HUD Issues Series of Mortgagee Letters

Mortgage Origination HUD FHA Loss Mitigation

Over the past week, HUD issued numerous mortgagee letters applicable to single-family mortgagees. Mortgagee Letter 2013-14, dated May 9, 2013, establishes documentation requirements for mortgagees to demonstrate eligibility for FHA mortgage insurance of loans when a governmental entity, or its agency or instrumentality, directly provides the borrower’s required minimum cash investment. The letter also provides guidance on resolving concerns with extending secondary financing by a governmental entity when such an entity provides the minimum cash investment through secondary financing. The letter becomes effective July 1, 2013. Also on May 9, HUD issued Mortgagee Letter 2013-15, which introduces new status codes for reporting delinquent mortgages in the Single Family Default Monitoring System and announces a new requirement to report each non-incentivized loan modification. The reporting and status code requirements become effective November 9, 2013. On May 14, HUD issued Mortgagee Letters 2013-16 and 2013-17. The former permits the subordination of partial claim liens for FHA streamlined refinances and eliminates consideration of partial claim notes from the 125% combined loan-to-value ratio calculation for streamlined refinances. Mortgagees have until July 13, 2013 to implement the changes. The latter provides guidance for determining interest rates to use when implementing loss mitigation home retention options for trial payment plans offered on or after July 1, 2013.