www.hudclips.org U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT WASHINGTON, D. C. 20410-8000 September 13, 1985 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Mortgagee Letter 85-20 TO: ALL APPROVED MORTGAGEES SUBJECT: Ferrell v. Pierce, 73 C 334, N.D. ILL. Assignment Reprocessing This Mortgagee Letter is to advise all lenders of recent developments with respect to the above litigation, and to alert you to reprocessing efforts by the Department. The Department of Housing and Urban Development (HUD) is required by the United States District Court in the case of Ferrell v. Pierce, 73 C 334 (N.D. Illinois) to reprocess certain cases in which a homeowner was rejected for an assignment of the mortgage by the local HUD office between January 1, 1980 and July 11, 1983. On August 13, 1985, we began notifying affected homeowners of their right to have their case reprocessed by HUD if they so choose. If the mortgage still exists, local offices will contact you to determine the status of the mortgage and perhaps, in some instances, to request your assistance in providing information or documents needed to reprocess the request. You will also receive, during reprocessing, copies of all letters and notifications sent to these mortgagors. HUD offices will also be asking mortgagees to delay foreclosure action for eligible cases where the mortgages are either in foreclosure, or where initiation of foreclosure action might be imminent. We realize that delays can be costly, and it is not our intention that lenders suffer as a result of actions required of HUD. We strongly urge you to delay the foreclosure wherever possible, and we are prepared to expedite processing of those requests. If delaying foreclosure will prevent you from starting foreclosure within one year of the date of default (see 24CFR 203.355), you should request an extension of time to foreclose from the field office. The date of the extension expiration should be entered in Block 19 of HUD-27011. If you have already incurred foreclosure expenses, and HUD ultimately accepts assignment of the mortgage, you may claim any reasonable foreclosure expenses previously incurred in your claim for insurance benefits. However, you must, in order to ensure that foreclosure expenses are paid, indicate boldly at the top of the claim, and on all copies, "FERRELL REPROCESSING FORECLOSURE EXPENSES INCURRED." This language must also be stated in the Mortgagee's Comments Section on the reverse of Part A. _____________________________________________________________________ 2 When HUD contacts you on an individual case, if you are unable to delay foreclosure, or if foreclosure has been completed and you are unable to delay eviction, you must immediately advise the HUD field office so that HUD can take appropriate action to protect the mortgagor's interest in the property. You will be instructed by the field office to take specific actions in each individual case. Where the mortgage has been foreclosed, but the property has not yet been conveyed to HUD, the field office will direct you to convey the property to HUD if the former mortgagor is in occupancy (or the former mortgagor and any tenants on 2-4 unit dwellings). In these cases, file your claim for insurance benefits as follows: (1) Check Block 22 "No", indicating that property is occupied (not vacant). (2) Insert the date of this Mortgagee Letter in Block 23 marked, "Date of Field Office Approval". (3) Be certain that all cases conveyed occupied pursuant to Ferrell reprocessing are marked "FERRELL REPROCESSING" boldly in the top margin of Part A of the claim form. Also, add in "Mortgagee Comments" section the following language: "Property conveyed occupied pursuant to Ferrell reprocessing." This last item is CRITICAL TO PROPER HANDLING OF YOUR CLAIM. The records you retain in support of your claim must indicate that the field office contacted you in connection with the mortgagor's request for assignment reprocessing, and what you told the field office with respect to whether foreclosure or eviction would be delayed. You must also note the instructions given to you by the field office in each case. Also, in some instances, mortgagors who request reprocessing of previously rejected requests may now be in bankruptcy, or under a payment plan with their lenders. HUD offices will be checking status of those cases with you upon receipt of the mortgagor's request for reprocessing. If the mortgagor is currently delinquent, under a payment plan with the lender, or in bankruptcy, and foreclosure is not pending at this time, you will be instructed to note the mortgagor's file and, should institution of foreclosure become necessary as a result of the mortgagor's failure to bring the account current, the case must be sent to the field office for reprocessing at that time. We also strongly urge delaying foreclosure on these cases as well. If you are unable to do so, you must advise the field office so that it can take action to protect the mortgagor's interest in the property pending outcome of the reprocessing. You must have a current assignment acceptance letter from the field office to assign mortgages to HUD, and you must file the assignment for record within 30 days of the date of the acceptance letter. _____________________________________________________________________ 3 Although HUD is taking all reasonable measures to ensure that normal service to mortgagees and the general public is not disrupted, there may be some unforseen delays in responding to assignment requests or other program matters. If any serious problems develop for lenders as a result, please contact Richard Buchheit, Director, Single Family Servicing Division, or a member of his staff, on (202) 755-6672. Questions concerning this Mortgagee Letter should also be directed to the above telephone number. Sincerely, Silvio J. DeBartolomeis Acting General Deputy Assistant Secretary for Housing- Federal Housing Commissioner _____________________________________________________________________ U.S. Department of Housing Postage and Fees Paid and Urban Development Department of Housing and Urban Development Washington, D.C. 20410 HUD-401 Official Business Penalty for Private Use, $300 _____________________________________________________________________