FHA Partial Claim
Under the Partial Claim option, the mortgagee will advance funds on behalf of a mortgagor in an amount necessary to reinstate a delinquent loan. Ref: Mortgagee Letter 2003-19.
FACTS
- A Subordinate Mortgage and Note, in the amount of the advance, is prepared in the nameof the Secretary of HUD.
- For mortgaged properties in the State of Texas, a Subordinate Mortgage and Promissory Note, in the amount of the advance, is prepared in the name of the Secretary of HUD.
- Total delinquency may not exceed 12 monthly payments principal, interest, taxes and insurance.
- Mortgagee must verify mortgagor was not able to repay delinquency through Special Forbearance or Loan Modification option.
- Partial Claim cannot be used to bring the loan current for sale or assumption.
- Partial Claim may be used as a stand-alone option.
- Partial Claim cannot be used in conjunction with a Loan Modification.
- The mortgagee cannot include late fees, legal fees, or other administrative expenses in the Partial Claim.
- Partial Claim amount must be included when calculating total indebtedness for the purpose of a Preforeclosure Sale.
- No administrative fees for completing the Partial Claim documents can be passed on to the mortgagor.
ELIGIBILITY
- Loan must be 92 days delinquent (4 full payments due and unpaid).
- Mortgagor must have overcome the cause of default.
- Owner-occupant committed to continuing occupancy as primary residence.
PROCEDURES
- Mortgagee will conduct a financial analysis of the mortgagor’s household income and living expenses.
- Calculate surplus income percentage for a minimum of 3 months.
- If mortgagor’s income percentage is 0% or less the Partial Claim is disallowed.
- Partial Claim must fully reinstate the loan.
- Mortgagee cannot include late fees, legal fees, or other administrative expenses in the Partial Claim. However, the mortgagee can collect legal costs and fees resulting for a canceled foreclosure action directly from the mortgagor to teh extent not reimbursed by HUD. Reference: Mortgage Letter 2005-30
- Partial Claim is due and payable when the first mortgage is paid off or when the mortgagor no longer owns the property.