
> case number and Section of the Act Code as they appear in Items 2 and
> 3 of Part A.
>
> Item 203 Mortgagee\'s Reference Number. Enter the mortgagee\'s
> reference number as it appears in Item 14 of Part A.
>
> Item 204 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 2-2 or within the extended
> time requirements (See Paragraph 1-6). 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 205 Debenture Interest Rate. Using the Debenture Interest Rate
> Table provided in Appendix 4 of these instructions, 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. The debenture
> interest rate can also be found on the Part A advice of payment.
>
> Items 206 -261 Disbursements for Protection and Preservation. Enter
> all inspection, protection and preservation expenses for which the
> mortgagee is not responsible. This includes debris removal, replacing
> broken glass, protecting plumbing and other operating systems against
> damage by freezing, care of lawns and shrubs, repair of leaking roof,
> etc. Describe the service performed, the date it was completed and the
> date paid. See paragraph 2-11 for the nature of reimbursable
> expenditures and cost limits. Enter expenses paid to board up the
> property if the field office gave prior approval.
>
> Enter the date of each inspection and indicate whether it is an
> Initial, Occupancy or Vacancy inspection. See paragraphs 2-10 and
> 2-11. A copy of an inspection report must be maintained by the
> mortgagee for each inspection Itemized.

-   Date Paid. A separate entry must be made for each payment. Enter the
    date the check was disbursed. If an expenditure or advancement was
    made prior to the date of default, enter the date of default and
    enter the actual date paid in parentheses following the description
    (See Paragraph 2-5C).

-   Date Work Completed - If date is not available on the invoice,
    obtain this date from vendor or contractor. This is not necessarily
    the date of billing, but the actual date the work was completed.

-   Description of Service Performed - Enter a description of the Items
    or types of repairs and services performed, i.e., inspections.
    Additional space is provided on reverse of form.

-   Amount Paid - Actual payment amounts are to be entered. This
    information will be transferred to Part B, Fiscal Data.

-   Debenture 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 in Item 204. Daily Interest Rate
    Factor tables are provided in Appendix 8 of these instructions 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 submission of the claim or the curtailment date.

> Note: If the claim includes mortgage interest under a special
> forbearance plan (Item 121), debenture interest is computed from the
> date of institution of foreclosure or acquisition of title by a
> deed-in-lieu, or from the date of expenditure, whichever is later.
>
> Item 262 Subtotals. If reverse side of form is used to list protection
> and preservation costs, add amount paid and debenture interest
> columns.
>
> Item 263 Subtotals Brought Forward. If reverse side of form is used,
> bring subtotals appearing in Item 262 to this line.
>
> Item 264 Totals. Total the \"amount paid\" and \"debenture interest\"
> columns. Enter the totals on Part B, Item 110, Column C when
> completing Part B, Fiscal Data.
>
> Items 265 & 266 Contact: Holding Mortgagee, Name and Telephone Number;
> or Contact: Servicing Mortgagee, Name and Telephone Number. 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 267 & 268 Mortgagee Official Signature, Date and Title (not
> necessary if signed by servicer) or Servicer Signature, Date and
> Title. A signature must appear in at least one of these blocks,
> however, it is acceptable if both the mortgagee and the servicer wish
> to sign this form.
>
> Mortgagee\'s Comments, if any - Use this area to justify extremely
> large expenditures, as well as other information required by these
> instructions.

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

D.  Instructions for the Completion of form HUD 27011, Part D, Support
    Document (Continuation 1). 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 to the date Part B is
    filed unless interest is curtailed.

-   Date Paid - A separate entry must be made for each payment. Enter
    the date the check was disbursed. If an expenditure or advancement
    was made prior to the date of default, enter the date of default and
    enter the actual date paid in parentheses following the description
    (See Paragraph 2-5C).

-   Description of Service Performed - Enter a description of the Items
    or types of services performed. Additional space is provided on
    reverse of form.

-   Amount Paid - Actual payment amounts are to be entered. This
    information will be transferred to Part B, Fiscal data.

-   Debenture 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 in Item 304. Daily Interest Rate
    Factor tables are provided in Appendix 8 of these instructions 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 submission of the claim or the curtailment date.

> Note: If the claim includes mortgage interest under a special
> forbearance plan (Item 121), debenture interest is computed from the
> date of institution of foreclosure or acquisition of title by a
> deed-in-lieu, or from the date of expenditure, whichever is later.

-   Total the \"amount paid\" and \"debenture interest\" columns.

PART D SUPPORT DOCUMENT (CONTINUATION 1)

> Items 300 & 301 FHA Case Number and Section of Act Code. 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. Enter the mortgagee\'s
> reference number as it appears in Item 14 of Part A.
>
> Item 303 Debenture Interest Rate. Using the Debenture Interest Rate
> Table provided in Appendix 4 of these instructions, 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. The debenture
> interest rate can also be found on the Part A advice of payment.
>
> Item 304 Date. 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 2-2 or within the extended
> time requirements (See Paragraph 1-6). 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, Payments for
> Deed-in-Lieu and Other Disbursements Not Shown Elsewhere. (Do not
> include any penalties for late payment). Itemize all disbursements in
> these categories. Do not include disbursements which were paid from
> available escrow funds. No expense should be incurred after the date
> the deed is filed for record (Item 10), except for costs associated
> with evictions or where the local HUD office instructs you to take an
> action. See explanation for escrow account, Part B, Item 109. See
> paragraph 1-10 for allowable attorney eviction fees.
>
> Item 306 Attorney/Trustee Fee. Itemize the fees paid to attorneys and
> trustees in connection with foreclosure or acquisition of title and
> conveyance of the property to the Secretary. Do not enter fees for
> bankruptcy or eviction in this item. If the fee for acquisition and
> conveyance is within the amount HUD approved for the area, do not
> itemize the elements of the fee. If attorney fees exceed those
> approved by HUD for routine foreclosures see paragraph 1-10. 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 and possession of
> the property in the name of the mortgagee, and to convey any evidence
> of title to the Secretary except taxes paid on deeds included in Item
> 308 and disbursements shown in Item 306. These costs must be itemized
> e.g., title policy, resale title binders, title search fees (if
> separate costs), publication, service of process, etc. 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. Enter amounts paid for taxes imposed upon any
> deeds or other instruments by which the property was acquired by the
> mortgagee and transferred or conveyed to the Secretary. (Note: Deed
> taxes should not be included in Item 307.)
>
> 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.
>
> Item 310 Bankruptcy. Itemize the bankruptcy fees paid. There must be
> an entry in Item 40. If the bankruptcy fees exceed those approved by
> HUD for routine bankruptcies, see paragraph 1-10. HUD WILL CALCULATE
> THE TWO-THIRDS ALLOWANCE FOR EXPENSES AND INTEREST (24 CFR 203.402).
>
> 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 the deed is filed for record.

E.  Instructions for the Completion of form HUD 27011, Part E Support
    Document (Continuation 2). The following item by item instructions
    are to be used when completing form HUD-27011, Part E for conveyance
    claims initiated under CWCOT procedure or the Preforeclosure Sale
    program and for claims involving approved deficiency judgment
    procedures.

PART E SUPPORT DOCUMENT (Continuation 2)

> Items 400 & 401 FHA Case Number and Section of Act Code. 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. Enter the mortgagee\'s
> reference number as it appears in Item 14 of Part A.
>
> Item 403 Debenture Interest Rate. Using the Debenture Interest Rate
> Table provided in Appendix 4 of these instructions, determine the rate
> at the date of firm commitment and the rate at the date of
> endorsement, then enter the higher rate.
>
> 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 2-2 or within the extended
> time requirements (See Paragraph 1-6). 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).
>
> Items 405 -- 407 Overhead Costs; Amounts Due from Buyer at Closing;
> Amounts Owed to Buyer at Closing. Not applicable.
>
> Item 408 Additional Closing Costs. This item is only used in
> unsuccessful preforeclosure sale cases. Enter the \$250 administrative
> fee, if applicable. Do not enter interest for this item.
>
> Item 409 Appraisal Fee. Enter the amount of the appraisal fee and date
> paid only if you were instructed to obtain an appraisal by the local
> HUD office while complying with the CWCOT procedures. If debenture
> interest is payable the amount of interest may be entered in Line 130,
> Column C of Part B.\*
>
> Item 410 Deficiency Judgment Costs/Fees. Enter a figure here only if
> the local HUD office authorized you to obtain a deficiency judgment.
> The allowable costs and fees are as follows: (1) cost of reasonable
> and customary attorney fees which relate only to the obtaining of the
> deficiency judgment; (2) additional filing or recording fees directly
> related to the deficiency judgment; (3) if local law required a
> judicial foreclosure in order to obtain a deficiency judgment, those
> costs directly related to the judicial foreclosure, provided that
> judicial foreclosure would not, otherwise, have been necessary. If
> debenture interest is payable, the amount of interest may be entered
> in Line 131, Column C of Part B.\*

Items 411 & 412 Reserved.

# CHAPTER 3: ASSIGNED HOME MORTGAGES {#chapter-3-assigned-home-mortgages .unnumbered}

[]{#__RefHeading___Toc167867603 .anchor}3-1 GENERAL.
[**(TOP)**](#TABLEOFCONTENTS)

A mortgagee shall be entitled to receive insurance benefits upon
assignment of a defaulted mortgage to the Secretary if HUD agrees to
accept the assignment (Section 230 of the National Housing Act, 12 USC
1715, 24 CFR 203.650 through 203.660, 203.664 and 203.665). HUD will
also accept an assignment if the Secretary previously sold the mortgage
or the property and the mortgagee is unable to complete foreclosure
because of a defect in the mortgagee instrument, a defect

in the mortgage transaction, or a defect in title which existed prior to
the time the mortgage assignment was filed for record (24 CFR 203.390).
The procedures in this chapter will be followed for filing both of these
types of assignment claims.

[]{#__RefHeading___Toc167867604 .anchor}3-2 TIME REQUIREMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

The mortgagee must comply with the following time requirements when
submitting a claim involving an assigned mortgage which is in default.
Failure to comply will result in curtailment of debenture interest to
the date the action should have been taken or to the date to which it
was extended by HUD \[24 CFR 203.404(a)(4)\].

A.  File the mortgage assignment for record within 30 calendar days
    after the date of HUD\'s written agreement to accept the assignment
    or within such additional time as HUD may authorize in writing.

B.  Submit the title evidence with attachments to the local HUD office,
    ATTN: Field Counsel, on the date the mortgage assignment is filed
    for record.

C.  Submit the originals of Parts A and B, form HUD-27011, with
    attachments, including the MIC and title submission certification to
    HUD Headquarters on the date the mortgage assignment is filed for
    record. HUD expects to receive these documents in HUD Headquarters
    within 10 days of the date of assignment when properly mailed.
    Therefore any claims received after ten calendar days from the date
    of the assignment will be considered late.

D.  Submit a copy of Parts A and B and the original of Part D, form
    HUD-27011, with attachments, to the local HUD office, ATTN: Single
    Family Loan Management Branch on the date the mortgage assignment is
    filed for record.

[]{#__RefHeading___Toc167867605 .anchor}3-3 EXTENSION OF TIME
REQUIREMENTS.

If the mortgagee cannot comply with the time requirement for paragraph A
above because of circumstances beyond its control, it should submit form
HUD-50012, Mortgagee\'s Request for an Extension of Time, to the local
HUD office ATTN: Single Family Loan Management Branch to request an
extension of time. See paragraph 1-6.

[]{#__RefHeading___Toc167867606 .anchor}3-4 ASSIGNMENT REQUIREMENTS.

A.  The Security Instrument (Mortgage).

    1.  The security instrument, together with any amendments or
        modification thereof, shall be assigned to \"The Secretary of
        Housing and Urban Development of Washington, D.C., his/her
        successors and assigns\", with the address of the local field
        office and \"Attention: Single Family Loan Management Branch\".
        (In those jurisdictions where it is necessary to name the person
        who holds such office, the assignment should be made to the
        person holding such office \"as Secretary of Housing and Urban
        Development, his/her successors and assigns\" at the time of the
        preparation of the assignment form.)

    2.  The assignment of the security instrument must be in a form
        which satisfactorily meets the legal requirements of the
        jurisdiction where the property is situated, and must be a valid
        assignment. The assignment must contain the following warranty:

> \"Without recourse or warranty, except that the undersigned hereby
> warrants that:

a.  No act or omission of the undersigned has impaired the validity and
    priority of the said security instruments;

b.  The security instrument is a good and valid first lien and is prior
    to all mechanics\' and material men's liens filed of record
    regardless of when such liens attach, and prior to all liens,
    encumbrances, or defects which may arise except such liens or other
    matters as have been approved by the assignee hereunder;

c.  The sum of \_\_\_\_\_\_\_\_ Dollars \[in blank space insert amount
    of the unpaid principal balance\] together with the interest from
    the \_\_\_\_\_\_\_\_ day of \_\_\_\_\_\_\_\_, 20\_\_, at the rate of
    \_\_\_\_\_\_ % per annum, computed as provided in the Note, is
    actually due and owing under the said Note;

d.  The undersigned has a good right to assign the said security and
    credit instruments.\"

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B.  The Credit Instrument (Note). The original credit instrument shall
    be endorsed to the Secretary of Housing and Urban Development in the
    following manner:

> \"All right, title and interest of the undersigned to the within
> credit instrument is hereby assigned to the Secretary of Housing and
> Urban Development of Washington, D.C., his/her successors and
> assigns.\" (In those jurisdictions where it is necessary to name the
> person holding such office, the assignment should be made to the
> person holding such office \"as Secretary of Housing and Urban
> Development, his/her successors and assigns,\" at the date of the
> preparation of the assignment form.)
>
> (If the endorsement is dated, it must bear the same date as the date
> of the execution of the assignment of the security instrument.)

[]{#__RefHeading___Toc167867607 .anchor}3-5 TITLE EVIDENCE.

HUD will accept an assignment and pay the insurance claim before
examining the title evidence to determine whether it complies with
Federal requirements. In the event title deficiencies appear after the
claim has been paid, the mortgagee will be required to correct the
deficiencies or reimburse HUD. (24 CFR 203.363 and 203.366)

A.  Submission to Field Office. Title evidence held by the mortgagee
    must be sent to the local HUD office, ATTN: Field Counsel, on the
    date the assignment is filed for record. The title evidence must be
    accompanied by:

    1.  The original security and credit instruments, including
        endorsement of the Note to HUD.

    2.  A copy of the assignment to HUD that was submitted for
        recordation. NOTE: The original recorded assignment must be sent
        to the local HUD office, ATTN: Field Counsel, as soon as it is
        received from the recording authority.

    3.  Copies of all intervening assignments.

    4.  The mortgagee\'s original title policy evidencing the loan to be
        a first lien of record. The title evidence need not be extended
        to reflect the assignment to HUD.

> Note: Certificate of title with master policies or ALTA short form
> policies are not acceptable forms of title evidence for HUD.

5.  A copy of Part A.

6.  If the property is damaged a letter certifying that the conditions
    of 24 CFR 203.379 (a)(1) or (2) have been met.

7.  If the mortgage or the property was sold by HUD and 24 CFR 203.390
    applies, a statement that describes the defect or impairment of
    title.

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B.  Title Submission Certificate. The mortgagee must execute a Title
    Submission Certificate in the form shown in Appendix 16 and submit
    it to HUD Headquarters and the local HUD office with Parts A and B
    of form HUD-27011. This certification will inform both offices that
    the title evidence has been sent to Field Counsel and is awaiting
    approval.

C.  Title Rejection. If Field Counsel rejects the title evidence as
    submitted the mortgagee must resolve all reported deficiencies.

> If the deficiencies are not resolved within 30 days the mortgage may
> be reassigned and the mortgagee will be required to reimburse HUD for
> all insurance benefits and costs. When the deficiencies have been
> resolved the mortgagee may resubmit the claim but interest will be
> computed only to the date an acceptable assignment should have been
> recorded.

D.  Title Approval. After the title evidence has been approved the field
    office will send the mortgagee a title approval letter which must be
    retained in the claim records file.

[]{#__RefHeading___Toc167867608 .anchor}3-6 OCCUPANCY OF PROPERTY.

To be eligible for assignment, the property must be the mortgagor\'s
principal place of residence unless this criterion is waived by HUD.
Therefore, the property must be occupied by the mortgagor unless HUD
waives the criterion. HUD also makes an exception concerning the
occupancy requirement if the mortgage is being assigned pursuant to 24
CFR 203.390.

[]{#__RefHeading___Toc167867609 .anchor}3-7 CONDITION OF PROPERTY AT
ASSIGNMENT. (24 CFR 203.379)

When a mortgage is assigned to the commissioner, the property shall be
undamaged by fire, earthquake, flood, tornado, hurricane or damage
caused by the mortgagees failure to take action to protect and preserve
a vacant or abandoned property if the mortgage was insured on or after
January 1, 1977.

A.  Repairs by Mortgagee.

    1.  Before assigning the mortgage to HUD, the mortgagee must repair
        such damage at its own cost. \[24 CFR 203.379(a)\]

    2.  The mortgagee is not required to repair damage resulting from
        causes other than those itemized above unless the repairs are
        requested in writing by HUD, or the repairs are necessary to
        protect and preserve the property until assignment of the
        mortgage to HUD. The cost of any such repairs should be entered
        in Part C. If the property is damaged by such other causes, Item
        24 must be marked \"No\" and the nature of the damage and the
        reason for denial of responsibility must be explained in the
        Mortgagee\'s Comments section of Part A.

    3.  HUD will not reimburse the mortgagee for repairs to or
        maintenance of property occupied by the mortgagor.

B.  Unrepaired Assignment.

If the prior approval of HUD is obtained, property damaged by the causes
itemized in paragraph A-1 may be in an unrepaired condition at the time
of assignment and there will be deducted from the insurance benefits,
HUD\'s estimate of the cost to repair the damage or any insurance
recovery received by the mortgagee, whichever is greater. \[24 CFR
203.379(a)(1)\] The deduction will be limited to the amount of insurance
recovery if the property has been damaged by fire and the mortgagee
certifies that the conditions of 24 CFR 203.379(a)(2) relating to
cancellation or

reduction of insurance coverage are met. The mortgagee should request
from the local HUD office their estimate of the cost of repairing the
damage, and permission to convey the property without repairs. HUD\'s
estimate must be entered in Item 27, Part A.

[]{#__RefHeading___Toc167867610 .anchor}3-8 PROTECTION AND PRESERVATION
OF PROPERTIES.

When a mortgage is accepted for assignment the property is usually
occupied by the mortgagor and not subject to protection and preservation
requirements. (24 CFR 203.377) There may be occasions, however, where
the property is vacant at the time of, or prior to, assignment of the
mortgage.

A vacant property must be protected and preserved while it is in the
possession of the mortgagee so that it will not be damaged at the time
of assignment. A prudent mortgagee will protect and preserve a vacant
property to avoid potential damage to the property and surcharges to
their claim. HUD will reimburse the mortgagee for required preservation
and protection costs within locally established limits when these
expenditures are adequately documented. See Chapter 2 for detailed
requirements.

[]{#__RefHeading___Toc167867611 .anchor}3-9 HAZARD INSURANCE.

Do not cancel the hazard or flood insurance policy. The mortgagee must
notify the insurance carrier of the change in mortgagee and must
authorize the carrier to amend the loss payable clause substituting as
mortgagee \"Secretary of Housing and Urban Development his/her
successors and assigns IN CARE OF (and insert the address of the local
HUD field office)\". The amendment should be effective as of the date
the mortgage is assigned. A copy of the letter from the mortgagee to
each insurance carrier, authorizing the amendment, should be submitted
to the local HUD office, Single Family Loan Management Branch with the
original insurance policy.

[]{#__RefHeading___Toc167867612 .anchor}3-10 ASSIGNMENT COSTS.

HUD will reimburse mortgagees for such costs and attorney\'s fees as
were properly incurred in connection with the defaulted mortgage and its
assignment to HUD.

A.  Allowable Costs. A complete listing of allowable or unallowable
    costs would not be practical because procedural requirements and
    terminology vary in different jurisdictions. Generally, HUD will
    reimburse a mortgagee for:

    1.  Fees which must be paid to public officials such as recorders of
        deeds or public trustees.

    2.  Costs which are required by law.

    3.  Fees and costs which are necessarily incurred and are reasonable
        and customary in the area such as attorney fees.

B.  Costs Not Reimbursable. HUD will not reimburse a mortgagee for:

    1.  Fees and costs which exceed reasonable and customary fees for
        the area. If a fee exceeds the customary fee for the area, for
        adequate reason, the excess may be paid by filing a supplemental
        claim (see paragraph 1-12).

    2.  Costs which are not necessarily incurred or are required because
        of dilatory service, such as courier service or express mail or
        property inspection by attorneys.

    3.  Costs which are overhead items such as postage, telephone,
        duplicating or collection services. The attorney\'s or
        trustee\'s overhead costs should be included in their fee.

    4.  Costs for Title Policy.

[]{#__RefHeading___Toc167867613 .anchor}3-11 NOTICE TO MORTGAGOR.

A.  On the day the assignment is filed for record notify the mortgagor
    that HUD is now the mortgagee and HUD will provide payment
    instructions.

B.  If the mortgagee receives payments from the mortgagor after the
    assignment is filed for record send the funds, with the FHA case
    number, to HUD through the HUD Lock Box at the following address:

Payment Processing Center P.O. Box 105652 Atlanta, Georgia 30348

[]{#__RefHeading___Toc167867614 .anchor}3-12 NOTICE TO TAXING AUTHORITY.

The mortgagee must instruct the taxing authority to send tax bills to
the local HUD office. Any tax bills received by the mortgagee after the
assignment was filed for record must be sent by the mortgagee to the
local HUD office.

[]{#__RefHeading___Toc167867615 .anchor}3-13 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.  Any mortgage interest accrued and unpaid at the time of
        assignment,

    2.  Any advances made under the mortgage and approved by HUD,

    3.  Reimbursement for approved costs and attorney\'s fees, and

    4.  Debenture interest on the net claims amount (excluding mortgage
        interest) from the date of assignment to the date of payment
        unless such interest is curtailed because of the mortgagee\'s
        failure to meet the time requirements identified in paragraph
        3-2.

B.  Deducting the Following Items.

    1.  Any cash retained by the mortgagee, including amounts held or
        deposited for the account of the mortgagor or to which it is
        entitled under the mortgage transaction that have not been
        applied in reduction of principal, and

    2.  Any damage or insurance recovery reported in Item 27.

[]{#__RefHeading___Toc167867616 .anchor}3-14 DOCUMENTS TO BE SUBMITTED.

It is very important that all required documentation be forwarded to the
appropriate locations 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 a claim.

All documents must be sent to HUD Headquarters or the local HUD Office
on the date the assignment is filed for record, as follows:

A.  TO HUD HEADQUARTERS.

    1.  The original Parts A and B.

    2.  The original Mortgage Insurance Certificate.

    3.  The Title Submission Certificate.

    4.  Worksheet showing reallocation of mortgage payments if
        capitalized method of accounting is used.

    5.  Copy of the Mortgage Note if the Mortgage is a GPM, ARM or GEM.

B.  TO THE LOCAL HUD OFFICE, ATTN: SINGLE FAMILY LOAN MANAGEMENT BRANCH.

    1.  Copies of Parts A and B.

    2.  The original of Part D.

    3.  A copy of the Title Submission Certificate.

    4.  The original of all hazard insurance policies and a copy of the
        notice to the insurance carrier requesting that HUD be named
        beneficiary in the mortgagee clause.

    5.  Copy of the last tax bill paid.

    6.  All ledger cards or payment records. If capitalization method is
        used, attach a worksheet showing allocation of payments per
        mortgage terms.

    7.  Section 235 loans. If not provided with the assignment request
        documents, send the last two recertifications (Forms HUD-93101,
        HUD-93101A); employment verifications; form HUD-93115, Notice to
        Homeowner (where appropriate); and form HUD-93114, Notice of
        Suspension, Termination and Reinstatement of Assistance Payments
        Contract (where appropriate).

    8.  If the case is subject to Section 235 recapture of assistance
        payments, provide the total dollar amount of assistance applied
        to the account through the date of assignment.

    9.  Copy of buy down agreement, if any, and all documents which
        relate to the payment amount or application of the payments.

    10. Any additional information which HUD may require.

C.  TO THE LOCAL HUD OFFICE, ATTN: FIELD COUNSEL.

    1.  Original mortgage.

    2.  Original note with endorsement.

    3.  Copy of assignment to HUD.

    4.  Copies of all intervening assignments.

    5.  Mortgagee\'s original title policy evidencing the loan to be the
        first lien of record.

    6.  A copy of Part A.

    7.  A copy of HUD\'s letter approving assignment of a damaged
        property under 24 CFR 203.379(a), if applicable.

    8.  The mortgagee\'s certificate that the conditions of 24 CFR
        203.379(a)(2), relating to fire damage, have been met, if
        applicable.

    9.  A statement relating to title defects if 24 CFR 203.390 applies.

> NOTE: See paragraph 1-8 for file documentation requirements.
>
> The following Table (Table 3.1) illustrates the document submission
> requirements for assignment claims.

[]{#__RefHeading___Toc167867617 .anchor}3-15 CLAIM PREPARATION -
ASSIGNMENTS.

The claim must be completed as described below using form HUD-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. Note paragraph 1-3 concerning pre-screening
of applications.

In many instances, the instructions provided in Chapter 2, Conveyances
apply equally in assignment 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.

Note: Mortgagees do not calculate debenture interest in assignment
claims.

A.  Instructions for the Completion of form HUD 27011, Part A, Initial
    Application. The following item by item instructions are to be used
    when completing form HUD 27011, Part A, for assignment claims.

PART A - INITIAL APPLICATION

> Item 1 Claim Type. Place an \"X\" in the space for Claim Type 02 =
> Assignment.
>
> Items 2 and 3 FHA Case Number and Section of Act Code. 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 or 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. Enter the applicable code number from the
> default reasons listed below. If code 15 is used, explain the reason
> on the reverse of Part A under \"Mortgagee\'s Comments.\"

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 a 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 (explain in Mortgagee comments)
>
> Item 5 Endorsement Date. 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 the form HUD 27011 is
> completed and submitted to HUD. To avoid debenture interest
> curtailment, Part A must be submitted on the same day the deed is
> filed for record, or mailed to the recording authority. See paragraph
> 2-2.
>
> Note: Although HUD permits 10 days from this date to receive the form
> HUD-27011 before curtailing interest for late submission, you are
> required to enter in Item 6 the date of the actual submission
> (mailing) date of the form.\*
>
> Item 7 Due Date of First Payment to Principal and Interest. 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. 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. Not
applicable.

> Item 10 Date Deed or Assignment Filed for Record or Date of Closing or
> Appraisal. Enter the date the deed conveying the property to the
> Secretary is filed for record. The date the deed is mailed to the
> recording authority may be entered. Do not enter the date the deed is
> mailed to an attorney.
>
> Note: Whichever date is entered (recording or mailing) will be used in
> evaluating all other related time requirements and cannot be altered.
>
> Item 11 Date Foreclosure Proceedings (a) Instituted or (b) Date of
> Deed In Lieu. (Not applicable.) Exception: enter when foreclosure was
> properly initiated and Local Office requested withdrawal of the
> foreclosure action.
>
> 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.
>
> Note: This number determines the name and address to which all
> computer generated letters and claim payment data are 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 (Same as Conveyance). 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 the suffix code 700 through 799. Do not enter a date
> here if this is a direct endorsement or coinsurance loan.
>
> Item 19 Expiration Date of Extension of Foreclose/Assign. If a request
> for an extension of time to assign the mortgage is requested by the
> mortgagee and granted by the local HUD office, enter the expiration
> date of that extension. The extension must be in writing.
>
> Item 20 Date of Notice/Extension to Convey. Enter the date of the
> local HUD office approval to assign the mortgage (Assignment
> Acceptance Letter).
>
> 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 - Check one to indicate the
> occupancy status as of the date in Item 10.\*
>
> Item 23 If Item 22 is \"No,\" Date of Local HUD Office Approval - Not
> applicable.
>
> Item 24 Is Property Conveyed Damaged? Yes or No (Same as Conveyance) -
> Check \"yes\" if the damage falls into the categories listed in
> paragraphs 2-10 and 2-11.\*
>
> If there is no damage or if there is damage to the property which is
> not covered by the above paragraphs, check \"no.\" In the latter case,
> specify the type of damage and if any immediate repairs are needed on
> the reverse of Part A under \"Mortgagee\'s comments.\"
>
> Item 25 If Item 24 is \"Yes,\" Date of (a) Local HUD Office Approval
> \[Pursuant to 203.379(a)(1)\] or (b) Certification (pursuant to
> 203.379(a)(2)) (Same as Conveyance) - Enter the date of the HUD
> approval letter or the mortgagee certification letter, whichever is
> applicable. Attach a copy of the certification letter to Part A
> (copy 1) which is sent to the local HUD office.
>
> Item 26 Type of Damage (Same as Conveyance) -- Check appropriate box.
> If more than one type of damage, check the type that caused the
> greatest damage. Do not complete this item if item 24 is checked
> \"no.\"
>
> Item 27 Recovery or Estimate of Damage - A figure must be entered here
> if item 24 is \"yes\" and 25(a) applies. If the local HUD office
> approved assignment of a mortgage on the property in a damaged
> condition, enter the greater of HUD\'s estimate to repair the damage
> (obtained from the local HUD office) or the amount of the insurance
> recovery. If the insurance recovery is not received when this item is
> completed, estimate the amount. AN AMOUNT MUST BE ENTERED.
>
> If item 25(b) applies, enter the amount of the insurance recovery, if
> any. If insurance recovery has not been received, estimate the amount.

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

Item 29 Deficiency Judgment Code. Not applicable.

Item 30 Authorized Bid Amount. - Not applicable.

Item 31 Mortgagee Reported Curtailment Date. Not applicable.

> Item 32 Schedule of Tax Information. Enter complete information on the
> last amount paid for each type of tax or assessment. If a tax has not
> been paid because it was not available for payment before assignment,
> show the exact title of the tax or assessment to which it is subject.
> If a tax was not paid because of a Homestead or similar exception,
> identify the tax and enter the exception type in the \"Amount Paid\"
> column.

-   Type of Tax/Tax Year. Enter the exact title of the tax or assessment
    with installment information, if applicable (e.g., county tax, first
    half or school district tax, second half) and the year for which the
    tax assessment was levied.

-   Collector\'s Property Identification. Enter the number used by the
    taxing authority to identify the property.

-   Amount Paid. Enter the amount paid for each type of tax or
    assessment (excluding penalties and interest) and attach a copy of
    the bill to the copy of Part A sent to the local HUD office. If no
    tax was paid because of a Homestead or similar exemption, enter the
    exemption type. If the tax was not paid for other reasons, enter
    \"None.\"

-   Period Covered, From - To. Enter the dates covered by the tax
    whether paid or not and without regard for the due date.

-   Date Paid. Enter the date of actual payment. All tax bills available
    before conveyance should be paid regardless of the due date. Tax
    bills received after the date the deed is filed for record should be
    sent to the local HUD office, identified by the FHA case number and
    the taxing authority identification number.

-   Internal Revenue Service (IRS) Lien. If there is an IRS tax lien,
    enter the date and the expiration of the lien on the reverse side of
    Part A under \"Mortgagee\'s Comments.\"

> Notice to Local HUD Office. In addition, the local HUD office must be
> promptly advised of the tax status of the property. After the
> assignment has been filed for record, the mortgagee shall immediately
> forward all tax bills received, which are in order for payment and
> properly identified by the FHA case number, to the local HUD office,
> ATTN: Single Family Loan Management Branch.
>
> Item 33 Mortgagor\'s Name, Social Security Number 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 MIC.
>
> Enter the social security numbers of all mortgagors, if known. At
> least one social security number is required. See Par. 1-14 for
> additional information.
>
> Item 34 Brief Legal Description of Property (Same as Conveyance).
> Enter a brief description of the property. This information is found
> on the mortgage which should agree with the deed to HUD.
>
> 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 claims.

Items 37 & 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 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 form HUD-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. Enter the regular
> monthly payment.
>
> 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 (Same as
> Conveyance). Enter the date the mortgagee or its agent first became
> aware of damage to the property. This date should be available in the
> Inspection Reports. If there are no Inspection Reports because the
> property was occupied and the date of damage is not known, enter an
> estimated date and indicate in the Mortgagee Comments section that the
> date is an estimate.
>
> Item 42 Date HIP Canceled or Refused, if Applicable (Same as
> Conveyance). Enter the date the fire insurance policy was canceled or
> refused by the insurer, if the property was damaged by fire and the
> mortgagee executes a certification pursuant to 24 CFR 203.379(a)(2) (a
> date will be entered in Item 42b).
>
> Item 43 Number of Living Units (Same as Conveyance). Enter the number
> of living units in the property.
>
> Item 44 Status of Living Units (Same as Conveyance). Indicate if the
> property is vacant or occupied for each living unit by checking the
> appropriate box. If the unit is occupied, enter the occupant\'s name.
> If the unit is vacant, enter the date vacated (as best as can be
> determined) and the date the mortgagee secured the property.
> Mortgagee\'s Comments, if Any. Use this area to justify unusual
> circumstances as well as other information required by the
> instructions.

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

B.  Instructions for the Completion of form HUD 27011, Part B, Fiscal
    Data. The following item-by-item instructions are to be used when
    completing form HUD 27011, Part B, for assignment claims. Prepare
    this Part after Part D has been completed. The information entered
    in this Part is transferred from Part D. Parts C and E are not
    applicable to the assignment claim.

Note: Debenture interest is not calculated by mortgagees in assignment
claims.

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 & 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 (See Paragraph 3-4).
>
> 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
> Non-conveyances) Not applicable.
>
> Item 109 Escrow Balance (as of Date in Block 10, Part A). Enter amount
> remaining in escrow account as of the date the assignment is filed for
> record. Also include any funds received on account of the mortgage
> which have not been applied to reduce the indebtedness, e.g., partial
> payments, buy down 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.

-   See Item 123 for unapplied Section 235 assistance payments.

-   Payment 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.

-   DO 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.

-   Illustration of Mortgagee Advances:

  ----------- ----------- ----------- ----------- ------------ -------------
  Date Due    Date Paid   Interest    Escrow      Escrow       Balance
                                      Principal   Adjustment   

  Balance                                                      \$151.60
  Forward                                                      

  01/01/83    02/03/83    \$73.32     \$21.09     \$70.69      \$222.29

  08/03/83                                        \$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. Not applicable, except for vacant assigned properties.
>
> 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 rental of the
> property between the date of default and the date the assignment was
> filed for record.
>
> 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. This entry cannot exceed the amount shown in Item 115.

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

> First 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.
>
> 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
> 309, Part D. Not applicable.
>
> Item 121 Mortgage Note Interest. Unpaid mortgage note interest to the
> date the assignment is filed for record will be included in the
> insurance benefits.

-   From. Enter the date of the last completely paid installment (Item
    8, Part A). If no payments were made, enter a date 30 days prior to
    the due date of the first scheduled payment (Item 7, Part A). If the
    date of the note is less than 30 days prior to the due date of the
    first scheduled payment, enter the date of the note.

-   To. Enter the date on which the assignment to the Secretary as filed
    for record (Item 10, Part A).

-   Rate. Enter the mortgage interest rate as it appears on the mortgage
    note.

-   Computation method. To obtain the amount of accrued mortgage
    interest due, multiply the Daily Interest Rate Factor by the amount
    of the unpaid principal balance. The Daily Interest Rate Factor is
    found in the Table 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 the assignment was filed for record. 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 - 132 Not applicable. Any amounts appearing on these lines
> will be disallowed.
>
> 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 & 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 & 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 form HUD 27011, Part C, Support
    Document.

Part C is not required when filing an assignment claim (except vacant
assigned properties, see instruction in Chapter 2).

D.  Instructions for the Completion of form HUD 27011, Part D, Support
    Documentation (Continuation 1).

The general instructions for the preparation of Part D in conveyance
claims are applicable in assignment claims except that where the general
instructions refer to \"the date the deed is filed for record\" or
\"date of conveyance\", the \"date of the assignment is filed for
record\" will be substituted.

Debenture interest on expenditures is paid from the date of assignment
(not from the date of payment expenditure) to the date of claim
settlement, therefore debenture interest should not be calculated or
entered in Part D.

PART D SUPPORT DOCUMENT (Continuation 1)

> Items 300 & 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. Not applicable.

> 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 all disbursements in these categories including
> for each item the date paid, the period covered, the description, and
> the amount paid. Do not include disbursements which were paid from
> available escrow funds. No expense should be incurred after the date
> the assignment is filed for record (Item 10), except where the local
> HUD office instructs you to take an action. See explanation for escrow
> account, Part B, Item 109.
>
> Item 306 Attorney/Trustee Fee. Enter reasonable attorney\'s fees paid
> in connection with preparation of an assignment of the mortgage to the
> Secretary. If attorney\'s fees exceed those normally charged in the
> applicable jurisdiction and/or if additional space is needed to list
> fees, attach a separate sheet to this part with an explanation of the
> excessive fees and/or the additional fees, and ensure adequate
> documentation is maintained in the claim file. See paragraph 1-10.
> Total the \"Amount Paid\" column.
>
> Item 307 Foreclosure and/or Acquisition, Conveyance and Other Costs.
> Itemize any other legal costs paid by the mortgagee, but not entered
> in Item 306 above. Total the \"Amount Paid\" column. NOTE: A fee for
> the title policy should not be claimed on an assignment.

Item 308 Taxes on Deed. Not applicable.

> Item 309 Special Assessments (Do not use for Coinsurance, see part E).
> Not applicable.
>
> Item 310 Bankruptcy. Itemize the bankruptcy fees paid. There must be
> an entry in item 40. If the bankruptcy fees exceed those approved by
> HUD for routine bankruptcies, see paragraph 1-10.
>
> Item 311 Mortgage Insurance Premiums. Itemize all MIP disbursements,
> including the date paid, the period covered, and the amount paid. Only
> include the \"advanced\" MIP disbursements paid after the due date of
> the last completely paid installment to the date the assignment is
> filed for record.

E.  Instructions for the Completion of form HUD 27011, Part E Support
    Document (Continuation 2). Part E is not required when filing an
    assignment claim.

[]{#__RefHeading___Toc167867618 .anchor}**CHAPTER 4: AUTOMATIC
ASSIGNED** HOME MORTGAGES UNDER SECTION 221(G)(4)

[]{#__RefHeading___Toc167867619 .anchor}4-1 GENERAL.
[**(TOP)**](#TABLEOFCONTENTS)

Section 221(g)(4) of the National Housing Act gives the mortgagee the
option of assigning to HUD mortgages insured under Section 221 pursuant
to a conditional or firm commitment issued on or before November 30,
1983 when such mortgages are not in default at the expiration of twenty
years from the date the mortgage was endorsed for insurance (24 CFR
221.255). Mortgages which were held by GNMA on or after April 1, 1984
are not eligible for this option. The procedures in this chapter will be
followed in automatic assignment claims.

[]{#__RefHeading___Toc167867620 .anchor}4-2 INELIGIBLE MORTGAGES.
[**(TOP)**](#TABLEOFCONTENTS)

The following mortgages are not eligible for automatic assignment:

A.  Mortgage in default;

B.  Mortgage insured pursuant to a conditional or firm commitment issued
    after November 30, 1983;

C.  Mortgages which were held by GNMA on or after April 1, 1984 (even if
    not now held by GNMA).

The following numbers apply:

94001 - 0999 - 4

94002 - 0999 - 5

94006 - 0999 - 9

94008 - 0999 - 0

94014 - 0999 - 3

94022 - 0999 - 8

[]{#__RefHeading___Toc167867621 .anchor}4-3 TIME REQUIREMENT.
[**(TOP)**](#TABLEOFCONTENTS)

The mortgagee must exercise its option under Section 221(g)(4) by filing
the assignment for record within one year following the 20th anniversary
of the date the mortgage was endorsed for insurance. No extension of
time will be permitted for this action. If the assignment is not
recorded or mailed to the recording authority within the one year time
required, the mortgage note may be reassigned to the mortgagee. In
states where recording is not required, the claim must be submitted
within the one year time frame to be considered as meeting the time
requirement. This option may not be exercised before the 20th
anniversary date.

All parts of the application identified in paragraph 4-13, together with
required attachments, and the title evidence must be submitted to the
appropriate HUD offices (Headquarters and Local Office) on the date the
assignment is filed for record.

[]{#__RefHeading___Toc167867622 .anchor}4-4 EXTENSION OF TIME
REQUIREMENTS. [**(TOP)**](#TABLEOFCONTENTS)

The time requirement for recording the assignment of a Section 221
mortgage and for the submission of an automatic assignment claim will
not be extended. The mortgagee must exercise its option under Section
221(g)(4) by filing the assignment for record within one year following
the twentieth anniversary of the date the mortgage was endorsed for
insurance. The claim must be submitted on the date the

assignment is filed for record (24 CFR 221.251, 221.255).

[]{#__RefHeading___Toc167867623 .anchor}4-5 ASSIGNMENT REQUIREMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

The instructions in paragraph 3-4 concerning the form of assignments are
applicable.

[]{#__RefHeading___Toc167867624 .anchor}4-6 TITLE EVIDENCE.
[**(TOP)**](#TABLEOFCONTENTS)

The instructions in paragraph 3-3 concerning the approval of title
evidence are applicable.

[]{#__RefHeading___Toc167867625 .anchor}4-7 PREPAYMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

A.  The date shown in Item 8 of Part A (the due date of the last
    complete installment paid) must not be later than the date shown in
    Item 10 (the date the assignment is filed for record), otherwise,
    the claims system will reject the claim. Therefore, if payments in
    advance of the current due date have been received send a check for
    the prepayment to the mortgagor.

B.  The claims system will accept one or more prepayments to principal
    alone, therefore, prepayments of principal should not be returned to
    the mortgagor. Annotate the \"Mortgagee\'s Comment\" section on the
    reverse side of Part A by the number and dollar amount of
    prepayments to principal and indicate the actual periodic payment
    and the scheduled periodic payment as it relates to the original
    amortization schedule, such as actual - 251st periodic payment,
    scheduled - 242nd periodic payment.

[]{#__RefHeading___Toc167867626 .anchor}4-8 ESCROW FUNDS.
[**(TOP)**](#TABLEOFCONTENTS)

A.  A check for the total amount of the escrow account should be sent to
    the mortgagor so that it is received no later than 10 days after the
    claim is submitted.

B.  The mortgagee must be certain that the escrow account contains
    enough funds to pay all escrow items as they fall due before the
    mortgage is assigned because the mortgagee will not be reimbursed
    for funds advanced. If any funds are advanced, they must be
    collected from the mortgagor.

[]{#__RefHeading___Toc167867627 .anchor}4-9 HAZARD INSURANCE.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Do not cancel the hazard or flood insurance contract.

B.  Instruct the hazard and flood insurance carrier to substitute as the
    beneficiary in the mortgagee clause the following: \"Secretary of
    Housing and Urban Development, his successors and assigns, in care
    of (insert the name and address of local HUD office)\".

C.  Send the insurance contract or policy (original) to the local HUD
    Field Office.

D.  Notify, at least 15 days prior to the filing date, all insurance
    carriers for the hazard, flood, life, health and disability
    coverage, that the mortgagor will be responsible for the payment of
    tax bills and insurance premiums.

E.  If there are funds accrued in escrow for insurance, the mortgagee
    must mail a check to the mortgagor for the amount of the accrued
    premium. HUD will not escrow for insurance or any other item for a
    Section 221(g)(4) mortgage.

[]{#__RefHeading___Toc167867628 .anchor}4-10 NOTICE TO MORTGAGOR.
[**(TOP)**](#TABLEOFCONTENTS)

A.  At least 60 days prior to the date the assignment will be filed for
    record, the mortgagee must notify the mortgagor of the pending
    assignment in the form of Appendix 17.

B.  At least 15 days prior to the date the assignment will be filed for
    record or at least 15 days prior to the first mortgage payment due
    HUD after the filing date, whichever is earlier, the mortgagee must
    notify the mortgagor that the mortgage will be assigned and payments
    should be made to HUD. The form of Appendix 18 should be used for
    this purpose.

C.  Payments received from mortgagor after the assignment has been filed
    for record. If the mortgagee receives additional payments from the
    mortgagor after the date the claim is submitted and the assignment
    is filed for record, the mortgagee must endorse the payment to HUD
    and forward all payments to our lock box in Atlanta at the following
    address:

Payment Processing Center

P.O. Box 105652

Atlanta, GA 30348

> The appropriate FHA Case Number must identify each payment forwarded
> to HUD\'s lock box. (Notate the FHA Case No. in the upper right hand
> corner of each check or money order.)

[]{#__RefHeading___Toc167867629 .anchor}4-11 NOTICE TO TAXING AUTHORITY.
[**(TOP)**](#TABLEOFCONTENTS)

At least 15 days prior to the filing date, notify the taxing authorities
that the mortgagor will be responsible for payment of tax bills.

[]{#__RefHeading___Toc167867630 .anchor}4-12 CLAIM PAYMENT.
[**(TOP)**](#TABLEOFCONTENTS)

All Section 221(g)(4) claims for insurance benefits will be paid in
debentures having a total face value equal to the unpaid obligation of
the mortgage as of the date of the assignment plus accrued mortgage
interest to such date. The debentures will be dated as of the date the
mortgage is assigned and shall bear interest at the \"going Federal
rate\" at the date of issuance.

The claim payment will not include any advances or costs paid by the
mortgagee, and since the claim will be paid in debentures, there will be
no accrued debenture interest.

[]{#__RefHeading___Toc167867631 .anchor}4-13 DOCUMENTS TO BE SUBMITTED.
[**(TOP)**](#TABLEOFCONTENTS)

It is very important that all required documentation be forwarded to the
appropriate locations 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 a claim.

All documents must be submitted on the date the assignment is filed for
record.

A.  TO HUD HEADQUARTERS:

    1.  The original Parts A and B.

    2.  The original Mortgage Insurance Certificate.

    3.  The Title Submission Certificate.

    4.  Worksheet showing reallocation of mortgage payments if
        capitalized method of accounting is used.

B.  TO THE LOCAL HUD OFFICE, ATTN: SINGLE FAMILY LOAN MANAGEMENT BRANCH:

    1.  Copies of Parts A and B.

    2.  A copy of the Title Submission Certificate.

    3.  A copy of the Mortgage Insurance Certificate.

    4.  The original of all hazard insurance policies and a copy of the
        notice to the insurance carrier requesting the HUD be named
        beneficiary in the mortgagee clause.

    5.  Copies of the 60 day and 15 day notices to the mortgagor (See
        paragraph 4-10).

    6.  A copy of the escrow check sent to the mortgagor.

    7.  A copy of the mortgage assignment document which was filed for
        record.

    8.  All ledger cards or payment records. If capitalization method is
        used, attach a worksheet showing allocation of payments per
        mortgage terms.

C.  TO THE LOCAL HUD OFFICE, ATTN: FIELD COUNSEL.

    1.  Original mortgage.

    2.  Original note with endorsement.

    3.  Copy of assignment to HUD.

    4.  Copies of all intervening assignments.

    5.  Mortgagee\'s original title policy evidencing the loan to be the
        first lien of record.

    6.  A copy of Part A.

    7.  A copy of HUD\'s letter approving damaged conveyance of the
        property under 24 CFR 203.379(a), if applicable.

    8.  The mortgagee\'s certificate that the conditions of 24 CFR
        203.379(a)(2), relating to fire damage, have been met, if
        applicable.

Note: See paragraph 1-8 for file documentation requirements.

> The following Table (Table 4.1) illustrates the document submission
> requirements for automatic assignment claims.

[]{#__RefHeading___Toc167867632 .anchor}4-14 CLAIM PREPARATION -
AUTOMATIC ASSIGNMENTS. [**(TOP)**](#TABLEOFCONTENTS)

The claim must be completed as described below. In order to avoid delay
in payment, the claim must be complete and accurate and contain all
information requested. Note paragraph 1-3 concerning pre-screening of
applications.

In many instances the instructions provided in Chapter 2, Conveyances,
apply equally in Automatic Assignment 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.

Note: Debenture interest is not calculated in automatic assignment
claims.

A.  Instructions for the Completion of form HUD 27011, Part A, Initial
    Application. The following item by item instructions are to be used
    when completing form HUD 27011, Part A, for automatic assignment
    claims.

PART A INITIAL APPLICATION

> Item 1 Claim Type. Place an \"X\" in the space for Claim Type 03 =
> Automatic Assignment.
>
> Items 2 & 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 or 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. Not applicable.

> 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. Part A must be submitted on the same day the
> assignment is filed for record and title evidence is submitted to the
> local HUD office.
>
> Note: Although HUD permits 10 days from this date to receive the form
> HUD 27011 you are required to enter in Item 6 the date of the actual
> submission (mailing) date of the form.\*
>
> Item 7 Due Date of First Payment to Principal and Interest (Same as
> Conveyance). Enter the date the first payment to Principal and
> Interest was due. Obtain this date from the mortgage note.
>
> Item 8 Due Date of Last Complete Installment Paid. 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. 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. Not
> applicable.
>
> Item 10 Date Deed or Assignment Filed for Record or Date of Closing or
> Appraisal. Enter the date the assignment to the Secretary is filed for
> record. The date the assignment is mailed to the recording authority
> may be entered. Do not enter the date the assignment is mailed to an
> attorney.
>
> Note: If the date the assignment is mailed to the recording authority
> is used, this date will be used in evaluating all other related time
> requirements.
>
> Item 11 Date Foreclosure Proceedings (a) Instituted or (b) Date of
> Deed In Lieu. Not applicable.
>
> 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 claims payment data and insurance benefits are mailed.
>
> Item 13 Servicing Mortgagee Number (Same as Conveyance). Enter the
> complete 10-digit mortgagee number of the servicing mortgagee.
>
> Note: This number determines the name and address to which all
> computer generated letters and claim payment data are 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. Enter the complete 9-digit Employer
> Identification Number. This information must be entered.
>
> Item 17 Unpaid Loan Balance as of Date in Item 8 (Item 11 if
> coinsurance). Enter the unpaid mortgage balance after crediting the
> last complete monthly installment paid. This figure is taken from the
> mortgagee\'s payment ledger.

Item 18 Date of Firm Commitment. Not applicable.

> Item 19 Expiration Date of Extension of Foreclose/Assign. Not
> applicable. No extension are allowed on automatic assignments.

Item 20 Date of Notice/Extension to Convey. Not applicable.

Item 21 Date of Release of Bankruptcy, If Applicable. Not applicable.

Item 22 Is Property Vacant? Yes or No - Check one.

> Item 23 If Item 22 is \"No,\" Date of Local HUD Office Approval - Not
> applicable.
>
> Item 24 Is Property Conveyed Damaged? Yes or No (Same as Conveyance) -
> Check \"yes\" if the damage falls into the categories listed in
> paragraphs 2-10 and 2-11.
>
> If there is no damage or if there is damage to the property which is
> not covered by the above paragraphs, check \"no.\" In the latter case,
> specify the type of damage and if any immediate repairs are needed on
> the reverse of Part A under \"Mortgagee\'s comments.\"
>
> Item 25 If Item 24 is \"Yes,\" Date of (a) Local HUD Office Approval
> (Pursuant to 203.379(a)(1) or (b) Certification (pursuant to
> 203.379(a)(2)) (Same as Conveyance) - Enter the date of the HUD
> approval letter or the mortgagee certification letter, whichever is
> applicable. Attach a copy of the certification letter to Part A
> (copy 1) which is sent to the local HUD office.
>
> Item 26 Type of Damage (Same as Conveyance) - Check appropriate box.
> If more than one type of damage, check the type that caused the
> greatest damage. Do not complete this item if item 24 is checked
> \"no.\"
>
> Item 27 Recovery or Estimate of Damage - A figure must be entered here
> if item 24 is \"yes\" and 25(a) applies. If the local HUD office
> approved assignment of a mortgage on the property in a damaged
> condition, enter the greater of HUD\'s estimate to repair the damage
> (obtained from the local HUD office) or the amount of the insurance
> recovery. If the insurance recovery is not received when this item is
> completed, estimate the amount. AN AMOUNT MUST BE ENTERED.
>
> If item 25(b) applies, enter the amount of the insurance recovery, if
> any. If insurance recovery has not been received, estimate the amount.

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

Item 29 Deficiency Judgment Code. Not applicable.

Item 30 Authorized Bid Amount. - Not applicable.

Item 31 Mortgagee Reported Curtailment Date. Not applicable.

> Item 32 Schedule of Tax Information. Enter complete information on the
> last amount paid for each type of tax or assessment. If a tax has not
> been paid because it was not available for payment before assignment,
> show the exact title of the tax or assessment to which it is subject.
> If a tax was not paid because of a Homestead exception, identify the
> tax and enter \"Homestead\" in the \"Amount Paid\" column.

-   Type of Tax/Tax Year. Enter the exact title of the tax or assessment
    with installment information, if applicable (e.g., county tax, first
    half or school district tax, second half) and the year for which the
    tax assessment was levied.

-   Collector\'s Property Identification. Enter the number used by the
    taxing authority to identify the property.

-   Amount Paid. Enter the amount paid for each type of tax or
    assessment (excluding penalties and interest) and attach a copy of
    the bill to the copy of Part A sent to the local HUD office. If no
    tax was paid because of a Homestead exemption, enter \"Homestead.\"
    If the tax was not paid for other reasons, enter \"None.\"

-   Period Covered, From - To. Enter the dates covered by the tax
    whether paid or not and without regard for the due date.

-   Date Paid. Enter the date of actual payment. All tax bills available
    before assignment should be paid regardless of the due date. Tax
    bills received after the date the assignment is filed for record
    should be sent to the local HUD office, identified by the FHA case
    number and the taxing authority identification number.

-   Internal Revenue Service (IRS) Lien. If there is an IRS tax lien,
    enter the date and the expiration of the lien on the reverse side of
    Part A under \"Mortgagee\'s Comments.\"

-   Notice to Local HUD Office. In addition, the local HUD office must
    be promptly advised of the tax status of the property. After the
    assignment has been filed for record, the mortgagee shall
    immediately forward all tax bills received, which are in order for
    payment and properly identified by the FHA case number, to the local
    HUD office, ATTN: Single Family Loan Management Branch.

> Item 33 Mortgagor\'s Name, Social Security Number and Property
> Address - Enter the name of the mortgagor 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. See paragraph 1-14 for
> additional information.
>
> Item 34 Brief Legal Description of Property (Same as Conveyance).
> Enter a brief description of the property. This information is found
> on the mortgage which should agree with the deed to HUD.
>
> 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 claims.
>
> Items 37 & 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 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 form HUD-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. Enter the regular
> monthly payment.

Item 40 If Bankruptcy Filed, Enter Date. Not applicable.

> Item 41 If Conveyed/Assigned Damaged, Date Damage Occurred (Same as
> Conveyance). Enter the date the mortgagee or its agent first became
> aware of damage to the property. This date should be available in the
> Inspection Reports. If there are no Inspection Reports because the
> property was occupied and the date of damage is not known, enter an
> estimated date and indicate in the Mortgagee Comments section that the
> date is an estimate.
>
> Item 42 Date HIP Cancelled or Refused, if Applicable (Same as
> Conveyance). Enter the date the fire insurance policy was cancelled or
> refused by the insurer, if the property was damaged by fire and the
> mortgagee executes a certification pursuant to 24 CFR 2O3.379(a)(2) (a
> date will be entered in Item 42b).
>
> Item 43 Number of Living Units (Same as Conveyance). Enter the number
> of living units in the property.
>
> Item 44 Status of Living Units (Same as Conveyance). Indicate if the
> property is vacant or occupied for each living unit by checking the
> appropriate box. If the unit is occupied, enter the occupant\'s name.
> If the unit is vacant, enter the date vacated (as best as can be
> determined) and the date the mortgagee secured the property.
>
> Mortgagee\'s Comments, if Any. Use this area to justify unusual
>
> circumstances as well as other information required by the
> instructions.
>
> HUD\'s Comments, if any. HUD USE ONLY.

A.  Instructions for the Completion of form HUD 27011, Part B, Fiscal
    Data. The following item-by-item instructions are to be used when
    completing form HUD 27011, Part B, for automatic assignment claims.
    Parts C, D and E are not applicable to automatic assignment claims.

Note: Debenture interest is not calculated in automatic assignment
claims.

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 & 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 (Same as Conveyance). Enter the date Part
> B is 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
> Non-conveyances). Not applicable.
>
> Item 109 Escrow Balance (as of Date in Block 10, Part A). Not
> applicable. The total amount of the escrow account must be sent to the
> mortgagor.
>
> Item 110 Total Disbursements for Protection and Preservation from Line
> 264, Part C. Not applicable.

Item 111 Total Disbursements from line 305, Part D. Not applicable.

> Item 112 Attorney/Trustee Fees Paid From Line 306, Part D. Not
> applicable.
>
> Item 113 Foreclosure, Acquisition, Conveyance and Other Costs from
> Line 307, Part D. Not applicable.
>
> Item 114 Bankruptcy Fee (if applicable) from Line 310, Part D. Not
> applicable.

Item 115 Rental Income. Not applicable.

Item 116 Rental Expense. Not applicable.

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

> 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
> 309, Part D. Not applicable.
>
> Item 121 Mortgage Note Interest. Unpaid mortgage note interest to the
> date the assignment is filed for record will be included in the
> insurance benefits.

-   From. Enter the due date of the last completely paid installment
    (Item 8, Part A).

-   To. Enter the date on which the assignment to the Secretary was
    filed for record (Item 10, Part A).

-   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 Factor by the amount
    of the unpaid principal balance. The Daily Interest Rate Factor is
    found in the Table 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 the assignment was filed for record. To
    assist in determining the number of days refer to the Julian Date
    Calendars provided in Appendix 5.

Item 122 Mortgage Insurance Premiums. Not applicable.

Item 123 Unapplied Section 235 Assistance Payments. Not applicable.

Item 124 Overpaid Section 235 Assistance Payments. Not applicable.

> Items 125 - 132 Not applicable. Any amounts appearing on these lines
> will be disallowed.
>
> 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 & 136 Enter the totals of Columns A) Deductions; B)
> Additions; and C) Interest.
>
> Item 137 Net Claim Amount (Columns B - A + C). Enter the net claim
> amount.\*
>
> Items 138 & 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.

A.  Instructions for the Completion of form HUD 27011, Parts C, D and E,
    Support Document (Continuations 1 and 2).

Parts C, D and E are not required when filing an automatic assignment
claim.

# CHAPTER 5: COINSURED MORTGAGES {#chapter-5-coinsured-mortgages .unnumbered}

[]{#__RefHeading___Toc167867634 .anchor}5-1 GENERAL.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Claims on loans which were originated under the coinsurance
    provisions of Section 244 of the National Housing Act, 12USC 1715Z-9
    and are still within the period of coinsurance must be filed in
    accordance with the provisions of this Chapter, unless the mortgage
    has been accepted by HUD for assignment.\*

> Under the coinsurance program the mortgagee does not convey the
> property to HUD in exchange for insurance benefits. After acquiring
> the property by foreclosure or deed-in-lieu of foreclosure, the
> mortgagee sells the property for the best price obtainable. The unpaid
> principal balance of the mortgage is reduced by the purchase price in
> computing insurance benefits. If the property is not sold within 6
> months after acquisition, the unpaid principal balance is reduced by
> the appraised value of the property. HUD and the mortgagee share any
> loss arising out of the mortgage transaction. The lender exposure will
> be 10% of the actual loss subject to a \"stop loss\" of one percent of
> the total face amount of coinsured loans originated by the lender in
> same calendar year.

B.  HUD maintains a Coinsurance Reserve Account for each mortgagee by
    calendar year. A percentage of the annual mortgage insurance premium
    is credited, and the mortgagee\'s share of the loss is debited, to
    this account.

C.  Claims for insurance benefits under the coinsurance program may be
    filed only by an approved coinsuring mortgagee (See 24 CFR 204.5).
    During the coinsurance period servicing functions must be performed
    by an approved coinsuring mortgagee. An \"approved coinsuring
    mortgagee\" is a mortgagee approved for participation in HUD\'s
    mortgage insurance programs and meeting certain special requirements
    relating to the coinsurance program.

[]{#__RefHeading___Toc167867635 .anchor}5-2 PERIOD OF COINSURANCE.
[**(TOP)**](#TABLEOFCONTENTS)

A mortgage endorsed for coinsurance is coinsured from the date of
endorsement to the date the 60th monthly amortization payment is made by
the mortgagor. During this period an insurance claim must be filed as
provided in this Chapter. After the mortgagor makes the 60th
amortization payment, the mortgage becomes fully insured and the
coinsurance provisions of the insurance contract terminate. Mortgages in
default would be handled as any other fully insured mortgage.

HUD may also agree, on request, to fully insure the mortgage on the date
of the 60th scheduled payment if the mortgagee provides forbearance or
recasting relief and payments are current under the forbearance or
recasting agreement.

If a coinsured mortgage is accepted by HUD for assignment, an insurance
claim is filed under the Assignment Claim procedures (Chapter 3).

[]{#__RefHeading___Toc167867636 .anchor}5-3 TIME REQUIREMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

The mortgagee must comply with the following time requirements when
submitting a claim during the coinsurance period. Failure to comply will
result in curtailment of interest to the date the action should have
been taken or to the date to which it was

extended by HUD \[24 CFR 204.322(j)\].

A.  Foreclosure Initiation. Institute foreclosure proceedings or other
    action to acquire the mortgaged property within one year from the
    date of default, unless an extension of time is approved in writing.
    (See paragraph 2-2A for more detailed information).

B.  Notice to HUD. Provide written notice to HUD that foreclosure has
    been instituted. The notice must be provided within 30 calendar days
    of the institution of foreclosure. This requirement is satisfied
    only by submission of complete and correct form HUD 92068A, the
    monthly Single Family Default Monitoring System (SFDMS) report.

C.  Prosecuting Foreclosure. 24 CFR 204.302 requires the mortgagee to
    \"exercise reasonable diligence in prosecuting such proceedings to
    completion.\" The provisions of paragraph 2-2 relating to reasonable
    diligence in prosecuting foreclosure in conveyance claims are
    applicable to coinsurance claims.

D.  Notice of Acquisition. Submit the notice of acquisition of title to
    the local HUD office within 15 calendar days of acquisition of good
    and marketable title to the property. A copy of the notice shall be
    included in the claim review file.

E.  Sale of Property. Take possession of, repair and sell the property
    for the best price obtainable within 6 months after date of
    acquisition of marketable title. If the property is not sold, notify
    the local HUD office at least 15 calendar days prior to the
    expiration of the six-month period. A copy of the notice, if
    applicable, shall be included in the audit file. The local HUD
    office will provide an appraised amount that must be used when the
    property has not been sold.

F.  Submit Claim to HUD. Complete all Parts of form HUD-27011 within 15
    calendar days after the sale of the property, or within 15 calendar
    days of receipt of the notice of the appraised value for properties
    not sold within six months after the date of acquisition of
    marketable title. The following distribution must be made:

    1.  Forward Parts A, B, the MIC (originals) and copies of Part C, D
        and E to HUD Headquarters, no later than 15 days from the date
        of sale or appraisal (Item 10).

    2.  Forward copies of Parts A and B and the original of Parts C, D
        and E to the attention of the Single Family Loan Management
        Branch in the local HUD office on the same day the originals are
        forwarded to Headquarters.

    3.  Retain copies of Parts A, B, C, D and E in the claim review
        file.

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    4.  []{#__RefHeading___Toc167867637 .anchor}EXTENSION OF TIME
        REQUIREMENTS. [**(TOP)**](#TABLEOFCONTENTS)

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. The
request should be made as soon as possible before the time limit for
that action expires (See paragraph 1-6). The time for filing a claim
will not be extended.

5.  []{#__RefHeading___Toc167867638 .anchor}ACQUISITION OF TITLE.
    [**(TOP)**](#TABLEOFCONTENTS)

The mortgagee shall initiate and complete foreclosure (or shall acquire
title by voluntary conveyance) and two-thirds of the costs will be
included in insurance benefits as in Conveyance Claims (Chapter 2)
except that the title will not be

conveyed to the Secretary by the mortgagee nor by direct conveyance.

6.  []{#__RefHeading___Toc167867639 .anchor}PROTECTION AND PRESERVATION
    OF PROPERTY. [**(TOP)**](#TABLEOFCONTENTS)

The mortgagee shall protect and preserve the property, as provided in
paragraph 2-11, from the time it acquires title to date the property is
sold by the mortgagee or to six months after the date of acquisition,
whichever first occurs.

7.  []{#__RefHeading___Toc167867640 .anchor}REPAIRS TO THE PROPERTY.
    [**(TOP)**](#TABLEOFCONTENTS)

The mortgagee may make necessary repairs prior to the sale of the
property (or prior to the six month sale limitation) but the repairs
shall not exceed:

A.  Repairs required by local law.

B.  Repairs required to meet the objectives of the FHA Minimum Property
    Standards.

C.  Repairs specifically approved in advanced by HUD.

    4.  []{#__RefHeading___Toc167867641 .anchor}SALE OF THE PROPERTY.
        [**(TOP)**](#TABLEOFCONTENTS)

The mortgagee must sell the property (with settlement completed) for the
best price obtainable no later than six months after the date it
acquired title. Reasonable and customary closing costs may be included
in computing insurance benefits and should be entered in Item 408 of
Part E.

5.  []{#__RefHeading___Toc167867642 .anchor}UNSOLD PROPERTIES.
    [**(TOP)**](#TABLEOFCONTENTS)

If the property is not expected to be sold within six months after
acquisition of title, the mortgagee must notify the local HUD office at
least 15 days prior to the expiration of the six month period. The field
office will arrange for an independent

appraisal of the property. The appraised value reported to the mortgagee
will be used in lieu of the sale price for purposes of claim settlement.

6.  []{#__RefHeading___Toc167867643 .anchor}COSTS.
    [**(TOP)**](#TABLEOFCONTENTS)

Expenditures made by the mortgagee in acquiring, protecting and
repairing the property will be entered in Parts C and D as in conveyance
claims. Items 405 through 408 of Part E will be used to claim costs and
reimbursements at the closing of the sale or on the date of the
appraisal notice if the property is not sold. Expenses claimed in Parts
C and D should not be entered in Part E. If the claim settlement is
based on appraised value rather than sales price, there should be no
entry in Item 408.

7.  []{#__RefHeading___Toc167867644 .anchor}INTEREST.
    [**(TOP)**](#TABLEOFCONTENTS)

HUD will compute the amount of debenture interest and mortgage interest
to be paid to the mortgagee. The interest will be computed on the unpaid
principal balance of the mortgage. No interest is paid on expenses or
advances.

A.  Debenture interest will be computed at the rate in effect on the
    date of the Mortgage Insurance Certificate. It will be computed from
    the date of default to the date the mortgagee acquires title to the
    property.

B.  Mortgage note interest will be computed from the date the mortgagee
    acquires title to the property to the date the claim for insurance
    benefits is processed for payment. If the property is sold, mortgage
    note interest will be calculated on the full unpaid principal
    balance from the date of acquisition of title (Item 9) to the date
    of the sale (Item 10) and will be paid on the unpaid principal
    balance minus the sale proceeds from the date of the sale to claim
    settlement.

C.  If the mortgagee fails to meet any of the time requirements
    identified in paragraph 5-3, debenture interest will be computed
    only to the date on which the action should have been taken or to
    which it was extended in writing by HUD.

    4.  []{#__RefHeading___Toc167867645 .anchor}CLAIM PAYMENT.
        [**(TOP)**](#TABLEOFCONTENTS)

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A.  Upon receipt of Parts A and B, form HUD-27011, and the required
    attachments in Headquarters, HUD will pay (subject to a reserve
    account limitation described below) to the mortgagee the unpaid
    principal balance of the mortgage and amount determined by:

    1.  Adding the following items:

        a.  Allowable costs and advances.

        b.  Debenture interest on the unpaid principal balance from the
            date of default to the date of acquisition of marketable
            title.

        c.  Mortgage interest on the unpaid principal balance from the
            date of acquisition of marketable title to the date the
            claim is paid. (The unpaid principal balance is reduced by
            the sale price when calculating interest from the date of
            the sale to settlement).

        d.  Payments made by the mortgagor for allowable repairs,
            preservation and maintenance.

        e.  Allowable sales expense.

        f.  Allowable overhead costs from the date of acquisition of
            title to the date of disposition or appraisal of the
            property.

    2.  Deducting the following items:

        a.  All amounts received by the mortgagee on account of the
            mortgage after institution of foreclosure or deed-in-lieu of
            foreclosure.

        b.  All amounts received by the mortgagee from any source
            relating to the property on account of rent or other income
            after deducting handling expenses.

        c.  All cash retained by the mortgagee for the account of the
            mortgagor that have not been applied to reduction of
            principal.

        d.  All amounts received by the mortgagee relating to the sale
            of the property or the appraisal value of the property.

B.  HUD is responsible for 90% of approved claim and the coinsuring
    mortgagee is responsible for 10%. HUD will pay 90% of the calculated
    claim amount immediately upon approval of the claim. Then HUD will
    check the appropriate reserve account to see if it contains a
    sufficient cash balance to cover the originating mortgagee\'s 10%
    share. If it does, HUD will transfer the funds out of the reserve
    account and pay the mortgagee the remaining 10% of the claim. If
    there is not sufficient cash in the reserve account, HUD will
    disburse an amount equal to the reserve balance only, if any.
    However, since the mortgagee\'s liability is limited to one percent
    of the total amount of coinsurance loans insured for each calendar
    year, if the reserve account has already been charged with one
    percent of the total principal balance of all loans for that year,
    HUD will pay the remaining 10% of the claim.

[]{#__RefHeading___Toc167867646 .anchor}5-13 DOCUMENTS TO BE SUBMITTED.
[**(TOP)**](#TABLEOFCONTENTS)

It is very important that all required documentation be forwarded to the
appropriate locations 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 a claim.

The following documents must be sent to HUD Headquarters or the local
HUD office within one of the following time requirements (whichever is
applicable): Within 15 days after the Sale of the Property; or Within 15
Calendar Days of the Receipt of the Notice of the Appraised Value for
Properties Not Sold Within Six Months After the Date Marketable Title
Was Acquired:

A.  TO HUD HEADQUARTERS

    1.  The original Parts A and B

    2.  The original Mortgage Insurance Certificate (MIC)

B.  TO THE LOCAL HUD OFFICE, ATTN: SINGLE FAMILY LOAN MANAGEMENT BRANCH

    1.  Copies of Parts A and B

    2.  The original Parts C, D and E

> Note: A copy of Parts A, B, C, D and E and all supporting documents
> must be retained in the audit file (See paragraph 1-8).
>
> The following Table (Table 5-1) illustrates the document submission
> requirements for conveyance claims.

[]{#__RefHeading___Toc167867647 .anchor}5-14 CLAIM PREPARATION -
COINSURANCE. [**(TOP)**](#TABLEOFCONTENTS)

A coinsured mortgage becomes fully insured on the date the 60th monthly
amortization payment is made by the mortgagor. If it becomes necessary
for the mortgagee to foreclose upon a defaulted coinsured mortgage prior
to becoming fully insured and the mortgagee chooses to file a claim for
insurance benefits, the mortgagee must follow the requirements outlined
in this chapter. After the mortgagor has made the 60th monthly payment,
the loan becomes fully insured and the claim is filed as a conveyance or
assignment, as applicable \[24 CFR 204.251(k),(l)\]. For further
reference, see Handbook 4205.1, Single Family Coinsurance Program.

The claim must be completed as described below using form HUD-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. Note paragraph 1-3 concerning pre-screening
of applications.

In many instances the instructions provided in Chapter 2, Conveyances,
apply equally in coinsurance 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.

Instructions for the Completion of form HUD 27011, Part A, Initial
Application. The following item by item instructions are to be used when
completing form HUD 27011, Part A, for coinsurance claims.

PART A INITIAL APPLICATION

> Item 1 Claim Type. Place an \"X\" in the space for Claim Type 04 =
> Coinsurance unless the claim is submitted as a fully insured
> Conveyance (01) or Assignment (02).
>
> Items 2 & 3 FHA Case Number and Section of Act Code (Same as
> Conveyance). Enter the FHA Case Number and the ADP code for the
> Section of the National Housing Act under which the mortgage was
> insured. There are five acceptable FHA case number formats which are
> illustrated below, including the Section of the Act (SOA) ADP codes.
> The format of each FHA insured case number appears on the Mortgage
> Insurance Certificate or the advanced notice of S/F Annual MIP unless
> the case is included in CHUMS, in which case, see \"5\" below.

\(1\) X X X - X X X X X X X X X or 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 default reasons listed below. If code 15 is used,
> explain the reason on the reverse of Part A under \"Mortgagee\'s
> Comments.\"

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 a 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 (explain in Mortgagee comments)

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

> endorsement date that appears on the Mortgage Insurance Certificate.
>
> 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 15 days of the date of sale closing or receipt of
> the appraisal if the property is not sold.
>
> 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: 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 of acquisition of good and marketable title to the property.
>
> Item 10 Date Deed or Assignment Filed for Record or Date of Closing or
> Appraisal. Enter the date of sale closing or the date of receipt of
> notice of the appraised value. If the date exceeds 6 months from the
> date in Item 9, an extension should be obtained from the local HUD
> office and entered into Item 20.
>
> Item 11 Date Foreclosure Proceedings (a) Instituted or (b) Date of
> Deed In Lieu (Same As Conveyance). Check the appropriate box and enter
> the date of the first public action taken which was required by law to
> initiate foreclosure (e.g., filing a complaint or petition, recording
> a notice of default, or publication of a notice of sale) or the date
> the deed-in-lieu was recorded, whichever is applicable. If foreclosure
> was instituted and a deed-in-lieu was then obtained, check both blocks
> and enter both dates. If the foreclosure action was nullified under
> state law by the filing of a bankruptcy petition, enter the date on
> which the foreclosure action was re-instituted.
>
> 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.
>
> 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 (Same as Conveyance). 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. Not applicable.

> Item 19 Expiration Date of Extension of Foreclose/Assign (Same As
> Conveyance). If an extension of time is requested by the mortgagee and
> granted by the local HUD office, enter the expiration date of that
> extension. The extension must be in writing. See paragraph 1-6.
>
> If bankruptcy is involved or if state or local laws delay action, the
> mortgagee need not obtain approval to extend the date to begin
> foreclosure, enter the date 60 days after the date of the release of
> bankruptcy, unless an additional extension period is approved by the
> local HUD office. The latest extension date must always entered. This
> 60 day extension is only applicable when the bankruptcy precluded
> initiation of foreclosure within the timeframe. See paragraph 2-16.
>
> Item 20 Date of Notice/Extension to Convey. Enter the date of the
> extension of time for closing or for requesting appraisal, if
> applicable.
>
> 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 - Not applicable.

> 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.

Item 30 Authorized Bid Amount. - Not applicable.

> Item 31 Mortgagee Reported Curtailment Date (Same as Conveyance). If
> the mortgagee failed to comply with a time requirement for any of the
> following circumstances a) reasonable diligence, b) notice of
> foreclosure, or c) failure to initiate foreclosure within one year of
> default and subsequent payments advance the default date, enter the
> date the action should have been taken. If there was more than one
> failure, enter the earliest date on which a required action should
> have been taken.

Item 32 Schedule of Tax Information. Not applicable.

> Item 33 Mortgagor\'s Name, Social Security Number 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. See paragraph 1-8 for
> additional information.
>
> Item 34 Brief Legal Description of Property (Same as Conveyance).
> Enter a brief description of the property. This information is found
> on the mortgage which should agree with the deed to HUD.
>
> 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 claims.
>
> Items 37 & 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 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 form HUD-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 to
> coinsurance claims.
>
> Item 40 If Bankruptcy Filed, Enter Date (Same as Conveyance). Enter
> the date of the last bankruptcy action. This is required if Item 21 is
> completed.
>
> Note: If foreclosure is not commenced within one year from the date of
> default because of bankruptcy, the mortgagee is granted an extension
> of 60 days after release of bankruptcy to initiate foreclosure.

Item 41 If Conveyed/Assigned Damaged, Date Damage Occurred. Not
applicable.

Item 42 Date HIP Canceled 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.
>
> HUD\'s Comments, if any. HUD USE ONLY.

A.  Instructions for the Completion of form HUD 27011, Part B, Fiscal
    Data. The following item-by-item instructions are to be used when
    completing form HUD 27011, Part B, for coinsurance claims. Prepare
    this Part after Parts C, D and E have been completed. The
    information entered in this Part is transferred from Parts C, D and
    E.

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 & 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 (Same as Conveyance). Enter the date Part
> B is 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. Enter the sales price or
> the appraised value of the property, as applicable.
>
> Item 109 Escrow Balance (as of Date in Block 10, Part A). Enter the
> amount remaining in the escrow account as of the date of closing or
> appraisal notice, partial payments, hazard insurance premium refunds,
> escrows for on-site repairs, buy down money, etc. Do not enter a
> negative balance.
>
> Item 110 Total Disbursements for Protection and Preservation from Line
> 264, Part C (Same as Conveyance). Enter the total amount of
> disbursements appearing in Part C, Item 264. Note on the reverse side
> of this Part any authorization obtained from the local HUD office for
> approvals to exceed allowable amounts.
>
> Item 111 Total Disbursements from line 305, Part D. Enter the total
> amount appearing in Part D, Item 306.
>
> Item 112 Attorney/Trustee Fees Paid From Line 306, Part D. Enter the
> total amount appearing in Part D, Item 306. HUD WILL CALCULATE THE
> TWO-THIRDS ALLOWANCE.
>
> Item 113 Foreclosure, Acquisition, Conveyance and Other Costs from
> Line 307, Part D. Enter the total amount appearing in Part D, Item
> 307. HUD WILL CALCULATE THE TWO-THIRDS ALLOWANCE.
>
> Item 114 Bankruptcy Fee (if applicable) from Line 310, Part D. Enter
> the amount of bankruptcy fees appearing in Part D, Item 310. HUD WILL
> CALCULATE THE TWO-THIRDS ALLOWANCE.
>
> Item 115 Rental Income (Same as Conveyance). Enter any income from the
> rent of the property between the date foreclosure proceedings were
> instituted (or property otherwise acquired) and the date of 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 (Same as
> Conveyance). Enter the total amount paid and shown in Item 308, Part
> D.
>
> Item 118 Recovery or Damage (if not reported on Part A). Use Line 119
> if Reported on Part A. If insurance recovery has been received and all
> funds have not been expended, enter the amount of remaining funds.

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

> Item 120 Special Assessments (DO NOT USE FOR COINSURANCE) from Line
> 309, Part D. Not applicable.
>
> Item 121 Mortgage Note Interest. Mortgage note interest from the date
> of acquisition of title to the date of settlement will be computed by
> HUD. It should not be claimed on this line. An entry should be made on
> line 121 only if a mortgagor fails to meet the requirements of a
> special forbearance agreement and the failure continues for at least
> 60 calendar days. See Paragraph 2-18.

-   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 institution of foreclosure proceedings;

    2.  the date of acquisition of title and possession by deed-in-lieu
        of foreclosure;

    3.  90 calendar days following the date the mortgagor fails to meet
        the requirement of the forbearance agreement; or

    4.  such other date as the local HUD office may approve in writing
        prior to expiration of the 90 calendar day period (24 CFR
        203.402a).

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-   Rate. Enter the mortgage interest rate as it appears on the mortgage
    note.

> Compute the amount of mortgage interest due as instructed in Paragraph
> 2-19 and enter in Column C.
>
> Coinsurer are also entitled to mortgage interest on the unpaid
> principal balance from the date of acquisition of title to the date of
> the insurance benefits payment \[203.322(k)\] but the coinsurer should
> not enter this amount. HUD will calculate the mortgage interest on the
> principal balance.
>
> Item 122 Mortgage Insurance Premiums (Same as Conveyance). Enter total
> from Item 311, Part D.

Item 123 Unapplied Section 235 Assistance Payments. Not applicable.

Item 124 Overpaid Section 235 Assistance Payments. Not applicable.

> Item 125 Overhead Costs. Enter the amount paid for overhead costs from
> Item 405, Part E.
>
> Item 126 Uncollected Interest (Approved Forbearance Agreements Only).
> Not applicable.
>
> Item 127 Amount Due from Buyer in Column A Closing or at Appraisal
> Notice Date. Enter the amount due from buyer, or would be due from
> buyer, if the property was sold, from Item 406, Part E.
>
> Item 128 Amount Owed to Buyer in Column B Closing or at Appraisal
> Notice Date. Enter the amount due to the buyer, or would be due to the
> buyer, if the property was sold, from Item 407, Part E.
>
> Item 129 Additional Closing Costs. Enter additional expenses incurred
> at closing from Item 408, Part E.

Item 130 Appraisal Fee. Not applicable.

Item 131 Deficiency Judgment Costs/Fees. Not applicable.

Item 132 Reserved.

> 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.
> Reserved.
>
> Items 134 & 136 Enter the totals of Columns A - Deductions; B -
> Additions; and C - Interest.
>
> Item 137 Net Claim Amount (Columns B - A + C). The amount HUD actually
> pays will differ from what the mortgagee enters here because of
> possible curtailments, disallowed expenses, HUD\'s calculation of
> two-thirds allowances on attorney/trustee fees, foreclosure costs and
> bankruptcy fees, and additional debenture interest calculated by HUD
> to the date of claim settlement.
>
> Items 138 & 139 Mortgagee\'s Official Signature, Date and Title
> (signature not necessary if signed by a servicer) and Servicer
> Signature, Date, and Title. A signature must appear in at least one of
> these blocks, however, it is acceptable if both the mortgagee and the
> service wish to sign this form.

PART C SUPPORT DOCUMENT

The general instructions for the preparation of Part C in conveyance
claims are applicable in coinsurance claims except that the property is
not conveyed to the Secretary and debenture interest is not paid on
expenses. The mortgagee must enter the Date Paid, the Description,
Amount Paid and the Total but no entry should be made in the Debenture
Interest Columns. Disbursement should include payments from the last
completely paid installment to the date of closing or appraisal.

> Item 200 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.
>
> Item 201 & 202 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 203 Mortgagee\'s Reference Number (Same As Conveyance). Enter the
> mortgagee\'s reference number as it appears in Item 14 of Part A.
>
> Item 204 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
> actions 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 205 Debenture Interest Rate. Make no entry.

> Item 206 - 261 Disbursements for Protection and Preservation. Enter
> all inspection, protection and preservation expenses for which the
> mortgagee is not responsible. This includes debris removal, replacing
> broken glass, protecting plumbing and other operating systems against
> damage by freezing, care of lawns and shrubs, repair of leaking roof,
> etc. Describe the service performed, the date it was completed and the
> date paid. See paragraph 2-10 and 2-11 for the nature of reimbursable
> expenditures and cost limits. Enter expenses paid to board up the
> property if the field office gave prior approval.
>
> Enter the date of each inspection and indicate whether it is an
> Initial, Occupancy or Vacancy inspection. See paragraph 2-11. A copy
> of an inspection report must be maintained by the mortgagee for each
> inspection itemized.

-   Date Paid - A separate entry must be made for each payment. Enter
    the date the check was disbursed. If an expenditure or advancement
    was made prior to the date of default, enter the date of default and
    enter the actual date paid in parentheses following the description
    (See Paragraph 1-7c).

-   Date Work Completed - If date is not available on the invoice,
    obtain this date from vendor or contractor. This is not necessarily
    the date of billing, but the actual date the work was completed.

-   Description of Service Performed - Enter a description of the items
    or types of repairs and services performed, i.e., inspections.
    Additional space is provided on reverse of form.

-   Amount Paid - Actual payment amounts are to be entered. This
    information will be transferred to Part B, Fiscal Data.

-   Debenture Interest - Make no entry. HUD WILL CALCULATE THE DEBENTURE
    INTEREST.

> Item 262 Subtotals (Same As Conveyance). If reverse side of form is
> used to list protection and preservation costs, add amount paid and
> debenture interest columns.
>
> Item 263 Subtotals Brought Forward (Same As Conveyance). If reverse
> side of form is used, bring subtotals appearing in Item 262 to this
> line.
>
> Item 264 Totals. Total the \"amount paid\" and \"debenture interest\"
> column. Enter the total on Part B, Item 110, Column C when completing
> Part B, Fiscal Data.
>
> Item 265 & 266 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.
>
> Item 267 & 268 Mortgagee Official Signature, Date and Title (not
> necessary if signed by servicer) or Servicer Signature, Date and Title
> (Same As Conveyance). A signature must appear in at least one of these
> blocks, however, it is acceptable if both the mortgagee and the
> servicer wish to sign this form.
>
> Mortgagee\'s Comments, if any - HUD USE ONLY.

B.  Instructions for the completion of form HUD 27011, Part D, Support
    Document (Continuation 1). The general instructions for the
    preparation of Part D in conveyance claims are applicable in
    coinsurance claims except that the property is not conveyed to the
    Secretary and debenture interest is not paid on expenses. The
    mortgagee must enter the Date Paid, the Description, Amount Paid and
    the Total but no entry should be made in the Debenture Interest
    Column. Disbursements should include payments from the last
    completely paid installment to the date of closing or appraisal.

PART D SUPPORT DOCUMENT (CONTINUATION 1)

> Items 300 & 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. Make no entry.

> 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 Disbursement 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 all disbursements in these categories,
> including for each item the date paid, the period covered, the
> description, and the amount paid. Do not include disbursements which
> were paid from available escrow funds. No expense should be incurred
> after the date of sale or appraisal notice date.
>
> Item 306 Attorney/Trustee Fee. Itemize the fees paid to attorneys and
> trustees in connection with foreclosure or acquisition of title in the
> name of the coinsurer. Do not enter fees for bankruptcy or eviction in
> this item. If the fee for acquisition and conveyance is within the
> amount HUD approved for the area, do not itemize the elements of the
> fee. If attorney fees exceed those approved by HUD for routine
> foreclosures, see paragraph 1-10. HUD WILL CALCULATE THE TWO-THIRDS
> ALLOWANCE.
>
> Item 307 Foreclosure and/or Acquisition, Conveyance and Other Costs.
> Enter all disbursements required to vest title to and possession of
> the property in the name of the coinsurer. These costs must be
> itemized. If additional space is needed, attach a separate sheet to
> Part D. HUD WILL CALCULATE THE TWO-THIRDS ALLOWANCE.
>
> Item 308 Taxes on Deed. Enter amounts paid for taxes imposed upon any
> deeds or other instruments by which the property was acquired by the
> coinsurer. (Note: Deed taxes should not be included in Item 307).
>
> Item 309 Special Assessments (Do not use for Coinsurance, see Part E).
> Not applicable. Use items 406 or 407 for special assessments.
>
> Item 310 Bankruptcy. Itemize the bankruptcy fees paid. There must be
> an entry in Item 40. If the bankruptcy fees exceed those approved by
> HUD for routine bankruptcies, see paragraph 1-10. HUD WILL CALCULATE
> THE TWO-THIRDS ALLOWANCE.
>
> 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 or appraisal notice.

C.  Instructions for the Completion of form HUD 27011, Part E Support
    Document (Continuation 2). The following item by item instructions
    are to be used when completing form HUD 27011, Part E for
    coinsurance claims.

PART E SUPPORT DOCUMENT (Continuation 2)

> Items 400 & 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 (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 405 Overhead Costs. The coinsurance regulations authorize payment
> to the mortgagee of an amount to compensate for overhead costs not to
> exceed \$40 plus \$15 per month, or a part thereof, from the date of
> acquisition of title to the date of disposition or appraisal of the
> property, whichever first occurs.
>
> One Time Charge. [\_\_\_\_\_\_]{.underline} Enter an overhead charge
> not to exceed \$40.
>
> Number of Months. [\_\_\_\_\_\_]{.underline} Enter the number of
> months from the date of acquisition of title to the date of sale or
> appraisal notice date, whichever occurs first, rounded upward to the
> nearest full month.
>
> Amount \$. [\_\_\_\_\_\_]{.underline} Enter the monthly charge not to
> exceed \$15. Multiply the monthly charge by the number of months and
> enter the result in the space provided.
>
> Total. [\_\_\_\_\_\_]{.underline} Add the one-time charge and the
> total monthly charges and enter the sum.
>
> Item 406 Amounts Due from Buyer at Closing or at Appraisal Notice
> Date. Enter in the appropriate spaces amounts due from the buyer at
> closing for taxes, water and special assessments. If the property is
> not sold, enter the amounts that would be due from a buyer at the
> appraisal notice date. Do not include any special assessments which
> become liens before the mortgage was endorsed for insurance if not
> noted in the applicable for insurance.
>
> Item 407 Amounts Due to Buyer at Closing or at Appraisal Notice Date.
> Enter in the appropriate spaces amounts owed to the buyer at closing
> for taxes, water and special assessments, or if the property is not
> sold, the amounts that would be owed to a buyer at the appraisal
> notice date. Do not include any special assessments which became liens
> before the mortgage was endorsed for insurance, if not noted in the
> application for insurance.
>
> Item 408 Additional Closing Costs at Settlement. Enter additional
> expenses, if any, in the spaces provided. Do not include any amounts
> already entered in Part C.

Item 409 Appraisal Fee. Not applicable.

Item 410 Deficiency Judgment Costs/Fees. Not applicable.

Items 411 & 412 Reserved.

[]{#__RefHeading___Toc167867648 .anchor}**CHAPTER 6: CLAIMS WITHOUT
CONVEYANCE OF TITLE** **(CWCOT)**

[]{#__RefHeading___Toc167867649 .anchor}6-1 GENERAL.
[**(TOP)**](#TABLEOFCONTENTS)

A.  Under the Claims Without Conveyance of Title (CWCOT) program the
    mortgagee does not convey the property to HUD in exchange for
    insurance benefits (Section 204 of the National Housing Act, 12 USC
    1710). The mortgagee bids not more than the Commissioner\'s Adjusted
    Fair Market Value (CAFMV) at the foreclosure sale. If a third party
    is the successful bidder the claim is filed as provided in this
    chapter. (24 CFR 203.368) If the mortgagee is the successful bidder
    and elects to convey the property to HUD the claim must be filed as
    a conveyance (See Chapter 2).

B.  The CWCOT procedure is used only in those cases in which the HUD
    field office directed or authorized the mortgagee to seek a
    deficiency judgment against the mortgagor.

[]{#__RefHeading___Toc167867650 .anchor}6-2 COMMISSIONER\'S ADJUSTED
FAIR MARKET VALUE **(CAFMV)** [**(TOP)**](#TABLEOFCONTENTS)

A.  The Commissioner\'s Adjusted Fair Market Value (CAFMV) is the
    estimate of the fair market value of the mortgaged property, less
    adjustments, which may include without limitation, HUD\'s estimate
    of holding costs and resale costs that would be incurred if title to
    the mortgaged property is conveyed to HUD.

B.  Generally the mortgagee should not bid more than the CAFMV at the
    foreclosure sale because that is the net value of the property to
    HUD. The effect of bidding an amount equal to, in excess of or less
    than the CAFMV is discussed in paragraph 6-5.

[]{#__RefHeading___Toc167867651 .anchor}6-3 OBTAINING THE CAFMV
[**(TOP)**](#TABLEOFCONTENTS)

A.  The mortgagee must take the following action to obtain the CAFMV:

    1.  Estimate the foreclosure sale date.

    2.  Call the Valuation Branch, Assignment Clerk, in the local HUD
        Office which has jurisdiction over the property to obtain the
        name of a fee appraiser or HUD staff person, if available, to
        perform the appraisal.

    3.  Prepare the form HUD-91022, Mortgagee Notice of Foreclosure
        Sale, Part A (see Appendix 12), Insert in Part A, Block 14 of
        the form HUD-91022:

        a.  the name of the appraiser which was assigned from the panel
            of HUD fee appraisers or,

        b.  \"HUD Staff,\" if HUD staff is performing the appraisal.

> NOTE: If State or local law or practice requires that a
> pre-foreclosure appraisal must be made by an independent appraiser
> (such as one employed by the Sheriff\'s Office), the mortgagee shall
> submit that appraisal, if it is obtainable, with the HUD-91022 in lieu
> of requesting the HUD fee appraiser.

4.  Deliver the HUD-91022 to the local HUD Office Single Family (SF)
    Loan Management Branch 45 days prior to the estimated foreclosure
    sale date and label the envelope \"CWCOT/Deficiency
    Judgment/Foreclosure Sale\".

5.  Confirm the actual date of the foreclosure sale by furnishing a copy
    of the legal Notice of Sale or other notification of the actual
    foreclosure sale date to the local HUD Office, SF Loan Management
    Branch, on or before the date of publication, posting, or other
    standard legal notice. Insert at the top of this notice:

    a.  \"Deficiency Judgment Case\",

    b.  the Mortgagee Loan Number,

    c.  the FHA Case Number, and

    d.  the Mortgagor\'s Name.

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B.  On the same day that the mortgagee submits the HUD-91022 to HUD, the
    mortgagee must:

    1.  Forward a completed Application for Property Appraisal and
        Commitment, form HUD-92800, package including a Uniform
        Residential Appraisal Report (URAR) to the appraiser or to the
        HUD Valuation Branch if a HUD staff person is to perform the
        appraisal (URAR not required for HUD staff), and

    2.  Label the top of the HUD-92800, \"PROPERTY IN
        FORECLOSURE/DEFICIENCY JUDGMENT\". (This will serve as a
        \"flag\" to the appraiser as well as the local HUD Office
        regarding the disposition of the appraisal report.)

> NOTE: The assigned fee appraiser will follow the outstanding
> instructions which require that within five working days of receipt of
> the request that the appraiser must send:

a.  The completed report to the local HUD Office, Valuation Branch, and

b.  A copy of the report to the mortgagee.

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C.  If the mortgagee discovers, through receipt of the actual Notice of
    Sale, or other standard legal notice of the foreclosure sale, that
    they have not sent the HUD-91022, the mortgagee must immediately
    send a packaged marked \"URGENT\" containing the HUD-91022 and the
    Notice of Sale (with the sale date highlighted) to the HUD Office
    Loan Management Branch.

> Example: The mortgagee estimated 45 days prior to a foreclosure sale
> date of July 15 and intends to submit the HUD-91022 on or a few days
> before June 1.
>
> On May 20, the mortgagee receives the actual Notice of Sale or other
> notification of the foreclosure sale date set for June 21.
>
> The mortgagee must submit immediately the HUD-91022 marked \"URGENT\"
> and the Notice of Sale or other notification on or before the date of
> the publication, posting, etc. of the June 21 foreclosure sale date.

D.  The SF Loan Management Branch will provide the CAFMV to the
    mortgagee when notified of the actual foreclosure sale date.

> If the CAFMV has not been received by the mortgagee at least five
> working days prior to the foreclosure sale, the mortgagee shall
> contact the local HUD Office Loan Management Branch to ascertain the
> reason for the delay in receipt of the CAFMV. If a mortgagee incurs
> repeated unsuccessful attempts to contact the local HUD Office to
> obtain the bid amount, it should proceed with the sale and bid as it
> chooses, but clearly document such circumstances for HUD monitoring
> purposes.

[]{#__RefHeading___Toc167867652 .anchor}6-4 POSTPONED SALES AND
REINSTATEMENT [**(TOP)**](#TABLEOFCONTENTS)

A.  Postponed Sales. If the foreclosure sale is postponed, the appraisal
    and the CAFMV continue in effect for four months from the date of
    the appraisal. During this period, the mortgagee must notify
    immediately the HUD SF Loan Management Branch if its inspection of a
    vacant property indicates any damage to the property. The SF Loan
    Management Branch will advise the mortgagee accordingly. (Refer to
    paragraph 6-9 below regarding damaged properties.)

> If the sale is postponed and the newly scheduled foreclosure sale date
> is set for more than four months from the date of the appraisal, the
> mortgagee must contact HUD to obtain an appraiser to update the
> appraisal and receive an updated CAFMV. The mortgagee must follow the
> same time requirements used to get the first appraisal and add to the
> top of the HUD-92800 that is an \"UPDATED APPRAISAL, PROPERTY IN
> FORECLOSURE/DEFICIENCY JUDGMENT.\"

B.  Reinstatement. If the mortgagor reinstates the mortgage after
    foreclosure has been instituted, the mortgagee must:

    1.  Advise the local HUD office, SF Loan Management Branch, by
        telephone and follow up with a letter marked to the attention of
        the SF Loan Management Branch/CWCOT/Deficiency Judgment and
        include the FHA case number, verifying such action.

    2.  Contact the fee appraiser to cancel the appraisal, or if HUD
        staff was assigned, the SF Loan Management Branch.

    3.  Pass on the cost for the appraisal to the mortgagor as part of
        the foreclosure expenses, as set out in 24 CFR 203.552(a)(9).

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    5.  []{#__RefHeading___Toc167867653 .anchor}BIDDING AND ACQUISITION
        OF TITLE AT FORECLOSURE SALE. [**(TOP)**](#TABLEOFCONTENTS)

At the foreclosure sale, either the mortgagee or a third party will be
the successful bidder. Also, the mortgagor or a third party may redeem
the property.

A.  If the Mortgagee is the Successful Bidder:

    1.  Where the mortgagee is the successful bidder for an amount equal
        to the CAFMV, the mortgagee may elect to either retain title to
        the property, or convey the title to the property to HUD.

        a.  When the mortgagee retains title, it must file its claim for
            insurance benefits as provided in this chapter. When the
            mortgagee conveys title to the property to HUD, the
            mortgagee must file its claim for insurance benefits as a
            conveyance claim (Chapter 2).

    2.  Where the mortgagee is the successful bidder for an amount in
        excess of the CAFMV, the mortgagee may not convey title to the
        property to HUD. The mortgagee is limited to filing a claim for
        the insurance benefits computed as provided in this chapter. The
        amount of the bid will be deducted from the principal balance of
        the mortgage when the claim is computed.

NOTE:

a.  There may be special circumstances, such as when the mortgagee may
    be required under State law to bid in excess of the CAFMV, which
    will justify a mortgagee\'s bid in excess of the CAFMV. Under such
    circumstances, the mortgagee must call the HUD Single Family Loan
    Management Branch immediately after but no later than five days
    after the foreclosure sale, to obtain approval to convey title to
    the property to HUD. The SF Loan Management Branch shall confirm
    such approval in writing. The Department will waive the bidding
    requirement of the CAFMV and allow the mortgagee to convey title to
    the property to HUD and file a claim for the insurance benefits. The
    mortgagee must indicate that it received the Field Office approval
    and provide the date of the approval letter in the \"Mortgagee\'s
    Comments Section\" on the Claim for Insurance Benefits, form
    HUD-27011. A copy of the Field Office approval letter must be
    maintained in the mortgagee\'s Audit File.

b.  If the mortgagee bids an amount in excess of the CAFMV, and is
    subsequently penalized for such action, this does not excuse the
    mortgagee from its duty to assign to HUD any deficiency judgment
    obtained.

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3.  Where the mortgagee is the successful bidder for an amount which is
    less than the CAFMV, the mortgagee must convey title to the property
    to HUD. If the mortgagee retains title to the property, the
    mortgagee may not file a claim.

> If the mortgagee elects to convey title to HUD, the mortgagee must
> file its claim for insurance benefits as a conveyance claim (Chapter
> 2).

4.  If the mortgagee retains title to the property HUD will not pay for
    any of the following costs incurred by the mortgagee:

    a.  Costs to maintain the property after the foreclosure sale,

    b.  Eviction costs, or

    c.  Costs to sell the property.

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B.  If a Third Party is the Successful Bidder:

    1.  Where a third party is the successful bidder at the foreclosure
        sale for an amount equal to or greater than the CAFMV, the
        mortgagee must submit its claim for insurance benefits as
        provided in this chapter. When the claim is calculated, the
        proceeds of the sale shall be deducted from the principal
        balance of the mortgage which was unpaid on the date of the
        foreclosure proceedings.

    2.  Where a third party is the successful bidder at the foreclosure
        sale for an amount which is less than the CAFMV, the mortgagee
        may not file a claim.

    3.  In the event of a third party purchase, HUD will not reimburse
        the mortgagee for eviction costs or expenses incurred to
        preserve and protect the property after the foreclosure sale.

C.  If the Mortgagor or a Third Party Redeems the Property:

> Where the mortgagor or a third party redeems the property and acquires
> title for an amount not less than the CAFMV, the mortgagee must submit
> its claim as provided in this chapter. The redemption amount will be
> deducted from the principal balance of the mortgage when the claim is
> calculated.

5.  []{#__RefHeading___Toc167867654 .anchor}TIME REQUIREMENTS.
    [**(TOP)**](#TABLEOFCONTENTS)

The mortgagee must comply with the following time requirements when
submitting a claim without conveyance of title. Failure to comply will
result in curtailment of debenture interest to the date the action
should have been taken or to the date to which it was extended by HUD
(24 CFR 203.402(k)(2)).

A.  Institute foreclosure proceedings or other action to acquire the
    mortgaged property within nine months from the date of default,
    unless an extension of time is approved in writing.

B.  Provide written notice to HUD that foreclosure has been instituted.
    The notice must be provided within 30 calendar days of the
    institution of foreclosure. This requirement is satisfied by
    reporting to HUD\'s Single Family Default Monitoring System.

C.  Exercise reasonable diligence in prosecuting the foreclosure
    proceedings to completion (See paragraph 2-2).

D.  File the claim within 30 days of:

    1.  the date the mortgagee acquired good marketable title; or

    2.  the date another (third) party acquired good marketable title;
        or

    3.  the date the mortgagor or other party redeemed the property; or

    4.  the date the redemption period expires; or

    5.  whatever date the Commissioner requires \[24 CFR
        203.368(i)(5)(iv)\].

E.  HUD Headquarters must receive the claim form (HUD-27011, Parts A
    and B) within 10 days of the date the form was prepared. The claim
    is not considered to have been received unless all required
    information has been provided and all attachments are received.

    5.  []{#__RefHeading___Toc167867655 .anchor}EXTENSION OF TIME
        REQUIREMENTS. [**(TOP)**](#TABLEOFCONTENTS)

If the mortgagee cannot comply with the above requirements for Items A
and D because of circumstances beyond its control, it should submit a
request for an extension of time to the local HUD office. The request
should be made as soon as

possible before the time limit for that action expires (See paragraph
2-14).

[]{#__RefHeading___Toc167867656 .anchor}6-8 DEFICIENCY JUDGMENT FEES AND
COSTS. [**(TOP)**](#TABLEOFCONTENTS)

A.  Full Reimbursement. Fees and costs are reimbursable only when HUD
    requested or required the deficiency judgment action or when HUD has
    approved the mortgagee\'s request to pursue the judgment. If HUD has
    requested the mortgagee to seek a deficiency judgment the deficiency
    judgment costs are 100 percent reimbursable. They should be entered
    in Item 410 of Part E and must be described in detail.

Allowable costs and fees are as follow:

1.  Attorney fees which relate only to the deficiency judgment.

2.  Additional filing or recording fees which relate only to the
    deficiency judgment.

3.  Costs related to a judicial foreclosure if local law requires a
    judicial foreclosure in order to obtain a deficiency judgment and
    the foreclosure would otherwise be by power of sale.

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B.  Partial Reimbursement. Non-judicial foreclosure costs and judicial
    foreclosure costs not required by the deficiency judgment request
    should be shown in Item 306 and 307 of Part B, and are subject to
    2/3 limitation in reimbursement. Attorney fees entered in Item 306
    are also subject to the same jurisdictional limitation as cases not
    involving a deficiency judgment. Only foreclosure costs which are
    subject to full reimbursement, and costs related to the deficiency
    judgment should be shown in Item 410 of Part E.

[]{#__RefHeading___Toc167867657 .anchor}6-9 DAMAGED PROPERTY.
[**(TOP)**](#TABLEOFCONTENTS)

A claim without conveyance title may not be filed if the property is
damaged. A conveyance claim must be filed for damaged property.

10. []{#__RefHeading___Toc167867658 .anchor}HAZARD INSURANCE.
    [**(TOP)**](#TABLEOFCONTENTS)

There will be no reimbursement from HUD for any hazard insurance
premiums allocated to the period after acquisition of title by the
mortgagee or a third party.

11. []{#__RefHeading___Toc167867659 .anchor}TITLE REQUIREMENT.
    [**(TOP)**](#TABLEOFCONTENTS)

Since the property is not conveyed to the Secretary, title evidence
procedures are not applicable.

12. []{#__RefHeading___Toc167867660 .anchor}SPECIAL FORBEARANCE.
    [**(TOP)**](#TABLEOFCONTENTS)

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 (see paragraph

2-20).

13. []{#__RefHeading___Toc167867661 .anchor}CLAIM PAYMENT.
    [**(TOP)**](#TABLEOFCONTENTS)

All claims for insurance benefits eligible to be paid in cash will be
settled in that manner. HUD will promptly pay in one lump sum, 100
percent of the unpaid principal balance, less the sale, bid or
redemption price, plus allowable costs and debenture interest, upon
receipt of Parts A and B provided the claim has been properly completed,
meets time requirements and does not contain exceptional

costs.

14. []{#__RefHeading___Toc167867662 .anchor}DEBENTURE INTEREST
    ALLOWANCE. [**(TOP)**](#TABLEOFCONTENTS)

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.

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 the mortgagee or third party bidder obtains
title or the date the mortgagor redeems the property.

Interest continues on the difference between the unpaid principal
balance and the greater of either the CAFMV, redemption amount or the
third party bid, to the date of final payment of the claim.

Further debenture interest is paid on expenses from the date of
expenditure to the date of final payment of the claim.

If the mortgagee fails to take actions as 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 \[24 CFR 203.402(k)(2)(ii)\].

15. []{#__RefHeading___Toc167867663 .anchor}DOCUMENTS TO BE SUBMITTED.
    [**(TOP)**](#TABLEOFCONTENTS)

It is very important that all required documentation be forwarded to the
appropriate locations in a timely manner. Failure to meet any of the
documentation requirements could jeopardize all or part of the claim
reimbursement. The various

critical control and notification functions which enable HUD to expedite
the payment of a claim. All documents must be submitted within 30 days
of the date the mortgagee or a third party acquires title to the
property, the date the property is redeemed, or the date the redemption
expires.

A.  To HUD Headquarters. HUD Headquarters must receive the documents
    within 10 days after submission date:

    1.  The original of Parts A and B.

    2.  The original Mortgage Insurance Certificate.

    3.  A copy of the forbearance agreement, if any.

    4.  A worksheet showing reallocation of mortgage payments if
        capitalization method of accounting is used (see paragraph 1-3).

B.  To the Local HUD Office:

    1.  Copies of Parts A and B.

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

    3.  An appropriate document confirming the sale price at
        foreclosure.

    4.  The deficiency judgment, if any, assigned of record to HUD, or
        if there is no deficiency judgment, the original credit and
        security instruments, assigned or endorsed by the mortgagee,
        without recourse, to HUD.

Note: See Paragraph 1-8 for file documentation requirements.

> The following Table (Table 6-1) illustrates the document submission
> requirements for conveyance claims.

[]{#__RefHeading___Toc167867664 .anchor}6-16 CLAIM PREPARATION - CLAIMS
WITHOUT CONVEYANCE OF TITLE. [**(TOP)**](#TABLEOFCONTENTS)

The claim must be completed as described below using form HUD-27011,
Single Family Application for Insurance Benefits. To avoid delay in
payment, the claim must be complete and accurate and contain all
information requested. Note paragraph 1-3 concerning pre-screening of
applications.

In many instances, the instructions provided in Chapter 2, Conveyances
apply equally in CWCOT 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.

A.  Instructions for the Completion of form HUD 27011, Part A, Initial
    Application. The following item by item instructions are to be used
    when completing form HUD 27011, Part A, for Claims Without
    Conveyance of Title.

PART A INITIAL APPLICATION

> Item 1 Claim Type. Place an \"X\" in the space for Claim Type 06 =
> CWCOT.
>
> Items 2 & 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\".

\(1\) X X X - X X X X X X X X X or 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 default reasons listed below. If code 15 is used,
explain the reason under \"Mortgagee\'s Comments.\"

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 a 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 (explain in Mortgagee comments)

Item 5 Endorsement Date. Enter the endorsement date that appears on the
Mortgage Insurance Certificate.

Item 6 Date Form Prepared. Enter the date this form is completed and
submitted to HUD.

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 mortgagee or third party obtains title to the property or the
date the property is redeemed.

> Item 10 Date Deed or Assignment Filed for Record or Date of Closing or
> Appraisal. Not applicable.
>
> Item 11 Date Foreclosure Proceedings (a) Instituted or (b) Date of
> Deed In Lieu. Check the appropriate box and enter the date of the
> first public action taken which was required by law to initiate
> foreclosure (e.g., filing a complaint or petition, recording a notice
> of default, or publication of a notice of sale). If the foreclosure
> action was nullified under state law by the filing of a bankruptcy
> petition, enter the date on which the foreclosure action was
> re-instituted. A deed-in-lieu may not be accepted in deficiency
> judgment cases.
>
> 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.

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 the suffix code 700 through 799. Do not enter a date
> here if this is a direct endorsement or coinsurance loan or you may be
> paid an incorrect debenture interest rate.
>
> Item 19 Expiration Date of Extension to Foreclose/ Assign (Same as
> Conveyance). If a request for an extension of time is requested by the
> mortgagee and granted by the local HUD office, enter the expiration
> date of that extension. The extension must be in writing. See
> paragraph 1-6.

If bankruptcy is involved or if state or local laws delay action, the
mortgagee need not obtain approval to extend the date to begin
foreclosure. Enter the date 60 days after the date of the release of
bankruptcy, unless an additional extension period is approved by the
local HUD office. The latest extension date must always be entered. This
60 day extension is only applicable when the bankruptcy precluded
initiation of foreclosure within the timeframe. See paragraph 2-16.

Item 20 Date of Notice/Extension to Convey. Not applicable.

> 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. Check one.

Item 23 If Item 22 is \"No,\" Date of Local HUD Office Approval. Not
applicable.

Item 24 Is Property Conveyed Damaged? Yes or No. If the damage falls
into the categories listed in 24 CFR 293.378 or 203.379, a CWCOT claim
may not be filed.

> 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. This question must be
answered. If the property was redeemed answer \"No\".

Item 29 Deficiency Judgment Code (Same as Conveyance). Enter the code
number 1, 2 3 or 4 as appropriate. See below.

Code 1 Enter \"1\" - If HUD authorized you to obtain a deficiency
judgment, but you did not acquire one.

Code 2 Enter \"2\" - If you obtained a deficiency judgment, but HUD did
not authorize you to do so.

Code 3 Enter \"3\" - If HUD authorized you to obtain a deficiency
judgment and you were successful in obtaining one.

Code 4 Enter \"4\" - If HUD did not authorize a deficiency judgment and
you did not obtain one.

Item 30 Authorized Bid Amount (Same as Conveyance). Enter the amount of
the CAFMV, if provided by HUD field office.

Item 31 Mortgagee Reported Curtailment Date (Same as Conveyance) - If
the mortgagee failed to comply with a time requirement for any of the
following circumstances: a) reasonable diligence, b) notice of
foreclosure, or c) failure to initiate foreclosure within one year of
default and subsequent payments advance the default date, enter the date
the action should have been taken. If there was more than one failure,
enter the earliest date on which a required action should have been
taken.

Item 32 Schedule of Tax Information. Not applicable.

Item 33 Mortgagor\'s Name, Social Security Number 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 MIC.

Enter the social security numbers of all mortgagors, if known. At least
one social security number is required. See Par. 1-8 for additional
information.

> Item 34 Brief Legal Description of Property. Enter a brief description
> of the property.
>
> 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 claims.
>
> Items 37 & 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 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 form HUD-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.

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

B.  Instructions for the Completion of form HUD 27011, Part B, Fiscal
    Data. The following item-by-item instructions are to be used when
    completing form HUD 27011, Part B, for claims without conveyance of
    title. Prepare this Part after Parts C, D and E have been completed.
    The information entered in this Part is transferred from Parts C, D
    and E.

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 & 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 (Same as Conveyance). Enter the date Part B
is prepared and submitted to HUD.

Item 105 Expiration Date to Submit Title Evidence, if Applicable. Not
applicable.

Item 106 Check if Supplemental. Check this box only if you have received
final payment of your claim. See Chapter 7.

Item 107 Adjusted Loan Balance (if different from block 17 on Part A).
Not applicable.

> Item 108 Sale/Bid Price or Appraisal Value (for Coinsurance or
> Non-conveyances) Enter the greater of the Commissioner\'s Adjusted
> Fair Market Value (CAFMV) or the foreclosure sale price or the
> redemption price. The term \"foreclosure sale price\" shall mean the
> actual amount bid at the foreclosure sale where the property was sold.
> The amount of the proceeds from the foreclosure sale actually
> distributed to the mortgagee should not be used. Similarly, the
> redemption price shall mean the redemption price figure, not the
> amount of redemption proceeds actually received by the mortgagee.
>
> Item 109 Escrow Balance (as of Date in Block 10, Part A) (Same as
> Conveyance). Enter amount remaining in escrow account as of the date
> the deed is filed for record. 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, buy
> down 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.

-   See Item 123 for unapplied Section 235 assistance payments.

-   Payment 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. DO 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.
    Illustration of Mortgagee Advances:

  ----------- ----------- ----------- ----------- ------------ -------------
  Date Due    Date Paid   Interest    Escrow      Escrow       Balance
                                      Principal   Adjustment   

  Balance                                                      \$151.60
  Forward                                                      

  01/01/83    02/03/83    \$73.32     \$21.09     \$70.69      \$222.29

  08/03/83                                        \$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 (Same as Conveyance). Enter the total amount of
> disbursements and debenture interest appearing in Part C, Item 264.
> Note on the reverse side of this part any authorization obtained from
> the local HUD office for approvals to exceed allowable amounts.

Item 111 Total Disbursements from item 305, Part D (Same as Conveyance).
Enter the total amount paid and debenture interest appearing in Part D,
Item 305.

Item 112 Attorney/Trustee Fees Paid From Line 306, Part D (Same as
Conveyance). Enter the total amount paid and debenture interest
appearing in Part D, Item 306. HUD WILL CALCULATE THE TWO-THIRDS
ALLOWANCE FOR BOTH EXPENSES AND INTEREST.

Item 113 Foreclosure, Acquisition, Conveyance and Other Costs from Line
307, Part D (Same as Conveyance). Enter the total amount paid and
debenture interest appearing in Part D, Item 307. HUD WILL CALCULATE THE
TWO-THIRDS ALLOWANCE FOR BOTH EXPENSES AND INTEREST.

Item 114 Bankruptcy Fee (if applicable) from Line 310, Part D (Same as
Conveyance). Enter the amount of bankruptcy fees paid and debenture
interest appearing in Part D, Item 310. HUD WILL CALCULATE THE
TWO-THIRDS ALLOWANCE FOR BOTH EXPENSES AND INTEREST.

> Item 115 Rental Income. Enter any income from the rent of the property
> between the date foreclosure proceedings were instituted (or property
> otherwise acquired) and the date in Item 9.
>
> 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 (Same as
> Conveyance). Enter the total amount paid and the debenture interest
> shown in Item 308, Part D.
>
> 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
> 309, 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. See Paragraph 2-19.

-   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 institution of foreclosure proceedings;

    2.  the date the successful bidder obtains title;

    3.  90 calendar days following the date the mortgagor fails to meet
        the requirement of the forbearance agreement; or

    4.  such other date as the local HUD office may approve in writing
        prior to expiration of the 90 calendar day period (24 CFR
        203.402a).

        -   Rate. Enter the mortgage interest rate as it appears on the
            mortgage note.

> Compute the amount of mortgage interest due as instructed in Paragraph
> 2-19 and enter in Column C.
>
> 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 & 129 Not applicable. Any amounts appearing on these lines
will be disallowed.

Item 130 Appraisal Fee. Enter total from line 409, part E, if
applicable. Interest may be added in Column C.

Item 131 Deficiency Judgment Costs/Fees. Enter the total from Line 410,
Part E, if applicable. Interest may be added in Column C.

Item 132 Reserved.

> 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 -- 136 Enter the totals of Columns A) Deductions; B)
Additions; and C) Interest.

> Item 137 Net Claim Amount (Columns B - A + C). The amount HUD actually
> pays will differ from what the mortgagee enters here because of
> possible interest curtailments, disallowed expenses, HUD\'s
> calculation of two-thirds allowances on attorney/trustee fees,
> foreclosure costs and bankruptcy fees, and additional debenture
> interest calculated by HUD to the date of claim settlement.
>
> Items 138 & 139 Mortgagee\'s Official Signature, Date and Title
> (signature not necessary if signed by a servicer) or Servicer
> Signature, Date, and Title. See instructions for Part A, Items 37 and
> 38.

C.  Instructions for the Completion of form HUD 27011, Part C, Support
    Document. The following item-by-item instructions are to be used
    when completing form HUD-27011, Part C, for claims without
    conveyance of title.

> Expenditures may be entered on Part C 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 to the date Part B is filed unless interest is
> curtailed.
>
> No expenses should be incurred and no work should be performed on the
> property of the foreclosure sale and the expiration of the redemption
> period. This does not preclude reimbursement for expenses incurred or
> work completed before conveyance but not paid until after the sale.
>
> If the local HUD office instructs the mortgagee to perform a specific
> service after the date of sale, a notation must be made on the reverse
> of the form under \"Mortgagee\'s Comments\".
>
> Each expense listed for reimbursement must be itemized and sufficient
> information must be provided for computation of debenture interest.
> See Paragraph 2-5.

PART C SUPPORT DOCUMENT

> Item 200 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 201 & 202 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 203 Mortgagee\'s Reference Number (Same as Conveyance). Enter the
> mortgagee\'s reference number as it appears in Item 14 of Part A.
>
> Item 204 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 205 Debenture Interest Rate (Same as Conveyance). Using the
> Debenture Interest Rate Table provided in Appendix 3 of these
> instructions, 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. The debenture interest rate can also be found on the Part
> A advice of payment.
>
> Item 206 - 261 Disbursements for Protection and Preservation (Same as
> Conveyance). Enter all inspection, protection and preservation
> expenses. This includes debris removal, replacing broken glass,
> protecting plumbing and other operating systems against damage by
> freezing, care of lawns and shrubs, repair of leaking roof, etc.
> Describe the service performed, the date it was completed and the date
> paid. See paragraph 2-11 for the nature of reimbursable expenditures
> and cost limits. Enter expenses paid to board up the property if the
> field office gave prior approval.
>
> Enter the date of each inspection and indicate whether it is an
> Initial, Occupancy or Vacancy inspection. See paragraph 2-11. A copy
> of an inspection report must be maintained by the
>
> mortgagee for each inspection itemized.

-   Date Paid. A separate entry must be made for each payment. Enter the
    date the check was disbursed. If an expenditure or advancement was
    made prior to the date of default, enter the date of default and
    enter the actual date paid in parentheses following the description
    (See Paragraph 2-5c).

-   Date Work Completed - If date is not available on the invoice,
    obtain this date from vendor or contractor. This is not necessarily
    the date of billing, but the actual date the work was completed.

-   Description of Service Performed - Enter a description of the items
    or types of repairs and services performed, i.e., inspections.
    Additional space is provided on reverse of form.

-   Amount Paid - Actual payment amounts are to be entered. This
    information will be transferred to Part B, Fiscal Data.

-   Debenture 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 in Item 204 (submission date for Part
    B). Daily Interest Rate Factor tables are provided in Appendix 8 of
    these instructions 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 submission of the claim or the
    curtailment date.

> Item 26 Subtotals (Same as Conveyance). If reverse side of form is
> used to list protection and preservation costs, add amount paid and
> debenture interest columns.

Item 263 Subtotals Brought Forward (Same as Conveyance). If reverse side
of form is used, bring subtotals appearing in Item 262 to this line.

> Item 264 Totals (Same as Conveyance). Total the \"amount paid\" and
> \"debenture interest\" columns. Enter the totals on Part B, Item 110,
> Column C when completing Part B, Fiscal Data.
>
> Item 265 & 266 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.
>
> Item 267 & 268 Mortgagee Official Signature, Date and Title (not
> necessary if signed by servicer) or Servicer Signature, Date and Title
> (Same as Conveyance). A signature must appear in at least one of these
> blocks; however, it is acceptable if both the mortgagee and the
> servicer wish to sign this form.
>
> Mortgagee\'s Comments, if any - Use this area to justify extremely
> large expenditures, as well as other information required by these
> instructions.

HUD\'s Comments, if any - For HUD\'s use only.

D.  Instructions for the Completion of form HUD 27011, Part D, Support
    Document (Continuation 1). 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 to the date Part B is
    filed unless interest is curtailed.

    -   Date Paid. A separate entry must be made for each payment. Enter
        the date the check was disbursed. If an expenditure or
        advancement was made prior to the date of default, enter the
        date of default and enter the actual date paid in parentheses
        following the description (See Paragraph 2-5c).

    -   Description of Service Performed - Enter a description of the
        items or types of services performed. Additional space is
        provided on reverse of form.

    -   Amount Paid - Actual payment amounts are to be entered. This
        information will be transferred to Part B, Fiscal data.

    -   Debenture 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 in Item 204 (submission
        date for Part B). Daily Interest Rate Factor tables are provided
        in Appendix 8 of these instructions to assist in convening 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
        submission of the claim or the curtailment date.

    -   Total the \"amount paid\" and \"debenture interest\" columns.

PART D SUPPORT DOCUMENT (CONTINUATION 1)

> Items 300 & 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 Appendix 4 of these
> instructions, determine the rate at the date of firm commitment and
> the rate at the date of endorsement, then enter the higher rate.
>
> 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 all disbursements in these categories. Do not
> include disbursements which were paid from available escrow funds. No
> expense should be incurred after the date the third party obtains
> title to the property (Item 9) 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 and
> trustees in connection with foreclosure or acquisition of title and
> conveyance of the property to the successful bidder. Do not enter fees
> for bankruptcy or eviction in this item. If the fee for acquisition
> and conveyance is within the amount HUD approved for the area, do not
> itemize the elements of the fee. If attorney fees exceed those
> approved by HUD for routine foreclosures see paragraph 1-10. 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 successful bidder except taxes paid on deeds included in
> Item 308 and disbursements shown in Item 306. These costs must be
> itemized e.g., title policy, resale title binders, title search fees
> (if separate costs), publication, service of process, etc. 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 03.402)
>
> Item 308 Taxes on Deed. Enter amounts paid for taxes imposed upon any
> deeds or other instruments by which the property was acquired by the
> successful bidder. (Note: Deed taxes should not be included in Item
> 307.)
>
> Item 309 Special Assessments (Do not use for Coinsurance, see Part E)
> (Same as Conveyance). 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.
>
> Item 310 Bankruptcy (Same as Conveyance). Itemize the bankruptcy fees
> paid. There must be an entry in Item 40. If bankruptcy fees exceed
> those approved by HUD for routine bankruptcies see paragraph 1-10. HUD
> WILL CALCULATE THE TWO-THIRDS ALLOWANCE FOR EXPENSES AND INTEREST (24
> CFR 203.402).
>
> Item 311 Mortgage Insurance Premiums (Same as Conveyance). 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 the deed is filed for record.

E.  Instructions for the Completion of form HUD 27011, Part E Support
    Document (Continuation 2). The following item by item instructions
    are to be used when completing form HUD-27011, Part E, for claims
    without conveyance of title.

PART E SUPPORT DOCUMENT (Continuation 2)

> Items 400 & 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 (Same as Conveyance). Using the
> Debenture Interest Rate Table provided in Appendix 3 of these
> instructions, determine the rate at the date of firm commitment and
> the rate at the date of endorsement, then enter the higher rate.
>
> Item 404 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).
>
> Items 405 Overhead Costs. Not applicable.
>
> Item 406 Amounts Due from Buyer at Closing. Not applicable.
>
> Item 407 Amounts Owed to Buyer at Closing. Not applicable.
>
> Item 408 Additional Closing Costs at Settlement. Not applicable.
>
> Item 409 Appraisal Fee. Enter the amount of the appraisal fee and date
> paid only if you were instructed to obtain an appraisal by the local
> HUD office while complying with the procedures. If debenture interest
> is payable the amount of interest may be entered in Line 130, Column
> C, of Part B.
>
> Item 410 Deficiency Judgment Costs/Fees. Enter a figure here only if
> the local HUD office authorized you to obtain a deficiency judgment.
> The allowable costs and fees are as follows: (1) cost of attorney fees
> which relate only to the obtaining of the deficiency judgment; (2)
> additional filing or recording fees directly related to the deficiency
> judgment; (3) if local law required a judicial foreclosure in order to
> obtain a deficiency judgment, those costs directly related to the
> judicial foreclosure, provided that judicial foreclosure would not,
> otherwise, have been necessary. If debenture interest is payable the
> amount of interest may be entered in Line 131, Column C of Part B.
>
> Items 411 & 412 Reserved.

# CHAPTER 7: SUPPLEMENTAL CLAIMS/REMITTANCE {#chapter-7-supplemental-claimsremittance .unnumbered}

[]{#__RefHeading___Toc167867666 .anchor}7-1 GENERAL.
[**(TOP)**](#TABLEOFCONTENTS)

Mortgagees must make a thorough review of all receipts and expenses
before submitting an Application for Insurance Benefits, form HUD-27011.
There will be occasions when the lender has incurred an expense but is
unable to make payment because a vendor delayed submitting an invoice or
for other valid reasons. HUD will consider one supplemental adjustment
to the initial claim payment in the event of such delayed disbursements
and to correct errors in the original claim or payment. If you have
properly reviewed and certified the accuracy of your initial claim
submission, the need for supplemental claims should be exceptional.
Funds received after the claim was filed must be remitted to HUD
immediately upon receipt or knowledge of such funds. The Supplemental
Process must be used when remitting such funds or to request
reconsideration of disallowed costs. Remittance of overpayments or any
other amounts due HUD are not subject to any limitation.\*

[]{#__RefHeading___Toc167867667 .anchor}7-2 ONE SUPPLEMENTAL CLAIM.
[**(TOP)**](#TABLEOFCONTENTS)

Mortgagees are allowed to file one supplemental claim for additional
funds. Remittance of overpayments or any other amounts due HUD are not
subject to any limitation. A supplemental claim will be denied unless
filed within the 6-month period following the date of final settlement
for any given HUD case number. Supplemental claims on Part A or B must
not be filed before receipt of the final payment of the original claim
on Part B except when Part A was overpaid. Any subsequent supplemental
claim for additional funds submitted for the same case will be denied
UNLESS it meets one of the following exceptions:

-   Filing approval from the local HUD office. The Single Family Loan
    Management Branch having jurisdiction over the property may give the
    mortgagee written approval to file an additional supplemental claim.

-   The subsequent supplemental claim concerns hazard insurance
    adjustments \-- no filing approval necessary.

-   The subsequent supplemental claim concerns deficiency judgments \--
    no filing approval necessary, or

-   Supplemental claims previously submitted and returned to the
    mortgagee for a correction and/or for further information must be
    received by the Department as soon as possible but no later than 45
    days from the Department\'s request or 6 months from the final
    settlement date of the original claim, whichever is later.

The need for mortgagees requesting the local HUD Offices to review and
approve more than the \"one\" supplemental claim submission for the same
case should be few, if any. However, mortgagees requesting local HUD
Offices to approve such supplemental claims must:

-   submit the request in writing,

-   provide thorough justification and documentation to show and support
    the exceptional situation required for approval of the request, and

-   maintain a copy of HUD\'s approval and supporting documentation in
    the claim review file.

[]{#__RefHeading___Toc167867668 .anchor}7-3 ATTORNEY FEES.
[**(TOP)**](#TABLEOFCONTENTS)

As of June 25, 1994, mortgagees are not required to file separate
supplemental claims directly to the Office of General Counsel for
attorney\'s fees which exceed the Federal National Mortgage Association
(FNMA) fee schedule.

For routine legal actions, HUD reimburses mortgagees for attorney\'s
fees based on the FNMA Schedule of Standard Attorney\'s and Trustee\'s
Fees. Formerly, mortgagees were generally instructed to enter the amount
actually paid to the attorney, regardless of whether the fee exceeded
the FNMA fee or whether the amounts were reasonable, and the initial
claim payment was limited to the allowable amount. Mortgagees must now
follow the instructions below regarding what may be claimed for
attorney\'s fees. Generally, mortgagees may enter no more than the FNMA
fee for a routine legal action and may enter only reasonable amounts for
contested foreclosures, contested evictions, contested bankruptcies,
required probate procedures, etc. If the mortgagee complies with the
guidance, the need to file a supplemental claim for additional funds for
attorney\'s fees should be eliminated in all but a very few cases.

However, as before, if the mortgagee believes it is entitled to more
than the amount HUD actually reimbursed in the initial claim payment,
the mortgagee may file a supplemental claim for attorney\'s fees.
However, mortgagees may file only one supplemental claim, so any claim
for additional attorney\'s fees must be included in

that one supplemental claim. In addition, supplemental claims for
attorney\'s fees should no longer be sent to the Home Mortgage Division,
Room 9258, as had been previously directed.

If a supplemental claim for attorney fees is filed, it may include other
items. To support the additional fees, the supplemental claim must
include a complete form HUD-27011 (supplemental); a copy of the Parts A
and B of the original form HUD-27011 and Parts C, D and E as applicable;
a copy of the final advice of payment letter; the mortgagee\'s comments
on the necessity for the increased fee; and copies of documentation
necessary to support the additional claimed amount.

Mortgagees are expected to maintain adequate documentation in the claim
review files to support all attorney\'s fees. This will be subject to
verification during the post claim review. If a mortgagee\'s claim is
more than the amounts allowed by the following instructions, it will be
considered a monetary finding and the mortgagee will be billed for the
statistically calculated overpayment for all claims within the review
period.

See Paragraph 1-10 for instructions on how reimbursement for attorney\'s
fees may be claimed on the initial Part B claim submission.

[]{#__RefHeading___Toc167867669 .anchor}7-4 CLAIM FORM.
[**(TOP)**](#TABLEOFCONTENTS)

A.  A supplemental claim is filed using Part A of form HUD-27011
    accompanied by the other claim parts to be amended or supplemented,
    following the instructions for the original claim type. The
    information to be entered is identification, date, correction of
    information provided in the original claim, items omitted in the
    original claim, and if items were incorrectly reported in the
    original claim, the difference between the amount reported and the
    amount that should have been reported, including debenture interest
    computation.

B.  The reason for the submission of the supplemental claims must be
    stated on the reverse side of Parts A or B.

[]{#__RefHeading___Toc167867670 .anchor}7-5 TIME REQUIREMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

A.  HUD will not accept claims to supplement or correct errors in the
    initial claim more than six months after the date of final payment
    except for:

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1.  Cases where HUD requests or requires pursuit of a deficiency
    judgment. A supplemental claim for costs related only to the
    deficiency judgment may be submitted up to three months after the
    deficiency judgment is obtained or denied. If this results in the
    claim being submitted more than one year after final settlement of
    the initial Part B claim, an extension to file must be obtained (see
    paragraph 1-6 F.4b).

2.  Correction of an estimated hazard insurance premium if received by
    HUD within two weeks of the insurer\'s notice of adjustment, but not
    more than twelve months after the date of final payment (See
    paragraph 1-6).

3.  Remittance of overpayments and funds received by the mortgagee after
    the claim was filed.

4.  Claims awaiting HUD decision.

5.  Claims initially received within 6 months after the date of final
    payment where HUD has requested additional documentation. In such
    case HUD will accept the claim within the latter of:

    a.  six months after the date of final payment; or

    b.  45 days after the date of HUD\'s letter requesting additional
        documentation.

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```
B.  Claims for amounts paid after the date the original claim was filed
    will be paid only if the obligation was incurred before the deed or
    assignment to HUD was filed for record or was paid on HUD\'s written
    instruction.

C.  Supplemental claims (on Parts A or B) must not be filed before
    receipt of final payment of the original claim on Part B except when
    Part A was overpaid (See paragraph 1-6).

[]{#__RefHeading___Toc167867671 .anchor}7-6 EXTENSION OF TIME
REQUIREMENTS. [**(TOP)**](#TABLEOFCONTENTS)

Extensions to file supplemental claims are generally not approved.
However, if the mortgagee cannot comply with the time requirements for a
particular action because of circumstances beyond its control, a request
for an extension of time (form HUD-50012) should be submitted to the
local HUD office (See paragraph 1-6).

[]{#__RefHeading___Toc167867672 .anchor}7-7 CLAIMS FOR ADDITIONAL FUNDS.
[**(TOP)**](#TABLEOFCONTENTS)

Mortgagees may not claim additional funds when there are offsetting
amounts due HUD. When a supplemental claim is filed for additional
funds, copies of receipts and other supporting documentation that apply
to the request must accompany the claim. Insufficient documentation will
result in either denial or return of the supplemental claim.

Generally, when a claim for additional funds is being filed based on a
date being corrected on the Part A claim, the supplemental claim must
provide a certification as to the accuracy and validity of all other
dates on the Part A claim which impact on time requirements and the
payment of interest on the claim. This certification must include a
statement that all such dates have been rechecked against the claim
filing instructions in this Handbook. The certification must also
include a statement describing the document of origin for each of these
dates.

Examples of the documents needed to establish a basis for the following
are:

+---------------------------------+---+---------------------------------+
| SUPPORT NEEDED FOR:             |   | > SUPPORT DOCUMENTS (copy of):  |
+---------------------------------+---+---------------------------------+
| Due Date of Last Installment    |   | Mortgage Payment History Record |
+---------------------------------+---+---------------------------------+
| Date of Possession and Title    |   | Legal documentation (sheriff\'s |
|                                 |   |                                 |
|                                 |   | deed, recorded deed in lieu,    |
|                                 |   | proof                           |
|                                 |   |                                 |
|                                 |   | of eviction date, inspection    |
|                                 |   |                                 |
|                                 |   | report)                         |
+---------------------------------+---+---------------------------------+
| Date of Deeding or Assignment   |   | Recorded Deed or Assignment     |
+---------------------------------+---+---------------------------------+
| Date of Foreclosure Institution |   | First Legal Action Taken        |
| or Deed in Lieu                 |   | (filing of complaint or         |
|                                 |   | publication of notice           |
|                                 |   |                                 |
|                                 |   | of sale) or Recorded Deed in    |
|                                 |   | Lieu                            |
+---------------------------------+---+---------------------------------+
| Unpaid Loan Balance             |   | Mortgage Note and Payment       |
|                                 |   | History                         |
|                                 |   |                                 |
|                                 |   | Record                          |
+---------------------------------+---+---------------------------------+
| Expiration Date of Extension    |   | form HUD-50012 approved by      |
|                                 |   | Local                           |
|                                 |   |                                 |
|                                 |   | HUD Office (before expiration   |
|                                 |   | of                              |
|                                 |   |                                 |
|                                 |   | time frame)                     |
+---------------------------------+---+---------------------------------+
| Date of Notice/Extension to     |   | Assignment Acceptance Letter    |
| Convey                          |   | form HUD-50012                  |
+---------------------------------+---+---------------------------------+
| Date of Bankruptcy Release      |   | Court Action (bankruptcy        |
|                                 |   | release                         |
|                                 |   |                                 |
|                                 |   | notice or release of stay)      |
+---------------------------------+---+---------------------------------+
| Protection and Preservation     |   | form HUD-27011 Part C filed     |
|                                 |   | with original claim submission  |
+---------------------------------+---+---------------------------------+
| Disbursements (Taxes, HIP,      |   | Paid receipts                   |
| eviction costs) Foreclosure     |   |                                 |
| Costs, Attorney\'s Fees,        |   | -   If incurred after date of   |
| Bankruptcy Costs, other         |   |     deeding or all assignment,  |
| disbursements                   |   |     obtain local HUD Office     |
|                                 |   |     written approval for        |
|                                 |   |     payment before filing       |
|                                 |   |     supplemental claim.         |
|                                 |   |                                 |
|                                 |   | -   form HUD-27011 Part D filed |
|                                 |   |     with original claim         |
|                                 |   |     submission; Paid receipts   |
|                                 |   |     and/or payment history      |
|                                 |   |     records;                    |
|                                 |   |                                 |
|                                 |   | -   If taxes were paid after    |
|                                 |   |     date of assignment or deed, |
|                                 |   |     obtain local HUD Office     |
|                                 |   |     written approval for        |
|                                 |   |     payment before filing       |
|                                 |   |     supplemental claim.         |
+---------------------------------+---+---------------------------------+

In all instances, the reason for submission of the supplemental must be
entered on the reverse of the Part A in the mortgagee comment section.

Foreclosure and Acquisition Costs, and Attorney/trustee fees are
reimbursed at 2/3 of the allowed amount. A supplemental claim should not
be submitted for the 1/3 of the cost or fee for which the mortgagee is
responsible.

[]{#__RefHeading___Toc167867673 .anchor}7-8 FUNDS DUE HUD.
[**(TOP)**](#TABLEOFCONTENTS)

If HUD overpaid a claim due to the mortgagee\'s or HUD\'s error or if a
any payment relating to the mortgage transaction is received after the
original claim was submitted, a supplemental claim must be filed and a
check for the amount due must be attached to the face of the
supplemental claim.

A.  If the claim involves an overpayment, explain in the \"Mortgagee\'s
    Comments\" on the reverse of Part A how the overpayment occurred.

B.  If the amount overpaid or received involved a computation of
    interest, the overpaid interest must be included in the
    reimbursement to HUD. The amount must include interest calculated by
    the mortgagee and included in Part B and interest calculated by HUD
    for the period from the date of claim to the date of payment.

The supplemental claim, with check attached, must be sent to the
appropriate address:

Post Office Box for Regular Mail: Street Address for Express

HUD-Single Family Claims Mail or Courier:

P. O. Box 954507 HUD-Single Family Claims

St. Louis, MO 63195-450 Mercantile Bank

[]{#__RefHeading___Toc167867674 .anchor}7-9 DOCUMENTS TO BE SUBMITTED
[**(TOP)**](#TABLEOFCONTENTS)

A.  To HUD Headquarters

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1.  The original Parts A and B for the supplemental claims.

2.  Supporting documents for the supplemental claim.

3.  Copies of the Parts A and B submitted in the original claim.

4.  Copies of Parts C, D and E, if applicable.

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B.  To the Local HUD Office, ATTN: Single Family Loan Management Branch

    1.  Copies of Parts A and B, if applicable

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

> Note: See paragraph 1-8 for claim file documentation requirements.
>
> For an illustration of the document submission requirements refer to
> one of the following tables depending on the claim type:

-   Supplemental Claims for Conveyances - See Table 2-1

-   Supplemental Claims for Assignments - See Table 3-1

-   Supplemental Claims for Automatic Assignments - See Table 4-1

-   Supplemental Claims for Coinsurance - See Table 5-1

-   Supplemental Claims for CWCOT - See Table 6-1

[]{#__RefHeading___Toc167867675 .anchor}7-10 CLAIM PREPARATION.
[**(TOP)**](#TABLEOFCONTENTS)

A supplemental claim is completed using the instructions for the
original claim type, except as instructed in this Chapter. Enter only
information necessary to correct the original claim and information
identified below by the word \"REQUIRED\".

Do not file a supplemental claim for additional reimbursement prior to
receipt of payment of the original Part B and do not file a corrected
claim. All corrections requesting additional reimbursement must be made
by supplemental claims filed after payment of the original Part B claim.

Whenever a supplemental claim is filed for additional funds attach
copies of supporting documents (i.e. extension letter, ledger cards,
receipts, etc.) to the claim form submitted to HUD Headquarters.

## Instructions for the Completion of form HUD 27011, Part A, Initial Application.

PART A INITIAL APPLICATION

> Item 1 Claim Type - REQUIRED. Place an \"X\" in the space for Claim
> Type 05 = Supplemental.
>
> Items 2 & 3 FHA Case Number and Section of Act Code - REQUIRED. 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 or 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. Not applicable.
>
> Item 5 Endorsement Date - REQUIRED. Enter the correct date.
>
> Item 6 Date Form Prepared - REQUIRED. Enter the date this form is
> completed and submitted to HUD.
>
> Items 7 - 11 Due Date of First Payment to Principal and Interest; Due
> Date of Last Complete Installment Paid; Date of Possession and
> Acquisition of Marketable Title; Date Deed or Assignment Filed for
> Record or Date of Closing or Appraisal; Date Foreclosure Proceedings
> (a) Instituted or (b) Date of Deed In Lieu. If the previously reported
> dates were incorrect, enter the correct date.
>
> Item 12 Holding Mortgagee Number (Payee) - REQUIRED. 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 - REQUIRED. Enter the complete
> 10-digit mortgagee number of the servicing mortgagee.
>
> Note: This number determines the name and address to which all
> computer generated letters and claim payment data are mailed. If this
> item is not completed, all mail will be sent to the holding mortgagee.
>
> Item 14 Mortgagee Reference Number - REQUIRED. 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 - REQUIRED. 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 - REQUIRED if initial claim was 03 -
> Automatic Assignment. Enter the complete 9-digit Employer
> Identification Number.
>
> Items 17 - 35 If the previously reported information was incorrect,
> enter the correct information.
>
> Item 35 Name and Address of Mortgagee - REQUIRED. Enter the name and
> address of the mortgagee, including the ZIP code.
>
> Item 36 Name and Address of Mortgagee\'s Servicer - REQUIRED. Enter
> the name and address of the mortgagee\'s servicer, including the ZIP
> code. Include the name and telephone number of a contact person who
> can answer questions about the claim.
>
> Items 37 & 38 Mortgagee Official Signature, Date and Title, and
> Servicer Signature, Date and Title - REQUIRED. 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 will be returned if it is not
> signed or if it contains a stamped or duplicated signature.
>
> Items 39 - 44 Not applicable.
>
> Mortgagee\'s Comments, if any. Enter the reason for submitting
>
> the supplemental claim and use this area to justify unusual
>
> circumstances as well as other information required by the
>
> instructions.

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

## Instructions for the Completion of form HUD 27011, Part B, Fiscal Data. Do not complete Part B if the required changes relate only to Part A; however, if there are changes relating only to Part B, the required items of Part A must be completed. Use the same instructions to complete the supplemental claim that were used to complete the original claim.

PART B FISCAL DATA

> Item 100 Mortgagor\'s Name and Property Address - REQUIRED. Enter the
> mortgagor\'s name and property address as they appear in Item 33 of
> Part A.
>
> Items 101 & 102 FHA Case Number and Section of Act Code - REQUIRED.
> Enter the FHA Case Number and Section of the Act Code as they appear
> in Items 2 and 3 of Part A.
>
> Item 103 Mortgage\'s Reference Number - REQUIRED. Enter the
> mortgagee\'s Reference Number as it appears in Item 14 of Part A.
>
> Item 104 Date Form Prepared. Enter the date the supplemental form is
> prepared and submitted to HUD.
>
> Item 105 Expiration Date to Submit Title Evidence, if Applicable.
> Complete only if the previously reported date was incorrect.
>
> Item 106 Check if Supplemental - REQUIRED. Check this box.
>
> Items 107 - 132 &
>
> Items 134-137 Use instructions of original claim type. If an amount
> was reported incorrectly on the original claim, enter only the
> difference between what was reported and what should have been
> reported. This may be either a positive or negative figure. If the
> difference is a negative figure, enter the difference on the
> appropriate line in the \"deduction\" column (Column A). If the
> difference is a positive figure, enter on the appropriate line the
> difference in the \"addition\" column (Column B). If either of these
> columns is shaded, place the amount in the opposite column in
> brackets.
>
> Item 133 Contact: Holding Mortgagee, Name and Telephone Number; or
> Contact: Servicing Mortgagee, Name and Telephone Number - REQUIRED:
> 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.
>
> Items 138 & 139 Mortgagee Official Signature, Date and Title (not
> necessary if signed by servicer) or Servicer Signature, Date and Title
> REQUIRED. A signature must appear in at least one of these blocks;
> however, it is acceptable if both the mortgagee and the servicer wish
> to sign this form.
>
> Mortgagee\'s Comments. - Use this area to justify information required
> by these instructions.

HUD\'s Comments. - For HUD\'s use only.

## Instructions for the Completion of form HUD 27011, Parts C, D and E, Support Documents (Continuations 1 and 2).

PARTS C, D AND E

The parts must be prepared in the same manner as the original claim.
Complete only those items which are in need of adjustment and enter only
the difference between what was reported and what should have been
reported. If changes are necessary only to Part A the other parts need
not be completed.

Calculate the interest due the mortgagee or owed to HUD by using the
same dates and interest tables that were used for the original
calculation, provided these dates and interest rates were correct. If
the dates or interest rates were incorrect, recalculate the interest for
all expenses claim in the original. Show only the difference in the
interest due.

If the amount paid in the original claim was an overpayment, enclose the
expense and interest adjustment in brackets.

HUD will calculate the remaining interest accumulating after the

date of the original Part B.

EXAMPLE: An expense for repairing windows of the \$168.95 was
incorrectly shown on an original submission of Part C as \$186.95 \-- an
overstatement of \$18

(\$186.95 - \$168.95).

The interest calculation dates: 9/11/83 (date of expenditure) to 10/1/84
(date on original part B).

Solution: Part C of the supplemental claim should show an adjusted
expense of \$18.00 and an adjusted interest amount of \$1.52 (\$18.00 x
.0002191781 x

386). Both the \$18 and the \$1.52 should be enclosed in brackets on
Part C and transferred to Part B, line 110, columns B and C. A check
with the FHA CASE number clearly noted should be attached.

# CHAPTER 8: PRE-FORECLOSURE SALES {#chapter-8-pre-foreclosure-sales .unnumbered}

[]{#__RefHeading___Toc167867681 .anchor}8-1 GENERAL.
[**(TOP)**](#TABLEOFCONTENTS)

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.

[]{#__RefHeading___Toc167867682 .anchor}8-2 PROGRAM COORDINATOR.
[**(TOP)**](#TABLEOFCONTENTS)

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).

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).

[]{#__RefHeading___Toc167867683 .anchor}8-3 RESPONSIBILITIES OF
MORTGAGEE IN THE PRE-FORECLOSURE SALES PROGRAM.
[**(TOP)**](#TABLEOFCONTENTS)

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.

[]{#__RefHeading___Toc167867684 .anchor}8-4 MARKETING THE PROPERTY.
[**(TOP)**](#TABLEOFCONTENTS)

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 east 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.

[]{#__RefHeading___Toc167867685 .anchor}8-5 SALES PROCEEDS.
[**(TOP)**](#TABLEOFCONTENTS)

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

[]{#__RefHeading___Toc167867686 .anchor}8-6 DEED-IN-LIEU OF FORECLOSURE.
[**(TOP)**](#TABLEOFCONTENTS)

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.

[]{#__RefHeading___Toc167867687 .anchor}8-7 CLAIM TYPE.
[**(TOP)**](#TABLEOFCONTENTS)

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.

[]{#__RefHeading___Toc167867688 .anchor}8-8 TIME REQUIREMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

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).

[]{#__RefHeading___Toc167867689 .anchor}8-9 EXTENSION OF TIME
REQUIREMENTS. [**(TOP)**](#TABLEOFCONTENTS)

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.

[]{#__RefHeading___Toc167867690 .anchor}8-10 TITLE REQUIREMENT.
[**(TOP)**](#TABLEOFCONTENTS)

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 reimbursed by entry
in Item 305.

[]{#__RefHeading___Toc167867691 .anchor}8-11 INCENTIVE PAYMENTS AND
COMPENSATION. [**(TOP)**](#TABLEOFCONTENTS)

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.

[]{#__RefHeading___Toc167867692 .anchor}8-12 DISCHARGE OF LIENS.
[**(TOP)**](#TABLEOFCONTENTS)

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).

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.

[]{#__RefHeading___Toc167867693 .anchor}8-13 PROTECTION AND PRESERVATION
OF PROPERTIES. [**(TOP)**](#TABLEOFCONTENTS)

(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.

[]{#__RefHeading___Toc167867694 .anchor}8-14 REIMBURSABLE COSTS AND
EXPENSES. [**(TOP)**](#TABLEOFCONTENTS)

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.

Disbursements for taxes, assessments, hazard insurance and other
allowable items payable before the date of the pre-foreclosure sale
closing.

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.

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.

An amount paid for the release or discharge of liens or encumbrances
with the approval of the Program Coordinator.

\$250 to be paid to the mortgagee as compensation for administrative
costs. No debenture interest should be computed on this amount.

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:

Costs to maintain, protect, and preserve the property after the
pre-foreclosure sale closing, Eviction costs, or Any other costs related
to the property which were incurred after the closing date.

[]{#__RefHeading___Toc167867695 .anchor}8-15 HAZARD INSURANCE.
[**(TOP)**](#TABLEOFCONTENTS)

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.

[]{#__RefHeading___Toc167867696 .anchor}8-16 SPECIAL FORBEARANCE.
[**(TOP)**](#TABLEOFCONTENTS)

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.

[]{#__RefHeading___Toc167867697 .anchor}8-17 DEFICIENCY JUDGMENTS.
[**(TOP)**](#TABLEOFCONTENTS)

Mortgagors determined to be eligible for, and who participate in the
pre-foreclosure sales program, are not to be pursued for deficiency
judgments.

[]{#__RefHeading___Toc167867698 .anchor}8-18 DEBENTURE INTEREST
ALLOWANCE. [**(TOP)**](#TABLEOFCONTENTS)

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.

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 \[24 CFR 203.402(k)(2)(ii)\].

[]{#__RefHeading___Toc167867699 .anchor}8-19 CLAIM PAYMENT.
[**(TOP)**](#TABLEOFCONTENTS)

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:

Adding the following items:

-   Allowable costs and advances.

-   Debenture interest on the unpaid principal balance from the date of
    default to the date of closing of the pre-foreclosure sale.

-   Debenture interest on allowable costs and advances from the date of
    expenditure to the date of closing of the pre-foreclosure sale.

-   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.

-   \$250 to compensate the mortgagee for administrative costs under the
    pre-foreclosure sales program.

-   Allowable mortgage interest if the mortgagor failed to meet the
    requirements of a special forbearance agreement.

-   Amounts paid to satisfy or release junior liens with the approval of
    the Program Coordinator.

Deducting the following items:

-   All amounts received by the mortgagee on account of the mortgage
    after closing of the pre-foreclosure sale.

-   All amounts received by the mortgagee from any source relating to
    the property on account of rent or other income after deducting
    handling expenses.

-   All cash retained by the mortgagee for the account of the mortgagor
    that have not been applied to reduction of principal.

-   All amounts received by the mortgagee relating to the sale of the
    property.

[]{#__RefHeading___Toc167867700 .anchor}8-20 DOCUMENTS TO BE SUBMITTED.
[**(TOP)**](#TABLEOFCONTENTS)

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.

    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.

[]{#__RefHeading___Toc167867701 .anchor}8-21 CLAIM PREPARATION -
PRE-FORECLOSURE SALES. [**(TOP)**](#TABLEOFCONTENTS)

The claim must be completed as described below using form HUD-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.

A.  Instructions for the Completion of form HUD 27011, Part A, Initial
    Application. The following item by item instructions are to be used
    when completing form HUD 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 & 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 default 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 a 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 (explain in Mortgagee comments)
>
> 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.
>
> 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.
>
> 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 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.
>
> 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 & 38 Mortgagee Official Signature, Date and Title, 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 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.

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 & 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
> Non-conveyances). Enter the amount of proceeds received from the
> Closing Agent.
>
> 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, buy down 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)

-   See Item 123 for unapplied Section 235 assistance payments.

-   Payment 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.

-   DO 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.

-   Illustration of Mortgagee Advances:

  ----------- ----------- ----------- ----------- ------------ -------------
  Date Due    Date Paid   Interest    Escrow      Escrow       Balance
                                      Principal   Adjustment   

  Balance                                                      \$151.60
  Forward                                                      

  01/01/83    02/03/83    \$73.32     \$21.09     \$70.69      \$222.29

  08/03/83                                        \$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.
First 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.

> 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

> 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.
>
> NOTE: Do not calculate debenture interest on the administrative fee.
> Mortgagees are not entitled
>
> to debenture interest on this item.

Items 130 & 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 - 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 & 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.

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.

-   Date 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.

-   Description of Service Performed. Enter a description of the items
    or types of services performed. Additional space is provided on the
    reverse of the form.

-   Amount Paid. Actual payment amounts are to be entered. This
    information will be transferred to Part B, Fiscal Data.

-   Debenture 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.

-   Total the \"Amount Paid\" and \"Debenture Interest\" columns.

PART D SUPPORT DOCUMENT (Continuation 1)

> Items 300 & 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 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 CFR203.402).
>
> 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 & 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).

Items 405 - 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 Judgment Costs/Fees. Not applicable.

Items 411& 412 Reserved.

\"FHA Single Family Insurance Claims\" REV-1

[]{#__RefHeading___Toc167867702 .anchor}**Appendix 1:** Single-Family
Application for Insurance Benefits [**(TOP)**](#TABLEOFCONTENTS)

[PDF Form](../27011.pdf)

[]{#__RefHeading___Toc167867703 .anchor}**Appendix 2:** Conveyance
Partial Payment [**(TOP)**](#TABLEOFCONTENTS)

Conveyance Partial Payment

DEAR SIR OR MADAM:

SUBJECT: FHA CASE NO. ADVICE OF PAYMENT

PROPERTY ADDRESS:

MORTGAGOR NAME:

SERVICERS\' NAME:

PAYMENT TYPE: PARTIAL MORTGAGEE REF. NO:

  ------------ ----------------------------- ---------- -------------- -------------- ------------- --------------
  SECTION OF                                 0203       CLAIM TYPE:                                 CONVEYANCE
  THE ACT:                                                                                          

  SETTLEMENT                                 06/10/94   SCHEDULE                                    0170C
  DATE:                                                 NUMBER :                                    

  DATE CLAIM                                 06/06/94   DUE DATE LAST                               06/01/93
  REC\'D:                                               INSTALLMENT:                                

  LINE NO.     \*\*\*\*DESCRIPTION\*\*\*\*                             DEDUCTION      EXPENSE       INTEREST RATE

  017          UNPAID PRINCIPAL BALANCE                                                             
               \$134,353.74                                                                         

  107          ADJUSTED LOAN BALANCE                                                                

  108          SALE/BID/APPRAISAL VALUE                                                             

  109          ESCROW BALANCE                                                                       

  110          TOTAL DISBURSEMENTS P&P                                                              

  111          TOTAL DISBURSEMENTS                                                                  

  112          ATTORNEY/TRUSTEE FEES PD                                                             

  113          FORECL., ACQUIS., CONVY.                                                             

  114          BANKRUPTCY FEE                                                                       

  115          RENTAL INCOME                                                                        

  116          RENTAL EXPENSE                                                                       

  117          TOTAL TAXES ON DEED                                                                  

  27 or 118    AMOUNT OF DAMAGE                                                                     

  119          ADJUSTED DAMAGE                                                                      

  120          SPECIAL ASSESSMENTS                                                                  

  121          MORTGAGE NOTE INTEREST                                                               
               FORBEARANCE (COINS. ONLY)                                                            

  122          MORT. INSURANCE PREMIUM                                                              

  123          UNAPPLIED 235 ASSISTANCE                                                             

  124          OVERPAID 235 SUBSIDY                                                                 

  125          OVERHEAD COST                                                                        

  126          UNCOLLECTED INTEREST                                                                 

  127          AMOUNT DUE FROM BUYER                                                                

  128          AMOUNT OWED TO BUYER                                                                 

  129          CLOSING COSTS/ADMIN FEE                                                              

  130          APPRAISAL FEE                                                                        

  131          DEF. JUDGMT COST & FEES                                                              

  999          COINSURANCE RESERVE AMT INT.                                           \$14,689.65   .127500
               FROM 08/01/93 TO 06/10/94                                                            

  TOTALS                                                               \$134,353.74   \$14,689.65   
  ------------ ----------------------------- ---------- -------------- -------------- ------------- --------------

FHA SETTLEMENT AMOUNT: \$149,043.39

LESS OFFSET AMOUNT: 0.00

LESS RESERVE AMT (COINS): 0.00

FHA DEBENTURE PAYMENT: [0.00]{.underline}

FHA CASH PAYMENT: \$149,043.39

**Appendix 2 (2 of 8)**

SUBJECT: FHA CASE NO: ADVICE OF PAYMENT ADJUSTMENTS

MTGEE REF NO: SCHED: 0170C STTLDT: 06/10/94

ADJUSTMENTS HAVE BEEN MADE TO YOUR CLAIM FOR THE REASONS SHOWN BELOW:

ITEM NO: REASONS:

If you have any questions, please call (703) 235-9102.

**Appendix 2 (3 of 8)**

Conveyance Final Payment

DEAR SIR OR MADAM:

SUBJECT: FHA CASE NO. ADVICE OF PAYMENT

PROPERTY ADDRESS:

MORTGAGOR NAME :

SERVICERS\' NAME :

PAYMENT TYPE : FINAL MORTGAGEE REF. NO:

  ------------ ----------------------------- ---------- -------------- ------------ ------------ --------------
  SECTION OF                                 0203       CLAIM TYPE:                              CONVEYANCE
  THE ACT:                                                                                       

  SETTLEMENT                                 07/28/94   SCHEDULE                                 0170C
  DATE:                                                 NUMBER :                                 

  DATE CLAIM                                 07/25/94   DUE DATE LAST                            06/01/93
  REC\'D:                                               INSTALLMENT:                             

  LINE NO.     \*\*\*\*DESCRIPTION\*\*\*\*                             DEDUCTION    EXPENSE      INTEREST RATE

  017          UNPAID PRINCIPAL BALANCE                                                          
               \$134,353.74                                                                      

  107          ADJUSTED LOAN BALANCE                                                             

  108          SALE/BID/APPRAISAL VALUE                                                          

  109          ESCROW BALANCE                                          \$676.00                  

  110          TOTAL DISBURSEMENTS P&P                                 \$910.75     \$17.63      .127500

  111          TOTAL DISBURSEMENTS                                     \$4,656.53   \$212.02     .127500

  112          ATTORNEY/TRUSTEE FEES PD                                \$200.00     \$14.67      .127500

  113          FORECL., ACQUIS., CONVY.                                \$674.40     \$32.72      .127500

  114          BANKRUPTCY FEE                                                                    

  115          RENTAL INCOME                                                                     

  116          RENTAL EXPENSE                                                                    

  117          TOTAL TAXES ON DEED                                                               

  27 or 118    AMOUNT OF DAMAGE                                                                  

  119          ADJUSTED DAMAGE                                                                   

  120          SPECIAL ASSESSMENTS                                                               

  121          MORTGAGE NOTE INTEREST                                                            
               FORBEARANCE (COINS. ONLY)                                                         

  122          MORT. INSURANCE PREMIUM                                 \$375.54     \$18.56      .127500

  123          UNAPPLIED 235 ASSISTANCE                                                          

  124          OVERPAID 235 SUBSIDY                                                              

  125          OVERHEAD COST                                                                     

  126          UNCOLLECTED INTEREST                                                              

  127          AMOUNT DUE FROM BUYER                                                             

  128          AMOUNT OWED TO BUYER                                                              

  129          CLOSING COSTS/ADMIN FEE                                                           

  130          APPRAISAL FEE                                                                     

  131          DEF. JUDGMT COST & FEES                                                           

  999          COINSURANCE RESERVE AMT INT.                                         \$12.87      .127500
               FROM 07/22/94 TO 07/28/94                                                         

  TOTALS       \$676.00                                                \$6,817.22   \$308.47     
  ------------ ----------------------------- ---------- -------------- ------------ ------------ --------------

FHA SETTLEMENT AMOUNT: \$6,449.69

LESS OFFSET AMOUNT: 0.00

LESS RESERVE AMT (COINS): 0.00

FHA DEBENTURE PAYMENT: [0.00]{.underline}

FHA CASH PAYMENT: \$6,449.69

**Appendix 2 (4 of 8)**

SUBJECT: FHA CASE NO: ADVICE OF PAYMENT ADJUSTMENTS

MTGEE REF NO: SCHED: 0170C STTLDT: 07/28/94

ADJUSTMENTS HAVE BEEN MADE TO YOUR CLAIM FOR THE REASONS SHOWN BELOW:

ITEM NO: REASONS:

If you have any questions, please call (703) 235-9102.

**Appendix 2 (5 of 8)**

Assignment - Full Payment

DEAR SIR OR MADAM:

SUBJECT: FHA CASE NO. ADVICE OF PAYMENT

PROPERTY ADDRESS:

MORTGAGOR NAME :

SERVICERS\' NAME :

PAYMENT TYPE : FULL MORTGAGEE REF. NO:

  ------------ ----------------------------- ---------- -------------- ------------- ------------ --------------
  SECTION OF                                 0734       CLAIM TYPE:                               ASSIGNMENT
  THE ACT:                                                                                        

  SETTLEMENT                                 03/10/94   SCHEDULE                                  0106C
  DATE:                                                 NUMBER :                                  

  DATE CLAIM                                 03/04/94   DUE DATE LAST                             
  REC\'D:                                               INSTALLMENT:                              

  LINE NO.     \*\*\*\*DESCRIPTION\*\*\*\*                             DEDUCTION     EXPENSE      INTEREST RATE

  017          UNPAID PRINCIPAL BALANCE                                                           
               \$79, 356.12                                                                       

  107          ADJUSTED LOAN BALANCE                                                              

  108          SALE/BID/APPRAISAL VALUE                                                           

  109          ESCROW BALANCE                                                                     

  110          TOTAL DISBURSEMENTS P&P                                                            

  111          TOTAL DISBURSEMENTS                                     \$1,936.41                 

  112          ATTORNEY/TRUSTEE FEES PD                                              \$13.00      

  113          FORECL., ACQUIS., CONVY.                                                           

  114          BANKRUPTCY FEE                                                                     

  115          RENTAL INCOME                                                                      

  116          RENTAL EXPENSE                                                                     

  117          TOTAL TAXES ON DEED                                                                

  27 or 118    AMOUNT OF DAMAGE                                                                   

  119          ADJUSTED DAMAGE                                                                    

  120          SPECIAL ASSESSMENTS                                                                

  121          MORTGAGE NOTE INTEREST                                                \$5,739.73   .100000
               FORBEARANCE (COINS. ONLY)                                                          

  122          MORT. INSURANCE PREMIUM                                               \$203.87     

  123          UNAPPLIED 235 ASSISTANCE                                                           

  124          OVERPAID 235 SUBSIDY                                                               

  125          OVERHEAD COST                                                                      

  126          UNCOLLECTED INTEREST                                                               

  127          AMOUNT DUE FROM BUYER                                                              

  128          AMOUNT OWED TO BUYER                                                               

  129          CLOSING COSTS/ADMIN FEE                                                            

  130          APPRAISAL FEE                                                                      

  131          DEF. JUDGMT COST & FEES                                                            

  999          COINSURANCE RESERVE AMT INT.                                                       
               FROM 03/01/94 TO 01/20/94                                                          

  TOTALS       0.00                                                    \$81,509.40   \$5,739.73   
  ------------ ----------------------------- ---------- -------------- ------------- ------------ --------------

FHA SETTLEMENT AMOUNT: \$87,249.13

LESS OFFSET AMOUNT: 0.00

LESS RESERVE AMT (COINS): 0.00

FHA DEBENTURE PAYMENT: [0.00]{.underline}

FHA CASH PAYMENT: \$87,249.13

**Appendix 2 (6 of 8)**

SUBJECT: FHA CASE NO: ADVICE OF PAYMENT ADJUSTMENTS

MTGEE REF NO: SCHED: 0106C STTLDT: 03/10/94

ADJUSTMENTS HAVE BEEN MADE TO YOUR CLAIM FOR THE REASONS SHOWN BELOW:

ITEM NO: REASONS:

20\. THE DATE IN ITEM 10 IS MORE THAN 30 DAYS AFTER THE DATE IN ITEM 20.
INTEREST IS CURTAILED TO THE DATE IN ITEM 20 PLUS 30 DAYS.

IF YOU ENTERED DEBENTURE INTEREST IN COLUMN C, IT HAS BEEN DISALLOWED.

HUD HAS CALCULATED THE DEBENTURE INTEREST YOU ARE DUE. IF YOU CLAIMED
AMOUNTS IN COLUMNS A OR B WHICH WERE NOT PAID, THE COSTS WERE NOT
ALLOWABLE FOR ASSIGNMENTS.

If you have any questions, please call (703) 235-9102.

**Appendix 2 (7 of 8)**

Supplemental Payment

DEAR SIR OR MADAM:

SUBJECT: FHA CASE NO. ADVICE OF PAYMENT

PROPERTY ADDRESS:

MORTGAGOR NAME:

SERVICERS\' NAME:

  ------------ ----------------------------- ---------- -------------- ------------ ------------ --------------
  SECTION OF                                 0703       CLAIM TYPE:                              CONVEYANCE
  THE ACT:                                                                                       

  SETTLEMENT                                 04/06/94   SCHEDULE                                 0125c
  DATE:                                                 NUMBER :                                 

  DATE CLAIM                                 05/07/93   DUE DATE LAST                            11/01/91
  REC\'D:                                               INSTALLMENT:                             

  LINE NO.     \*\*\*\*DESCRIPTION\*\*\*\*                             DEDUCTION    EXPENSE      INTEREST RATE

  017          UNPAID PRINCIPAL BALANCE                                                          
               \$79, 356.12                                                                      

  107          ADJUSTED LOAN BALANCE                                                             

  108          SALE/BID/APPRAISAL VALUE                                                          

  109          ESCROW BALANCE                                                                    

  110          TOTAL DISBURSEMENTS P&P                                                           

  111          TOTAL DISBURSEMENTS                                     \$173.00                  

  112          ATTORNEY/TRUSTEE FEES PD                                                          

  113          FORECL., ACQUIS., CONVY.                                                          

  114          BANKRUPTCY FEE                                                                    

  115          RENTAL INCOME                                                                     

  116          RENTAL EXPENSE                                                                    

  117          TOTAL TAXES ON DEED                                                               

  27 or 118    AMOUNT OF DAMAGE                                                                  

  119          ADJUSTED DAMAGE                                                                   

  120          SPECIAL ASSESSMENTS                                                               

  121          MORTGAGE NOTE INTEREST                                                            
               FORBEARANCE (COINS. ONLY)                                                         

  122          MORT. INSURANCE PREMIUM                                                           

  123          UNAPPLIED 235 ASSISTANCE                                                          

  124          OVERPAID 235 SUBSIDY                                                              

  125          OVERHEAD COST                                                                     

  126          UNCOLLECTED INTEREST                                                              

  127          AMOUNT DUE FROM BUYER                                                             

  128          AMOUNT OWED TO BUYER                                                              

  129          CLOSING COSTS/ADMIN FEE                                                           

  130          APPRAISAL FEE                                                                     

  131          DEF. JUDGMT COST & FEES                                                           

  999          COINSURANCE RESERVE AMT INT.                                                      
               FROM 01/01/92 TO 00/00/00                                                         

  TOTALS       0.00                                                    \$173.00     0.00         
  ------------ ----------------------------- ---------- -------------- ------------ ------------ --------------

FHA SETTLEMENT AMOUNT: \$173.00

LESS OFFSET AMOUNT: 0.00

LESS RESERVE AMT (COINS): 0.00

FHA DEBENTURE PAYMENT: [0.00]{.underline}

FHA CASH PAYMENT: \$173.00

**Appendix 2 (8 of 8)**

SUBJECT: FHA CASE NO: ADVICE OF PAYMENT ADJUSTMENTS

MTGEE REF NO: SCHED: 0125C STTLDT: 04/06/94

ADJUSTMENTS HAVE BEEN MADE TO YOUR CLAIM FOR THE REASONS SHOWN BELOW:

ITEM NO: REASONS:

HIP REFUND.

If you have any questions, please call (703) 235-9102.

[]{#__RefHeading___Toc167867704 .anchor}**Appendix 3:** Errors
Frequently Made in Preparing Claims [**(TOP)**](#TABLEOFCONTENTS)

Mortgagees can avoid the inconvenience and expense resulting from
erroneous entries on the claim form by determining that all entries and
computations are correct before the claim is submitted. The following
are the types of errors most frequently found in mortgagee claim
reviews.

1.  Incorrect dates. More than half of the reimbursement demanded by HUD
    because of overpayment of mortgage insurance claims involve
    incorrect dates entered on the claim form.

Item 6 - Date Form Prepared

In some cases, the date of receipt of the Part A demonstrates that the
mortgagee entered the date the deed was filed for record rather than the
date of preparation and submission of Part A.

Item 8 - Due Date of Last Complete Installment Paid

Some mortgagees either transcribe the wrong date from the ledger or
incorrectly compute the date resulting in an erroneous date of default.

Item 9 - Date of Possession and Acquisition of Marketable Title

Some mortgagees have incorrectly entered the date of the foreclosure
sale, the date the property was secured, the date of vacancy although
title had not been obtained or the date the redemption period began.

Item 10 - Date Deed Filed for Record

[]{.mark}

Some mortgagees have incorrectly entered the date the deed was mailed to
the attorney, the date the redemption period expired, or the date Part A
of the claim form was prepared.

Item 11 - Date Foreclosure Proceedings Instituted

Some mortgagees have incorrectly entered the date the case was referred
to an attorney for foreclosure; the date the Mortgagor was notified, or
the date a committee recommended foreclosure.

Item 18 - Date of Firm Commitment

Some mortgagees fail to enter a date although the case is not in the
Direct Endorsement Program or enter an incorrect date resulting in an
incorrect debenture interest rate.

Item 19 - Date of Extension to Foreclosure

Some mortgagees have entered an extension date without obtaining HUD
approval or meeting the extension requirements.

Item 20 - Date of Extension to Convey

Some mortgagees have entered an extension date without obtaining prior
HUD approval.

Item 21 - Date of Release of Bankruptcy

Some mortgagees have incorrectly entered the date it learned of the
release rather than the date of release, or entered a release date when
the bankruptcy did not prevent timely foreclosure initiation or
prosecution.

2.  Hazard Insurance Recovery. Some mortgagees have failed to report
    actual or estimated hazard insurance recoveries in Item 27,
    resulting in an overpayment of insurance benefits.

3.  Debenture interest is computed to the date in Item 104 when an
    earlier time frame was missed.

4.  Debenture interest is computed from the date of an advancement
    although the mortgage was not in default.

5.  Excessive or inappropriate protection and preservation expenses were
    claimed without prior HUD approval.

6.  Protection and preservation expenses were incurred after the
    property was conveyed to HUD.

7.  Incorrect amounts were entered in the escrow account in Item 109.

Some mortgagees have claimed disbursements in Items 305 and 311 when
they were paid from the escrow account, claimed advances in Item 305
when escrow funds were available, deducted non-escrow disbursements from
the escrow account or failed to enter the escrow balance, buy down and
unapplied funds, or hazard insurance premium refunds in Item 109.

8.  Incorrect Entry of Disbursement Amounts in Item 305

Claims have been made for taxes paid after conveyance to HUD resulting
in double payment or for other expenses incurred after conveyance, for
penalties and interest on disbursements and attorney fees and
foreclosure costs which should have been claimed in Items 306 or 307 for
two-thirds reimbursement.

[]{#__RefHeading___Toc167867705 .anchor}**Appendix 4:** DEBENTURE
INTEREST RATES [**(TOP)**](#TABLEOFCONTENTS)

DEBENTURE INTEREST RATES

APPENDIX 4

  ----------------------- ----------------------- -----------------------
  FROM                    TO                      RATE

  March 1, 1941           May 14, 1950            2.750%

  May 15, 1950            March 22, 1953          2.500%

  March 23, 1953          July 7, 1953            2.750%

  July 8, 1953            May 28, 1954            3.000%

  May 29, 1954            August 31, 1954         2.750%

  August 9, 1954          August 31, 1954         2.750%

  September 1, 1954       December 31, 1954       2.500%

  January 1, 1955         June 30, 1955           2.625%

  July 1, 1955            June 30, 1956           2.875%

  July 1, 1956            December 31, 1956       3.000%

  January 1, 1957         June 30, 1957           3.250%

  July 1, 1957            December 31, 1957       3.375%

  January 1, 1958         June 30, 1958           3.500%

  July 1, 1958            December 31, 1958       3.125%

  January 1, 1959         June 30, 1959           3.750%

  July 1, 1959            December 31, 1960       4.125%

  January 1, 1961         June 30, 1961           3.875%

  July 1, 1961            December 31, 1961       3.750%

  January 1, 1962         June 30, 1962           4.000%

  July 1, 1962            June 30, 1963           3.875%

  July 1, 1963            December 31, 1963       4.000%

  January 1, 1964         December 31, 1965       4.125%

  January 1, 1966         June 30, 1966           4.375%

  July 1, 1966            December 31, 1966       4.625%

  January 1, 1967         December 31, 1967       4.750%

  January 1, 1968         June 30, 1969           5.375%

  July 1, 1969            December 31, 1969       5.875%

  January 1, 1970         June 30, 1970           6.375%

  July 1, 1970            December 31, 1970       6.875%

  January 1, 1971         June 30, 1971           6.125%

  July 1, 1971            December 31, 1971       5.875%

  January 1, 1972         June 30, 1972           5.375%

  July 1, 1972            December 31, 1972       5.500%

  January 1, 1973         June 30, 1973           5.250%

  July 1, 1973            December 31, 1973       6.000%

  January 1, 1974         June 30, 1974           6.250%

  July 1, 1974            June 30, 1975           6.875%

  July 1, 1975            December 31, 1975       7.000%

  January 1, 1976         June 30, 1976           7.125%

  July 1, 1976            December 31, 1976       7.000%

  January 1, 1977         June 30, 1977           6.625%

  July 1, 1977            December 31, 1977       7.250%

  January 1, 1978         June 30, 1978           7.125%

  July 1, 1978            December 31, 1978       7.750%

  January 1, 1979         June 30, 1979           8.000%

  July 1, 1979            December 31, 1979       8.250%

  January 1, 1980         June 30, 1980           9.500%

  July 1, 1980            December 31, 1980       9.875%

  January 1, 1981         June 30, 1981           11.750%

  July 1, 1981            December 31, 1981       12.875%

  January 1, 1982         December 31, 1982       12.750%

  January 1, 1983         June 30, 1983           10.250%

  July 1, 1980            December 31, 1980       9.875%
  ----------------------- ----------------------- -----------------------

[]{.mark}

DEBENTURE INTEREST RATES

[]{.mark}

  ----------------------- ----------------------- -----------------------
  FROM                    TO                      RATE

  January 1, 1984         June 30, 1984           11.500%

  July 1, 1984            December 31, 1984       13.375%

  January 1, 1985         June 30, 1985           11.625%

  July 1, 1985            December 31, 1985       11.125%

  January 1, 1986         June 30, 1986           10.250%

  July 1, 1986            December 31, 1986       8.250%

  January 1, 1987         June 30, 1987           8.000%

  July 1, 1987            December 31, 1987       9.000%

  January 1, 1988         June 30, 1988           9.125%

  July 1, 1988            December 31, 1988       9.375%

  January 1, 1989         June 30, 1989           9.250%

  July 1, 1989            December 31, 1989       9.000%

  January 1, 1990         June 30, 1990           8.125%

  July 1, 1990            December 31, 1990       9.000%

  January 1, 1991         June 30, 1991           8.750%

  July 1, 1991            December 31, 1991       8.500%

  January 1, 1992         June 30, 1992           8.000%

  July 1, 1992            December 31, 1992       8.000%

  January 1, 1993         June 30, 1993           7.750%

  July 1, 1993            December 31, 1993       7.000%

  January 1, 1994         June 30, 1994           6.625%

  July 1, 1994            December 31, 1994       7.750%

  221(G)(4)                                       

  July 1, 1980            December 31, 1980       9.375%

  January 1, 1981         June 30, 1981           10.875%

  July 1, 1981            December 31, 1981       11.625%

  January 1, 1982         June 30, 1982           11.625%

  July 1, 1982            December 31, 1982       12.500%

  January 1, 1983         June 30, 1983           9.750%

  July 1, 1983            December 31, 1983       9.375%

  January 1, 1984         June 30, 1984           10.500%

  July 1,1984             December 31, 1984       12.000%

  January 1, 1985         June 30, 1985           10.625%

  July 1, 1985            December 31, 1985       10.125%

  January 1, 1986         June 30, 1986           9.250%

  July 1, 1986            December 31, 1986       7.500%

  January 1, 1987         June 30, 1987           7.000%

  July 1, 1987            December 31, 1987       8.250%

  January 1, 1988         June 30, 1988           8.375%

  July 1, 1988            December 31, 1988       8.625%

  January 1, 1989         June 30, 1989           8.625%

  July 1, 1989            December 31, 1989       8.625%

  January 1, 1990         June 30, 1990           7.750%

  July 1, 1990            December 31, 1990       8.625%

  January 1, 1991         June 30, 1991           8.250%

  July 1, 1991            December 31, 1991       8.125%

  January 1, 1992         June 30, 1992           7.500%

  July 1, 1992            December 31, 1992       7.500%

  January 1, 1993         June 30, 1993           6.875%

  July 1, 1993            December 31, 1993       6.000%

  January 1, 1994         June 30, 1994           5.750%

  July 1, 1994            December 31, 1994       7.250%
  ----------------------- ----------------------- -----------------------

[]{#__RefHeading___Toc167867706 .anchor}**Appendix 5:** Mortgagee\'s
Request for Extensions of Time [**(TOP)**](#TABLEOFCONTENTS)

[]{.mark}

[]{#__RefHeading___Toc167867707 .anchor}**Appendix 6:** As the First
Legal Action to Commence (Institute) Foreclosure
[**(TOP)**](#TABLEOFCONTENTS)

ACTION CONSIDERED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AS
THE FIRST LEGAL ACTION TO COMMENCE (INSTITUTE) FORECLOSURE Page 1 of 2

==================================================== TYPICAL

[]{.mark}

+-----+-----------+----------------+---------------+------------------+
| ST  | STATE     | TYPE OF HUD    | NORMAL METHOD | FIRST FORCLOSURE |
| ATE |           | SECURITY       | OF            | ACTION           |
| C   |           | INSTRUMENT     | FORECLOSURE   |                  |
| ODE |           |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 01  | Alabama   | Mortgage       | Non-Judicial  | Publication      |
+-----+-----------+----------------+---------------+------------------+
| 11  | Alaska    | Deed of Trust  | Non-Judicial  | Recording of     |
|     |           |                |               | Notice of        |
|     |           |                |               | Default          |
+-----+-----------+----------------+---------------+------------------+
| 02  | Arizona   | Deed of Trust  | Non-Judicial  | Recording of     |
|     |           |                |               | Notice of Sale   |
+-----+-----------+----------------+---------------+------------------+
| 03  | Arkansas  | Deed of Trust  | Non-Judicial  | Recording of     |
|     |           |                |               | Notice of        |
|     |           |                |               | Default          |
+-----+-----------+----------------+---------------+------------------+
| 04  | C         | Deed of Trust  | Non-Judicial  | Recording of     |
|     | alifornia |                |               | Notice of        |
|     |           |                |               | Default          |
+-----+-----------+----------------+---------------+------------------+
| 05  | Colorado  | Deed of Trust  | Non-Judicial  | Filing of        |
|     |           |                |               | Foreclosure      |
|     |           |                |               | Documents with   |
|     |           |                |               | Public Trustee   |
+-----+-----------+----------------+---------------+------------------+
| 06  | Co        | Mortgage       | Judicial      | Delivering       |
|     | nnecticut |                |               | Complaint to     |
|     |           |                |               | Sheriff          |
+-----+-----------+----------------+---------------+------------------+
| 07  | Delaware  | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 08  | District  | Deed of Trust  | Non-Judicial  | Recording of     |
|     | of        |                |               | Notice of        |
|     | Columbia  |                |               | Default          |
+-----+-----------+----------------+---------------+------------------+
| 09  | Florida   | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 10  | Georgia   | Security Deed  | Non-Judicial  | Publication      |
+-----+-----------+----------------+---------------+------------------+
| 14  | Hawaii    | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 12  | Idaho     | Deed of Trust  | Non-Judicial  | Recording of     |
|     |           |                |               | Notice of        |
|     |           |                |               | Default          |
+-----+-----------+----------------+---------------+------------------+
| 13  | Illinois  | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 15  | Indiana   | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 16  | Iowa      | Mortgage       | Judicial      | Petition         |
+-----+-----------+----------------+---------------+------------------+
| 18  | Kansas    | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 20  | Kentucky  | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 22  | Louisiana | Mortgage       | Judicial      | Petition for     |
|     |           |                |               | Executory        |
|     |           |                |               | Process          |
+-----+-----------+----------------+---------------+------------------+
| 23  | Maine     | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 24  | Maryland  | Mortgage       | Judicial      | Petition in      |
|     |           |                |               | Equity           |
|     |           | Deed of Trust  | Non-Judicial  |                  |
|     |           |                |               | Filing an Order  |
|     |           |                |               | to Docket        |
+-----+-----------+----------------+---------------+------------------+
| 25  | Mass      | Mortgage       | Non-Judicial  | Filing of        |
|     | achusetts |                |               | Complaint        |
|     |           |                |               | Relative to      |
|     |           |                |               | Soldiers\' and   |
|     |           |                |               | Sailors\' Relief |
|     |           |                |               | Act              |
+-----+-----------+----------------+---------------+------------------+
| 26  | Michigan  | Mortgage       | Non-Judicial  | Publication      |
+-----+-----------+----------------+---------------+------------------+
| 27  | Minnesota | Mortgage       | Non-Judicial  | Publication      |
+-----+-----------+----------------+---------------+------------------+
| 28  | Mi        | Mortgage       | Non-Judicial  | Publication      |
|     | ssissippi |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 29  | Missouri  | Mortgage       | Non-Judicial  | Publication      |
+-----+-----------+----------------+---------------+------------------+

[]{.mark}

====================================================

ACTION CONSIDERED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AS
THE FIRST LEGAL ACTION TO COMMENCE (INSTITUTE) FORECLOSURE Page 2 of 2

==================================================== TYPICAL

+-----+-----------+----------------+---------------+------------------+
| ST  | STATE     | TYPE OF HUD    | NORMAL METHOD | FIRST FORCLOSURE |
| ATE |           | SECURITY       | OF            | ACTION           |
| C   |           | INSTRUMENT     | FORECLOSURE   |                  |
| ODE |           |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 31  | Montana   | Trust          | Non-Judicial  | Recording of     |
|     |           | Indenture      |               | Notice of Sale   |
+-----+-----------+----------------+---------------+------------------+
| 32  | Nebraska  | Mortgage       | Judicial      | Petition         |
|     |           |                |               |                  |
|     |           | Deed of Trust  | Non-Judicial  | Publication of   |
|     |           |                |               | Notice of Sale   |
+-----+-----------+----------------+---------------+------------------+
| 33  | Nevada    | Deed of Trust  | Non-Judicial  | Recording Notice |
|     |           |                |               | of Default       |
+-----+-----------+----------------+---------------+------------------+
| 34  | New       | Mortgage       | Non-Judicial  | Publication      |
|     | Hampshire |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 35  | New       | Mortgage       | Judicial      | Complaint        |
|     | Jersey    |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 36  | New       | Mortgage       | Judicial      | Complaint        |
|     | Mexico    |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 37  | New York  | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 38  | North     | Deed of Trust  | Non-Judicial  | Notice of        |
|     | Carolina  |                |               | Hearing          |
+-----+-----------+----------------+---------------+------------------+
| 40  | North     | Mortgage       | Judicial      | Complaint        |
|     | Dakota    |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 41  | Ohio      | Mortgage Deed  | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 42  | Oklahoma  | Mortgage       | Judicial      | Petition         |
+-----+-----------+----------------+---------------+------------------+
| 43  | Oregon    | Deed of Trust  | Non-Judicial  | Recording Notice |
|     |           |                |               | of Default       |
+-----+-----------+----------------+---------------+------------------+
| 44  | Pen       | Mortgage       | Judicial      | Complaint        |
|     | nsylvania |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 45  | Rhode     | Mortgage       | Non-Judicial  | Publication      |
|     | Island    |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 46  | South     | Mortgage       | Judicial      | Complaint        |
|     | Carolina  |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 47  | South     | Mortgage       | Judicial      | Complaint        |
|     | Dakota    |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 48  | Tennessee | Deed of Trust  | Non-Judicial  | Publication      |
+-----+-----------+----------------+---------------+------------------+
| 49  | Texas     | Deed of Trust  | Non-Judicial  | Posting and      |
|     |           |                |               | Filing of the    |
|     |           |                |               | Notice of Sale   |
+-----+-----------+----------------+---------------+------------------+
| 52  | Utah      | Mortgage       | Judicial      | Complaint        |
|     |           |                |               |                  |
|     |           | Deed of Trust  | Non-Judicial  | Recording Notice |
|     |           |                |               | of Default       |
+-----+-----------+----------------+---------------+------------------+
| 53  | Vermont   | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 54  | Virginia  | Deed of Trust  | Non-Judicial  | Publication      |
+-----+-----------+----------------+---------------+------------------+
| 56  | W         | Mortgage       | Judicial      | Complaint        |
|     | ashington |                |               |                  |
|     |           | Deed of Trust  | Non-Judicial  | Recording of     |
|     |           |                |               | Notice of Sale   |
+-----+-----------+----------------+---------------+------------------+
| 57  | Wet       | Deed of Trust  | Non-Judicial  | Publication      |
|     | Virginia  |                |               |                  |
+-----+-----------+----------------+---------------+------------------+
| 58  | Wisconsin | Mortgage       | Judicial      | Complaint        |
+-----+-----------+----------------+---------------+------------------+
| 59  | Wyoming   | Mortgage       | Non-Judicial  | Publication      |
+-----+-----------+----------------+---------------+------------------+
| 50  | Puerto    | Mortgage       | Judicial      | Complaint        |
|     | Rico      |                |               |                  |
+-----+-----------+----------------+---------------+------------------+

[]{.mark}

[]{.mark}

[]{#__RefHeading___Toc167867708 .anchor}**Appendix 7:** Foreclosure Time
Frames [**(TOP)**](#TABLEOFCONTENTS)

FORECLOSURE TIME FRAMES

Mortgagees are expected to complete foreclosure within the following
time frames. Documented delays which are found to be beyond the control
of the mortgagee shall be taken into consideration before any
determination is made that reasonable diligence was not followed. These
requirements shall apply to all foreclosure actions commenced on or
after March 1, 1990.

  ------------------ --------- --------------- --------- -------------- --------
  STATE              MONTHS    STATE           MONTHS    STATE          MONTHS

  Alabama            4         Kentucky        7         North Dakota   10

  Alaska             7         Louisiana       6         Ohio           12

  Arkansas           8         Maine           22        Oklahoma       7

  Arizona            4         Maryland        6         Oregon         7

  California         7         Massachusetts   8         Pennsylvania   10

  Colorado           7         Michigan        9\*       Puerto Rico    14

  Connecticut        9         Minnesota       12        Rhode Island   3

  Delaware           8         Mississippi     4         South Carolina 7

  District of        7         Missouri        3         South Dakota   10
  Columbia                                                              

  Florida            9         Montana         9         Tennessee      4

  Georgia            4         Nebraska        6         Texas          3

  Hawaii             9         Nevada          7         Utah           5

  Idaho              9         New Hampshire   4         Vermont        17

  Illinois           13        New Jersey      14        Virginia       5

  Indiana            12        New Mexico      7         Washington     6

  Iowa               17        New York        13        West Virginia  5

  Kansas             12        North Carolina  5         Wisconsin      12

                                                         Wyoming        6
  ------------------ --------- --------------- --------- -------------- --------

[]{.mark}

The time frames are measured from the initiation to the completion of
foreclosure. Initiation of foreclosure is the first public action
required by law, such as filing a compliant or petition, recording a
notice of default, or publication of a notice of sale.

Completion of foreclosure shall be considered to be the data on which
the Sheriff\'s, Trustee\'s, etc. deed is recorded. The deed is generally
executed after the expiration of the redemption period and before
eviction of the occupant. However, if a redemption period runs after the
foreclosure deed is recorded (e.g., in Michigan), the foreclosure is
considered completed only after the redemption period has expired. If
the property will be directly conveyed to the Secretary, these time
frames are extended an additional 30 days.

\*This includes the most common redemption period, which can run after
the foreclosure deed is recorded.

[]{.mark}

[]{#__RefHeading___Toc167867709 .anchor}**Appendix 8:** Daily Interest
Rate Factors Normal Year [**(TOP)**](#TABLEOFCONTENTS)

DAILY INTEREST RATE FACTORS NORMAL YEAR

INSTRUCTIONS: Locate the whole number of the interest rate in the
\"Percent\" column, then locate the fractional part of the interest rate
shown at the top of the columns to the right of the \"Percent\" column
(if no fractional part, use the 0/8 column). Where the two meet, you
will find the factor.

Example: The daily factor for 10 5/8% is .0002910959.

The daily factor for 13% is .0003561644.

  -------------- -------------- -------------- -------------- --------------
  PERCENT        0/8            1/8            1/4            3/8

  2              .0000547945    .0000582192    .0000616438    .0000650685

  3              .0000821918    .0000856164    .0000890411    .0000924658

  4              .0001095890    .0001130137    .0001164384    .0001198630

  5              .0001369863    .0001404110    .0001438356    .0001472603

  6              .0001643836    .0001678062    .0001712329    .0001746575

  7              .0001917808    .0001952055    .0001986301    .0002020548

  8              .0002191781    .0002226027    .0002260274    .0002294521

  9              .0002465753    .0002500000    .0002534247    .0002568493

  10             .0002739726    .0002773973    .0002808219    .0002842466

  11             .0003013699    .0003047945    .0003082192    .0003116438

  12             .0003287671    .0003321918    .0003356164    .0003390411

  13             .0003561644    .0003595990    .0003630137    .0003664383

  14             .0003835616    .0003869863    .0003904110    .0003938356

  15             .0004109589    .0004143836    .0004178082    .0004212329

  16             .0004383562    .0004417808    .0004452055    .0004486301

  17             .0004657534    .0004691781    .0004726027    .0004760274

  18             .0004931507    .0004965753    .0005000000    .0005034246
  -------------- -------------- -------------- -------------- --------------

  -------------- -------------- -------------- -------------- --------------
  PERCENT        1/2            5/8            3/4            7/8

  2              .0000684931    .0000719178    .0000753425    .0000787671

  3              .0000958904    .0000993151    .0001027397    .0001061644

  4              .0001232877    .0001267123    .0001301370    .0001335616

  5              .0001506849    .0001541096    .0001575342    .0001609589

  6              .0001780822    .0001815068    .0001849315    .0001883562

  7              .0002054794    .0002089041    .0002123288    .0002157334

  8              .0002328767    .0002363014    .0002397260    .0002431507

  9              .0002602740    .0002636986    .0002671233    .0002705479

  10             .0002876712    .0002910959    .0002945205    .0002979452

  11             .0003150685    .0003184931    .0003219178    .0003253424

  12             .0003424657    .0003458904    .0003493151    .0003527397

  13             .0003698630    .0003732877    .0003767123    .0003801370

  14             .0003972603    .0004006849    .0004041096    .0004075342

  15             .0004246575    .0004280822    .0004315068    .0004349315

  16             .0004520548    .0004554794    .0004589041    .0004623287

  17             .0004794520    .0004828767    .0004863014    .0004897260

  18             .0005068493    .0005102740    .0005136986    .0005171233
  -------------- -------------- -------------- -------------- --------------

[]{.mark}

DAILY INTEREST RATE FACTORS LEAP YEAR

INSTRUCTIONS: See instructions for Normal Year, Daily Interest Rate
Factors.

  -------------- -------------- -------------- -------------- --------------
  PERCENT        0/8            1/8            1/4            3/8

  2              .0000546448    .0000580601    .0000614754    .0000648907

  3              .0000819672    .0000853825    .0000887978    .0000922131

  4              .0001092896    .0001127049    .0001161202    .0001195355

  5              .0001366120    .0001400273    .0001434426    .0001468579

  6              .0001639344    .0001673497    .0001707650    .0001741803

  7              .0001912568    .0001946721    .0001980874    .0002015027

  8              .0002185792    .0002219945    .0002254098    .0002288251

  9              .0002459016    .0002493169    .0002527322    .0002561475

  10             .0002732240    .0002766393    .0002800546    .0002834699

  11             .0003005464    .0003039617    .0003073770    .0003107923

  12             .0003278689    .0003312842    .0003346994    .0003381147

  13             .0003551913    .0003586066    .0003620218    .0003654371

  14             .0003825137    .0003859290    .0003893443    .0003927596

  15             .0004098361    .0004132514    .0004166667    .0004200820

  16             .0004371585    .0004405738    .0004439891    .0004474044

  17             .0004644809    .0004678962    .0004713115    .0004747268

  18             .0004918033    .0004952186    .0004986339    .0005020492
  -------------- -------------- -------------- -------------- --------------

[]{.mark}

  -------------- -------------- -------------- -------------- --------------
  PERCENT        1/2            5/8            3/4            7/8

  2              .0000683060    .0000717213    .0000751366    .0000785519

  3              .0000956284    .0000990437    .0001024590    .0001058743

  4              .0001229508    .0001263661    .0001297814    .0001331967

  5              .0001502732    .0001536885    .0001571038    .0001605191

  6              .0001775956    .0001810109    .0001844262    .0001878415

  7              .0002049180    .0002083333    .0002117486    .0002151639

  8              .0002322404    .0002356557    .0002390710    .0002424863

  9              .0002595628    .0002629781    .0002663934    .0002698087

  10             .0002868852    .0002903005    .0002937158    .0002971311

  11             .0003142076    .0003176229    .0003210382    .0003244535

  12             .0003415300    .0003449453    .0003483606    .0003517759

  13             .0003688524    .0003722677    .0003756830    .0003790983

  14             .0003961749    .0003995901    .0004030054    .0004064207

  15             .0004234973    .0004269126    .0004303279    .0004337431

  16             .0004508197    .0004542350    .0004576503    .0004610656

  17             .0004781421    .0004815574    .0004849727    .0004883880

  18             .0005054645    .0005088798    .0005122951    .0005157104
  -------------- -------------- -------------- -------------- --------------

[]{.mark}

[]{#__RefHeading___Toc167867710 .anchor}**Appendix 9:** Julian Date
Calendar [**(TOP)**](#TABLEOFCONTENTS)

[PDF File](../julian_calendar.pdf)

(PERPETUAL)

\"FHA Single Family Insurance Claims\" REV-1

[]{#__RefHeading___Toc167867711 .anchor}**Appendix 10:** Conveyances
[**(TOP)**](#TABLEOFCONTENTS)

File Not Available

[]{#__RefHeading___Toc167867712 .anchor}**Appendix 11:** Attorney's
Certificate of Title [**(TOP)**](#TABLEOFCONTENTS)

[]{#__RefHeading___Toc167867713 .anchor}**File Not Available**

[]{#__RefHeading___Toc167867714 .anchor}**Appendix 12:** Mortgagee
Notice of Foreclosure Sale [**(TOP)**](#TABLEOFCONTENTS)

[PDF File](../91022.pdf)

[]{.mark}

[]{#__RefHeading___Toc167867715 .anchor}**Appendix 13:** HUD Regional
Offices [**(TOP)**](#TABLEOFCONTENTS)

[]{#__RefHeading___Toc167867716 .anchor}Current information at
http://www.fha.gov.

[]{#__RefHeading___Toc167867717 .anchor}**Appendix 14:** Request to
Exceed Cost Limit(s) for Preservation and Protection
[**(TOP)**](#TABLEOFCONTENTS)

[]{.mark}

REQUEST TO EXCEED COST LIMIT(S) FOR PRESERVATION AND PROTECTION

Department of Housing and Urban Development

Dear \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_:

SUBJECT: Request for Variance from Regional Preservation and

Protection Schedule

FHA Case No.:

Mtgee Loan No.:

Mortgagor\'s Name:

Property Address:

Permission is requested to perform the following services (all
applicable estimates and required documentation are attached):

Service Cost

\$

\$

\$

\$

\(1\) TOTAL \$

Preservation and Protection Costs Expended to Date (excluding
inspections):

Service Cost

\$

\$

\$

\$

\(2\) TOTAL \$

(NOTE: Expenses listed in item (2) must be consistent with regional P&P
limits subject to further guidance and are and/or verification.)

Signature: Title: Phone: [( )]{.underline}

\[ \] Please fax your response to Fax No: [( )]{.underline}

HUD APPROVAL/DISAPPROVAL:

For the subject case, HUD authorizes additional expenditures for:

debris removal up to a maximum of \$ boarding up to a maximum of \$

winterization up to a maximum of \$

other: \$

\(3\) Total Additional Expenditures Approved Not to Exceed: \$

\(4\) Total Authorization Not To Exceed \[item (2) + item (3)\]: \$

Date Mortgagee\'s Request Received:

Date of Approval:

Date of this Response:

Approved By:

[]{.mark}

[]{#__RefHeading___Toc167867718 .anchor}**Appendix 15:** Short Rate
Method [**(TOP)**](#TABLEOFCONTENTS)

SHORT RATE METHOD

  --------- --------- --------- --------- ---------- --------- --------- ---------
  Days      \% of     Days      \% of     Days       \% of     Days      \% of
  one-yr    Policy in one-yr    Policy in one-yr     Policy in one-yr    Policy in
  Premium   Force     Premium   Force     Premium    Force     Premium   Force
            Premium             Premium              Premium             Premium

  1         5%        66 -- 69  29%       154 - 156  53%       256 - 260 77%

  2         6%        70 - 73   30%       157 -- 160 54%       261 --    78%
                                                               264       

  3 -- 4    7%        74 - 76   31%       161 -- 164 55%       265 - 269 79%

  5 -- 6    8%        77 - 80   32%       165 - 167  56%       270 - 273 80%

  7 -- 8    9%        81 - 83   33%       168 - 171  57%       274 - 278 81%

  9 -- 10   10%       84 - 87   34%       172 - 175  58%       279 - 282 82%

  11 -- 12  11%       88 - 91   35%       176 - 178  59%       283 - 287 83%

  13 - 14   12%       92 - 94   36%       179 - 182  60%       288 - 291 84%

  15 - 16   13%       95 - 98   37%       183 - 187  61%       292 - 296 85%

  17 - 18   14%       99 - 102  38%       188 - 191  62%       297 - 301 86%

  19 - 20   15%       103 - 105 39%       192 - 196  63%       302 - 305 87%

  21 - 22   16%       106 - 109 40%       197 - 200  64%       306 - 310 88%

  23 - 25   17%       110 - 113 41%       201 - 205  65%       311 - 314 89%

  26 - 29   18%       114 - 116 42%       206 - 209  66%       315 - 319 90%

  30 - 32   19%       117 - 120 43%       210 - 214  67%       320 - 323 91%

  33 - 36   20%       121 - 124 44%       215 - 218  68%       324 - 328 92%

  37 - 40   21%       125 - 127 45%       219 - 223  69%       329 - 332 93%

  41 - 43   22%       128 - 131 46%       224 - 228  70%       333 - 337 94%

  44 - 47   23%       132 - 135 47%       229 - 232  71%       338 - 342 95%

  48 - 51   24%       136 - 138 48%       233 - 237  72%       343 - 346 96%

  52 - 54   25%       139 - 142 49%       238 - 241  73%       347 - 351 97%

  55 - 58   26%       143 - 146 50%       242 - 246  74%       352 - 355 98%

  59 - 62   27%       147 - 149 51%       247 - 250  75%       356 - 360 99%

  63 - 65   28%       150 - 153 52%       251 - 255  76%       361 - 365 100%
  --------- --------- --------- --------- ---------- --------- --------- ---------

[]{.mark}

[]{#__RefHeading___Toc167867719 .anchor}**Appendix 16:** Title
Submission Certification [**(TOP)**](#TABLEOFCONTENTS)

TITLE SUBMISSION CERTIFICATION

Mortgagor Name Loan No.

FHA Case No. Log No.

I certify that the title evidence and related documents for the above
referenced mortgage have been forwarded to the appropriate HUD Field
Counsel as set forth in Mortgagee Letter 84-7, Supplemental, dated June
7, 1984, and Mortgagee Letter 86-21, dated November 14, 1986, on the
same day that the completed Form HUD-27011, Parts A and B (original),
and the original Mortgage Insurance Certificate were forwarded to HUD,
Office of Finance and Accounting, Insurance Claims Division.

Certifying Official - Name and Title

Signature

[]{.mark}

[]{#__RefHeading___Toc167867720 .anchor}**Appendix 17:** Letter
[**(TOP)**](#TABLEOFCONTENTS)

Date FHA Case Number

Loan Number

Dear (Mortgagor\'s Name),

Pursuant to Section 221 (g)(4) of the National Housing Act, as amended,
we are planning to exercise an option to transfer (assign) your mortgage
to the Department of Housing and Urban Development (HUD) as of its
twentieth year. The transfer is not a reflection on your payment history
or credit; in fact, your mortgage must be current to be eligible.

THIS LETTER SERVES AS YOUR 60 DAYS NOTICE. YOU ARE NOT REQUIRED TO DO
ANYTHING AT THIS TIME. WE WILL SEND YOU A SECOND NOTICE APPROXIMATELY 15
DAYS PRIOR TO THE FIRST PAYMENT THAT WILL BE DUE TO HUD OR 15 DAYS PRIOR
TO THE TRANSFER OF YOUR MORTGAGE. THE SECOND NOTICE WILL GIVE SPECIFIC
INSTRUCTIONS ON WHAT YOU WILL NEED TO DO.

When your mortgage is transferred, HUD will require that you continue
paying the principal and interest to them and have adequate hazard
insurance coverage (and flood insurance if it is presently required) to
protect their interest in the mortgage. In addition, you will be
responsible for the payment of your tax bills and insurance premiums
which are associated with the hazard, flood and other insurance
coverage. HUD will not escrow for any item. You will also be required to
verify your payment of taxes and hazard (and flood) insurance within 30
days of the due date by sending copies of the paid receipts to HUD. HUD
reserves the right to escrow for taxes or advance funds to pay taxes if
you fail to do so. The monies in your escrow account and (if applicable)
any advanced monthly payments will be refunded to you after the transfer
of your mortgage occurs.

If you prefer to pay your mortgage off rather than have it transferred
to HUD, you may request a pay off statement from us and remit payment in
full before the transfer occurs. Please contact our Pay Off Department
at XXX-XXX-XXXX. If you have any questions concerning your account on
this matter, please call XXX-XXX-XXXX.

[]{.mark}

[]{#__RefHeading___Toc167867721 .anchor}**Appendix 18:** Letter
[**(TOP)**](#TABLEOFCONTENTS)

1 of 2

Date FHA Case Number

Loan Number

Dear (Mortgagor\'s Name),

As we advised you approximately forty-five days ago, we are transferring
your mortgage to the Department of Housing and Urban Development (HUD).
THIS LETTER SERVES AS YOUR SECOND NOTICE AND SETS FORTH THE INSTRUCTIONS
THAT YOU WILL NEED TO FOLLOW.

Beginning with your next monthly payment which is due on the first of
each month you will send to HUD the amount of \_\_(dollars)\_\_. This is
your monthly payment to HUD (it is equivalent to your scheduled monthly
principal and interest). You will make checks or money orders payable to
the Department of Housing and Urban Development. It is important that
you write your name, property address and FHA case number, which is
\_\_\_\_(number)\_\_\_\_\_, on your checks or money orders, otherwise,
HUD may not be able to properly identify your monthly payment. HUD will
send you each month a billing statement and self-addressed envelopes.
Send your next payment to: Department of Housing and Urban Development,
Payment

Processing Center, P. O. Box 105652, Atlanta, GA 30348.

We will refund the monies in your present escrow account and any
advanced monthly payments shortly after the transfer occurs. Also, we
have contacted all third parties, such as, taxing authorities and
insurance carriers to inform them that you are responsible for the
payment of tax bills and premiums. Your hazard insurance carrier (and
flood) has been requested to change the named beneficiary in the
mortgagee clause to HUD.

If you have any questions, please contact us at XXX-XXX-XXXX. If you
have any questions after the transfer of your mortgage, you should
contact the local Office of the Department of Housing and Urban
Development. Their address is \_\_\_(street or P.O. Box, City,\_\_
State, ZIP)\_\_. The telephone number of the Single Family Loan
Management Branch is XXX-XXX-XXXX. You should address all correspondence
to the local HUD Office, as the Payment Processing Center in Atlanta,
Georgia, is only HUD\'s banking facility, and any inquiries sent to them
will be delayed or may not be answered at all.

We hope these instructions will assist you. PLEASE SEE THE ATTACHED
INSTRUCTIONS AND NOTICE.

TRANSFER OF 221 (g)(4)

SPECIAL INSTRUCTIONS AND NOTICE

PLEASE BEGIN MAKING YOUR MONTHLY PAYMENTS TO HUD. IF YOU DO NOT REMIT
YOUR PAYMENT TO HUD, YOU MAY BE CONSIDERED DELINQUENT IF THE PAYMENT IS
NOT RECEIVED. YOUR MONTHLY PAYMENT WILL BE APPLIED FIRST TO ANY
DELINQUENCY, THEN TO CURRENT INTEREST DUE, WITH THE REMAINDER TO
PRINCIPAL.

DO NOT SEND MORE THAN THE AMOUNT DUE UNLESS YOU DESIRE TO REPAY ANY
DELINQUENCY, OR TO REDUCE THE PRINCIPAL BALANCE. ANY AMOUNT IN EXCESS OF
THIS MONTHLY PAYMENT WILL BE APPLIED AS DESCRIBED ABOVE. YOU WILL
RECEIVE A STATEMENT EVERY MONTH UNTIL THE MORTGAGE IS PAID IN FULL.

IN ADDITION, YOU ARE REQUIRED TO HAVE ADEQUATE HAZARD INSURANCE

COVERAGE (AND FLOOD INSURANCE IF IT IS PRESENTLY REQUIRED) TO PROTECT
HUD\'S INTEREST IN THE MORTGAGE. HUD MUST BE THE NAMED BENEFICIARY AND
MUST RECEIVE THE ORIGINAL POLICY.

YOU ARE RESPONSIBLE FOR THE PAYMENT OF YOUR INSURANCE PREMIUMS WHICH ARE
ASSOCIATED WITH THE HAZARD, FLOOD OR OTHER INSURANCE COVERAGE AND TAX
BILLS. HUD WILL NOT ESCROW FOR ANY ITEM. YOU ARE ALSO REQUIRED TO VERIFY
YOUR PAYMENTS OF HAZARD (AND FLOOD) INSURANCE PREMIUMS AND TAXES WITHIN
30 DAYS AFTER THE DUE DATE BY SENDING COPIES OF THE PAID RECEIPTS TO THE
LOCAL HUD OFFICE.

HUD RESERVES THE RIGHT TO ESCROW FOR TAXES OR ADVANCE FUNDS TO PAY TAXES
IF YOU FAIL TO DO SO. HUD ALSO RESERVES THE RIGHT TO CHANGE ITS
SERVICING POLICIES AND PROCEDURES AS THEY RELATE TO YOUR MORTGAGE.

[]{.mark}

[]{.mark}

[]{.mark}

[]{#__RefHeading___Toc167867722 .anchor}**Appendix 19:** Pre-Foreclosure
Sale Program Instructions to Mortgagee [**(TOP)**](#TABLEOFCONTENTS)

PRE-FORECLOSURE SALE PROGRAM

INSTRUCTIONS TO MORTGAGEE

Mortgagee Name Date

Program Office Control Number

Homeowner Name(s)

Property Address

Account Number

The subject homeowners have been accepted into the Pre-Foreclosure Sale
Program. In order to facilitate their participation in the program, you
are requested to service this mortgage as follows:

( ) - Do not schedule the foreclosure sale date before

( ) -- Other

\[ \] EXTENSION REQUEST

It has been determined that it is in HUD\'s interest to extend the delay
of foreclosure activity as indicated below:

( ) - Continue delay of foreclosure sale. Do not schedule before

( ) - Other

Program Coordinator - Date

[]{.mark}

[]{.mark}

[]{#__RefHeading___Toc167867723 .anchor}**Appendix 20:** Pre-Foreclosure
Sale Program Title Search \\ Discharge of Lien(s)
[**(TOP)**](#TABLEOFCONTENTS)

PRE-FORECLOSURE SALE PROGRAM

TITLE SEARCH \\ DISCHARGE OF LIEN(S)

Mortgagee Name Acct. No.

HUD Ofc/Coordtr Control No.

Homeowner Name(s)

Property Address

Part A: TITLE SEARCH

Title Search performed? ( ) YES ( ) NO

If Yes, Date By

Liens and Encumbrances Discovered:

1\.

2\.

Part B: DISCHARGE OF LIENS

The mortgagee is hereby requested to satisfy the following liens against
the property to facilitate the following Pre-foreclosure Sale program
activity:

( ) - Anticipated sale of the property

( ) - Acceptance of a deed-in-lieu of foreclosure

Liens and Other Encumbrances:

1\.

2\.

The Department authorizes mortgagees to negotiate a compromise
settlement in resolving liens and encumbrances. Reimbursement will be
made through the Single Family Claims for Insurance Benefits.

Program Coordinator: Signature - Date

[]{#__RefHeading___Toc167867724 .anchor}**Appendix 21:** Pre-Foreclosure
Sale Program Sales Contract Review [**(TOP)**](#TABLEOFCONTENTS)

PRE-FORECLOSURE SALE PROGRAM

SALES CONTRACT REVIEW

Date:

HUD Ofc/Coordtr: Control Number:

Mortgagor Name(s) and Property Address: FHA Case Number:

HUD APPROVAL OF THE SALES CONTRACT IS A PRE-CONDITION OF THE SALE

Date of Sales Contract: Agent:

Date Received by Program Coordtr:

Offered By:

Address:

Listing Price: \$ APPRAISED VALUE \$

Price Offered: \$ 90% of APPRAISED VALUE \$

Estimated Net Sales Proceeds: \$

The Sales Contract offered by the individuals listed above is:

( ) Accepted ( ) Rejected (List reasons below)

This sales contract is rejected for the following reason(s):

Coordtr/Local HUD Office: Signature - Date

cc: Mortgagee

[]{.mark}

[]{.mark}

[]{#__RefHeading___Toc167867725 .anchor}**Appendix 22:** Pre-Foreclosure
Sale Program Closing Worksheet\\Recap [**(TOP)**](#TABLEOFCONTENTS)

[]{.mark}

PRE-FORECLOSURE SALE PROGRAM

CLOSING WORKSHEET\\RECAP

[]{.mark}

HUD Ofc/Coordtr: Date:

Control Number: FHA Case Number:

Mortgagor Name(s) and Property Address: Mortgagee Name and Address:

Date Enrolled: [/ /]{.underline} Outstanding Indebtedness: \$

Orig\'l Appraised Value: \$ Date: [/ /]{.underline}

No. of Sales Contracts Submitted: Date Contract Approved:

Name(s) of Purchaser(s):

No. of Liens Satisfied: Amount Paid to Lien holders \$

\"As-Is\" Appraised Value Selling Price Percentage of Appraised Value

\$ \$ %

Name of Broker Sales Commission/Rate Broker\'s Sig. & Date\*

\$ / %

Type of financing: ( ) FHA ( ) VA ( ) Conventional ( ) Other

\[check one\]

\*By signing, the Broker certifies that there are no hidden terms or
special understandings with the buyer, seller, or program coordinator.

Does selling price exceed appraised value? ( ) yes ( ) no

If yes: \$ \$

Excess amount 50% (fifty percent) of excess

INCENTIVES TO BE PAID TO SELLER AT CLOSING:

Base incentive: \$ = (Enter \$1500 or 50% of excess amount, whichever is
greater)

Plus additional amounts (if any): \$

Total Incentives: \$

Program Coordinator - Date

/////

Date of Closing: [/ /]{.underline}

TOTAL INCENTIVES PAID: \$

This certifies that the incentives itemized above were paid to the
seller at closing.

Closing Agent - Signature - Date

(Attach copy of Settlement Statement)

[]{.mark}

[]{#__RefHeading___Toc167867726 .anchor}**Appendix 23** Termination of
Participation [**(TOP)**](#TABLEOFCONTENTS)

PRE-FORECLOSURE SALE PROGRAM

TERMINATION OF PARTICIPATION

Date:

Control Number:

Dear :

This is to advise you that your participation in the HUD Pre-Foreclosure
Sale Program has been terminated for the following reasons:

( ) - Failure to put forth a \"good faith\" effort to sell the property

( ) - Title search revealed liens and/or other encumbrances which cannot
be dissolved. Therefore, HUD cannot permit a pre-foreclosure sale or
prevail upon the lender to accept a deed-in-lieu of foreclosure.

( ) - Participant withdrew from the program.

OTHER COMMENTS:

Program Coordinator - Date

cc: Mortgagee

[]{.mark}

[]{.mark}

[]{#__RefHeading___Toc167867727 .anchor}**Appendix 24:** Request for
Deed-in-Lieu of Foreclosure [**(TOP)**](#TABLEOFCONTENTS)

PRE-FORECLOSURE SALE PROGRAM

REQUEST FOR DEED-IN-LIEU OF FORECLOSURE

Mortgagee Name: Acct. No:

HUD Ofc/Coordtr: Control No:

Homeowner Name(s)

Property Address

A \"good faith\" effort has been made to sell the subject property prior
to foreclosure, but without positive results. The homeowner is prepared
to tender the deed at the conclusion of his/her participation in the
program, which is imminent. HUD strongly recommends that you accept a
deed-in-lieu of foreclosure.

Under program procedures, HUD authorizes the payment of \$500 to the

homeowner as an inducement to tender the deed. This fee is fully
reimbursable through the Single Family Claims for Insurance Benefits.

Program Coordinator: Signature - Date

[]{.mark}

[]{.mark}

[]{#__RefHeading___Toc167867728 .anchor}**Appendix 25:** Submitting
Single Family Claims For Insurance Benefits Form
[**(TOP)**](#TABLEOFCONTENTS)

For use when submitting Single Family Claims For Insurance Benefits,
Form 27011, via courier service.

Holding Mortgagee Name:

Mortgagee No:

Name of Courier Service:

Tracking Number:

FHA Case Number FHA Case Number

1\. 11.

2\. 12.

3\. 13.

4\. 14.

5\. 15.

6\. 16.

7\. 17.

8\. 18.

9\. 19.

10\. 20.

FOR HUD USE ONLY

Attachment for Form 27011

[]{#__RefHeading___Toc167867729 .anchor}**Appendix 26:** Special
Forbearance Checklist [**(TOP)**](#TABLEOFCONTENTS)

SPECIAL FORBEARANCE CHECKLIST

Special Forbearance relief has been granted under authority of 24 CFR
203.614 (b) to:

Mortgagor:

Address:

FHA Case No:

Loan No:

Date of oldest paid installment

Date of HUD \# 1

Date of HUD \# 2 or \# 3

Date Mortgagor provided financial info

Dates of Forbearance from to

Date Mortgagor broke the forbearance

Date of Management Review

The following have been confirmed and documented: (Yes or No)

\(1\) The mortgagor does not own any other property subject to a
mortgage insured by the Secretary.

\(2\) The default was due to circumstances beyond the mortgagor's
control.

(3)The written agreement meets all requirements and is properly signed
and dated by both the mortgagor and an approved representative of the
mortgagee.

(To be completed by approving official)

I certify that I have completed a thorough review of the subject case.
All of the requirements of 24 CFR 203.614(b) have been met.

Approving Official:

Title:

Date:

[]{#__RefHeading___Toc167867730 .anchor}

**Appendix 27:** Compliance Inspection Report
[**(TOP)**](#TABLEOFCONTENTS)

File Not Available