On April 17, the Federal Housing Administration issued a reminder to lenders of its requirements regarding initial occupancy verification and borrower contact methods for mortgages in default.
Under Section III.A.2.g.ix.(B) of the Single-Family Housing Policy Handbook 4000.1, mortgagees must determine the occupancy status of a property by the 45th day of delinquency. Mortgagees can make this determination through contact with the borrower. When a borrower in default cannot be reached by the 45th day, the mortgagee must obtain an initial occupancy inspection no later than the 60th day of delinquency.
When contacting a borrower, Handbook 4000.1 Section III.A.2.g.iii. “Communication Methods” states that the mortgagee must use the method(s) of communication most likely to receive a response from each borrower and consider the borrower’s expressed preference for certain methods. Mortgagees may use mail, certified mail, in person, any acceptable method of electronic communication or telephone contact attempts to establish contact with the borrower.
Mortgagees may attempt to contact an unresponsive borrower at the property as part of an occupancy inspection, which qualifies as an in-person attempt and may include leaving a notice at the property.
In accordance with the Department of Housing and Urban Development (HUD) policy, mortgagees may include costs associated with occupancy inspections when a mortgage files a claim with Part C or D of HUD Form 27011.
Appendix 7.0 of Handbook 4000.1 lists the maximum allowances that HUD will reimburse for property inspections, which may be included in a claim:
To review the full policy, refer to Sections III.A.2.g.ix.(B); III.A.2.r.iii(B); IV.A.2.a.ii(D)(2); IV.A.2.b.i(B)(1); IV.A.2.b.ii(B)(1); IIV.A.2.d.ii(B); and IV.A.2.e.ii(A)(2) of Handbook 4000.1
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