When may a Mortgagee file a HECM Claim Type 23 - Borrower's Short Sale?

When a borrower sells the property but the sales proceeds are insufficient to satisfy the mortgage, a Mortgagee may file a HECM Claim Type 23 (Borrower’s Short Sale) provided that either:

  • the loan was not due and payable and the property was sold for at least the current appraised value; or
  • the loan was due and payable and the property was sold for at least 95% of the current appraised value.  

For more information see Mortgagee Letter 15-10 available at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee
Any additional questions may be directed to the FHA Resource Center at Toll-Free (800) CALLFHA (225-5342) or by email to answers@hud.gov. Persons with hearing or speech impairments may reach this number by calling the Federal Information Relay Service at (800) 877-8339.

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-02428