HUD Updates Foreclosure Policies

The U.S. Department of Housing and Urban Development increased the cap on foreclosure attorneys’ fees that may be eligible for reimbursement on FHA insurance claims and published a list of acceptable time frames within every state for completing the foreclosure process.

Beginning January 1, 2016, the policies announced in Mortgagee Letter 2015-24 last week will supersede all prior Reasonable Diligence (foreclosure) time frames, Attorney Fee schedules, and Cash for Keys’ Relocation allowances, including those outlined in Mortgagee Letters 13-38 and 02-13.

HUD said “these updates are necessary to help align FHA’s foreclosure time lines with the industry’s experience in all states across the country. In addition, the guidance provides greater clarity and/or more information to mortgage servicers.”

The policies announced in Mortgagee Letter 2015-24 apply to companies that service FHA forward mortgages and reverse mortgages. However, HUD officials confirmed to NRMLA that changes to the Cash for Keys’ Relocation allowance – an incentive that pays individuals to voluntarily vacate a property rather than face legal eviction – are not applicable to HECM.

The mortgagee letter includes attachments with updated Attorney Fee schedules and Reasonable Diligence time frames for every state.

“The Reasonable Diligence time frame begins with the First Legal Action required by the jurisdiction to commence foreclosure and ends with the later date of acquiring good marketable title and possession of the property,” ML 2015-24 states. “HUD expects mortgagees to comply with all federal, state and local laws when prosecuting a foreclosure and pursuing a possessory action.”