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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410

July 9, 1982
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING - FEDERAL HOUSING COMMISSIONER             IN REPLY REFER TO:
Mortgagee Letter 82-12
TO:  ALL APPROVED MORTGAGEES
SUBJECT:  Microfilming, Retention, and Disposition of Documents of
            Single Family HUD-Insured Mortgage
            Files - Clarification
 
     This Mortgagee Letter clarifies and amends certain requirements
which were previously outlined in Mortgagee Letter 81-14 , dated April
9, 1981, pertaining to the retention of documents.
 
     In paragraph eight of Mortgagee Letter 81-14 , mortgagees were
reminded that the entire case file must accompany the sale or
transfer of servicing of the mortgage.  In light of concerns which
have surfaced since that time, we are amending that statement to
require that:
 
(1)  If the originating mortgagee sells the mortgage after
     origination to an investing (purchasing) mortgagee, the
     originating mortgagee shall retain a copy of the entire
     origination file, either in hard copy form or microfilm form,
     for at least one year from the date of origination for auditing
     purposes.  Upon sale, the origination file itself, again either
     hard copy or microfilmed form, will still accompany the sale of
     the mortgage.
 
(2)  The subsequent retention of documents, either for the
     origination or servicing files, will be the responsibility of
     either the holding or servicing mortgagee, depending on
     arrangements which are negotiated between the parties involved.
 
(3)  While HUD requires that servicing records reflecting collection
     efforts be retained for a certain period of time where a default
     has occurred, the lender must realize that certain other
     records, such as escrow analyses, routine correspondence, etc.,
     may have to be retained for longer periods of time, if such
     would be necessary to reconstruct a history of the account.  For
     example, the lender should be able to reconstruct, at a minimum,
     a complete accounting of all transactions for payments to, and
     disbursements from, the escrow account.  If that can be
 
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     accomplished without retention of hard copies or microfilm of
     escrow analyses, then the mortgagee would not have to retain these
     type records in the mortgagor's file.  If, on the other hand, such
     reconstruction could not take place without escrow analyses on hand,
     the mortgagee must retain the copies.
 
     Retention of all data relating to the billing and application of
     assistance payments amounts on Section 235 mortgages that contain a
     recapture provision is mandatory.  The mortgagee must be able to
     document its statement of the amount of assistance that has been paid
     on each account when the time comes for the Department to recapture
     the assistance payments in accordance with the law, and satisfy the
     recapture lien.
 
     All other provisions of Mortgagee Letter 81-14 , except as
amended above, remain in full force and effect.  If there are any
questions, please contact Richard Buchheit, Director, Single Family
Servicing Division, (202) 755-8680.  (This is not a toll-free
number.)
 
                                   Very truly yours,
 
                                   Philip Abrams
                                   General Deputy Assistant
                                   Secretary-Deputy Federal Housing
                                   Commissioner
 
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