www.hudclips.org DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410 April 9, 1981 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING - FEDERAL HOUSING COMMISSIONER IN REPLY REFER TO: Mortgagee Letter 81-14 TO : ALL APPROVED MORTGAGEES SUBJECT: Microfilming, Retention, and Disposition of Documents in Single Family HUD-Insured Mortgage Files Concern has been expressed by HUD-approved mortgagees regarding the two-year retention requirement on original documentation expressed in Mortgagee Letter 79-21, dated August 30, 1979. This Mortgagee Letter supersedes 79-21. Accordingly, HUD has reviewed its policy in this regard and has decided to further define and amend it. The Department has no objection to the microfilming of documentation, and subsequent disposition of most of the original paper files after the quality of the microfilming has been verified, if the lender systematically engages in the copying of the entire file, including all documents, notes, forms, and records related to each specific case. However, since jurisdictions differ in the practice of whether Mortgage Notes or Deeds of Trust are recorded, it would be impossible in some areas to obtain a court certified copy of these origination documents at the time of conveyance of the property or assignment of the mortgage. For this reason, and to maintain consistent record keeping practices, the original Mortgage, Mortgage Note or Deed of Trust, and the Mortgage Insurance Certificate must be preserved for all HUD/FHA insured mortgages. Contracts for microfilming, entered into by lenders, must require that the entire case file be copied. Upon request, mortgagees must make available to HUD staff readable hard copies of the microfilmed material and do so in a timely manner. The entire case file pertaining to loan origination must be retained in microfilmed form for the life of the insured mortgage plus two years, whether the mortgage has been satisfied by payment-in-full, or there has been voluntary termination of mortgage insurance or a claim for mortgage insurance. If the mortgagee elects not to microfilm documents, the entire origination case file must be retained for the same period. _____________________________________________________________________ 2 Mortgage servicing records are not required to be microfilmed whether or not the mortgagee elects to microfilm origination documents. However, on mortgages where a default has occurred within a previous three year period, the servicing records reflecting collection efforts, forbearance agreements, personal interviews, property inspections and the like must be retained for three years from the date the account was last brought current, and two years after a claim has been made for mortgage insurance benefits or the mortgage satisfied after an unresolved default by the mortgagor, whichever is the later. If the mortgagee elects to microfilm servicing records, the same requirements as for microfilmed origination documents apply except that they need only be retained for the period defined by this paragraph. Mortgagees are further reminded that upon sale or transfer of servicing from one mortgagee to another the entire case file, whether microfilmed or not, must accompany the transfer. This includes, but is not limited to servicing and collection histories. On Section 235 mortgages even though the assistance payments contract may be in a suspended status, the entire record including recertifications, verifications of income, records of assistance billed for, etc., from the time of origination of the mortgage must be transferred. The following checklist will provide guidance regarding Section 235 related documents that must accompany the sale or transfer: HUD Form 3115 Notice to Mortgagor 93101 Recertifications 93101A Subsidy Calculations 93114 Suspension, Termination and Reinstatement Requests 3103 Subsidy Billing Justification or Equivalent ADP Printout In the event that a mortgagee files a claim for insurance benefits, the documents must be forwarded in accordance with outstanding instructions contained in HUD Handbook 4191.1 REV., paragraph 145 and HUD Handbook 4110.2 , chapter 12. It is the mortgagee's responsibility to be certain that the required single family records and/or information are maintained in usable accessible condition and to be assured that the use of microfilming meets these requirements. Sincerely, George O. Hipps, Jr. Acting Assistant Secretary for Housing-Deputy Federal Housing Commissioner _____________________________________________________________________