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U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

August 28, 1990
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
MORTGAGEE LETTER 90-33
       TO:  ALL APPROVED MORTGAGEES
       ATTENTION:  Single Family Servicing Managers
       SUBJECT:  Single Family Default Monitoring System (SFDMS)
                   Change to Instructions for Completing Form
                   HUD-92068-A,
 
            Effective 30 days from the date of this Mortgagee Letter,
       the following change in the instructions for the Single Family
       Default Monitoring System (SFDMS) monthly report (Form HUD-92068-A)
       will become effective.  Form HUD-92068-A is being revised to
       include the modified instructions.  Please ensure that all
       individuals responsible for SFDMS reporting are aware of this
       change.
 
            The instructions for completing Form HUD-92068-A are being
       modified as follows.
 
            Section M . . . . . .
 
            (Status Code B)      Foreclosure Started.  Enter the date the
                                 first legal action is taken to foreclose
                                 (for example, the filing of a complaint
                                 or the publication of notice of sale).
 
            HUD Regulation 24 CFR 203.356 requires mortgagees to provide
       the Commissioner with written notice within 30 days after the
       institution of foreclosure proceedings.  Current policy provides
       that this requirement is satisfied when accounts are properly
       reported to the Single Family Default Monitoring System (SFDMS)
       via the monthly delinquency report, Form HUD-92068-A.
 
            This policy will not change.
 
            The instructions for the December 1986 version of Form
       HUD-92068-A, Status B, request the mortgagee to identify
       "foreclosure started" as the date the case is forwarded to an
       attorney to begin foreclosure.  This date is inaccurate and a
       change is required to ensure that the foreclosure start date
       entered in the SFDMS is consistent with the date identified for
       the initiation of foreclosure when filing for single family
       insurance benefits, as specified in the claim instructions.
 
_____________________________________________________________________
 
                                                                2
 
         It is very important for mortgagees to realize that if the
    requirement of 24 CFR 203.356 is not met, the Department has the
    authority, 24 CFR 203.402(k), to curtail interest on a subsequent
    insurance claim beyond the date which the action should have
    occurred.  The Department intends to fully enforce the regulatory
    requirement that mortgagees notify the Commissioner of
    foreclosure initiations.
 
         The mortgagee will be considered as meeting the requirement
    when:
 
         (1)  For foreclosures instituted between the first and
              fifteenth of a month - the institution of foreclosure
              is reported on the next required 92068-A report; or
 
         (2)  For foreclosures instituted between the sixteenth of
              the month and the end of the month - the institution of
              foreclosure is reported on the next required 92068-A or
              that of the next following month.
 
                             Sincerely yours,
 
                             Arthur J. Hill
                             Acting Assistant Secretary for
                               Housing-Federal Housing Commissioner