How does a HECM repair set-aside affect assignment to HUD?

Repairs required as a condition of endorsement must be completed within 12 months. Failure of the mortgagor to complete required repairs is a violation of the mortgage covenants and would trigger a servicer to first suspend payments under the payment plan and ultimately to request permission from HUD to call the loan due and payable. Loans that are in due and payable status cannot be assigned to HUD.

If a servicer requests approval to assign a mortgage that shows funds still set aside for repairs, HUD's contractor will ask the servicer to confirm that repairs are complete and the funds have been appropriately disbursed. If there are excess funds after the repairs are complete, they should either be forwarded to the mortgagor or applied to the principal balance of the mortgage.

HUD’s Servicing Contractor
Novad Management Consulting
Shepherd’s Mall
2401 NW 23rd Street, Suite 1A1
Oklahoma City, OK 73107

Toll-Free Telephone Number: (800) CALLFHA (225-5342)
Fax Number: (800) 489-1733

Borrower inquiries (HECM or Forward)

HECM Servicer inquiries

Extensions and Variances Automated Requests System (EVARS) and E-Class assistance

Payoff requests for Secretary-Held HECM mortgages:

4330.1 REV-5, Section 13-11

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-01918