Non-Monetary Default is a Default where the Borrower fails to perform obligations, other than making monthly payments, contained in the mortgage security instrument for a period of 30 Days.
When the Non-Monetary Default may be cured or otherwise resolved by Mortgagee action without resorting to foreclosure action, the Mortgagee must advance and charge to the Borrower all amounts due for servicing activities, as defined in the mortgage agreement, if:
- the Borrower fails to make required payments or charges;
- the Borrower fails to perform any other covenants and agreements contained in the Deed of Trust/Security Instrument; or
- there is a legal proceeding that may affect the Mortgagee’s rights in the Property.
- The Mortgagee may advance the funds to pay the renewal premiums. The Mortgagee must renew the same type of policy and the same coverage carried previously by the Borrower.
- If Borrowers fail to renew hazard insurance coverage when required, the Mortgagee may force-place hazard and/or flood insurance where consistent with federal regulations. While the Mortgagee may, at its discretion, obtain more coverage than is necessary to protect the Mortgagee’s interest, HUD limits its reimbursement of these premiums.
If the Borrower fails to pay Condominium/HOA Fees, the Mortgagee must take any action necessary to protect the first-lien position of the FHA-insured Mortgage against foreclosure actions brought by a condominium/HOA or any other junior lien holder.
If the Borrower fails to address a code violation notice from the municipality where the Property is located, the Mortgagee must perform activities necessary to preserve and protect the Property, as authorized under the security instruments. See Mortgagee Property Preservation and Protection.
The Mortgagee must forward copies of all notices pertaining to demolition orders and hearings to HUD’s Mortgagee Compliance Manager (MCM) immediately upon discovery. The MCM will advise the Mortgagee as to whether to proceed with the demolition or to postpone the demolition until after conveyance to HUD.
The Mortgagee must review the Mortgage’s legal documents to determine any covenant restrictions pertaining to assumption. See Assumptions (Section III.A.3.b) in Handbook 4000.1.
Additional questions may be directed to the HUD National Servicing Center at (877) 622-8525.
See policy in Handbook 4000.1 Section III.A.2.n. at: