www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 May 10, 1993 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Mortgagee Letter 93-11 TO: ALL APPROVED MORTGAGEES ATTENTION: SINGLE FAMILY SERVICING MANAGERS SUBJECT: FHA Single Family Insurance Claims HUD Handbook 4330.4 Clarifications and Corrections The purpose of this mortgagee letter is to provide several clarifications and corrections in reference to HUD Handbook 4330.4, FHA Single Family Insurance Claims, issued November 11, 1992. 1. Form HUD-27011 has been updated. Replace the Form HUD-27011, Parts A and B, that was originally provided in Appendix 1 with the newer version that is attached. Do not use the version of the Form HUD-27011 that was originally provided. 2. There are two clarifications required in the Preforeclosure Sales Instructions (Chapter 8). (a) Refer to page 8-26 and delete the words "including the $250 administrative fee payable to the mortgagee" from the explanation for item 305, beginning on the ninth line. The administrative fee is only claimable on Part E, item 408, as explained on page 8-28. (b) Refer to Item 22, on page 8-15. Add "to indicate the occupancy status as of date in Item 911 (date of acceptance into preforeclosure sale program) after the words "Check one". This item must be completed in preforeclosure (07) claims. 3. Many mortgagees appear to be confused about the proper use of Item 31 in conveyance (01), coinsurance (04) and nonconveyance (06) claims to report a self-curtailment date. Mortgagees should only enter a date in item 31 when interest should properly be curtailed to reflect: (a) the mortgagee's failure to meet the reasonable diligence in the prosecution of foreclosure time requirement (24 CFR 203.356); or, _____________________________________________________________________ 2 (b) the mortgagee's failure to provide timely notice of foreclosure initiation to the Secretary (24 CFR 203.356); or, (c) the mortgagee did not meet a time requirement due to the special circumstances explained in paragraph 2-5 C.3. on page 2-8 of the Handbook. The date reflected in Item 31 should never be later than the date reflected in item 9 on Part A of the HUD-27011. 4. Mortgagees are expected to seek hazard insurance proceeds for all situations where the property has sustained casualty damage, not just for damages sustained in fire, flood, earthquake, tornado or where the mortgagee failed to take proper action to preserve and protect the property (mortgagee neglect). However, the application of insurance proceeds on form HUD-27011 will differ for those cases where the damage was not fire, flood, earthquake, tornado or mortgagee neglect in that these funds must only be shown on Part B, line 118. Please add the following to your conveyance instructions on page 2-29, paragraph 2-12 B. of Handbook 4330.4, " To remit hazard insurance recovery where the damage was other than fire, flood, earthquake, tornado or mortgagee neglect, the amount of the recovery must be shown on Part B, line 118." Do not report these funds received on Part A, item 27, as it will cause your claim to suspend and delay your payment. These changes and clarifications should be maintained for easy reference by all staff responsible for submission of claims for insurance benefits to HUD. Very sincerely yours, James Schoenberger Associate General Deputy Assistant Secretary for Housing Attachment _____________________________________________________________________ __________________________________________________________________________ Single-Family Application for Insurance Benefits ******************************************************************** * * * * * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ form HUD-27011 (5/93) ref. Handbooks 4330.4 and 4310.5 Part A _____________________________________________________________________ __________________________________________________________________________ ******************************************************************** * * * * * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ form HUD-27011 (5/93) ref. Handbooks 4330.4 and 4310.5 Part A, cont. _____________________________________________________________________ __________________________________________________________________________ Single-Family Application for Insurance Benefits Part B Fiscal Data ******************************************************************** * * * * * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ form HUD-27011 (5/93) ref. Handbooks 4330.4 and 4310.5 Part B _____________________________________________________________________ ___________________________________________________________________________ Single-Family Application for Insurance Benefits Part C Support Document ******************************************************************** * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ form HUD-27011 (5/93) ref. Handbooks 4330.4 and 4310.5 Part C _____________________________________________________________________ __________________________________________________________________________ Single-Family Application for Insurance Benefits Part C Support Document (Continuation) ******************************************************************** * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ form HUD-27011 (5/93) ref. Handbooks 4330.4 and 4310.5 Part C con't. _____________________________________________________________________ __________________________________________________________________________ Single-Family Application for Insurance Benefits Part D Support Document (Continuation 1) ******************************************************************** * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ form HUD-27011 (5/93) ref. Handbooks 4330.4 and 4310.5 Part D _____________________________________________________________________ __________________________________________________________________________ Single-Family Application for Insurance Benefits Part E Support Document (Continuation 2) ******************************************************************** * * * * * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ form HUD-27011 (5/93) ref. Handbooks 4330.4 and 4310.5 Part E