Must Mortgagees bid the Commissioner's Adjusted Fair Market Value (CAFMV) at the foreclosure sale for Claims Without Conveyance of Title (CWCOT)?

Unless otherwise required by statute or jurisdiction, the Mortgagee must use the Commissioner's Adjusted Fair Market Value (CAFMV)  for all foreclosure sales and Post-Foreclosure Sales Efforts for Mortgages in Default when all of the following criteria are met:
  • the FHA mortgage insurance is still active for the FHA case number;
  • the FHA-insured Mortgage is not subject to indemnification;
  • the Mortgagee has worked with the Borrower to exhaust all Home Retention Options and has determined that the Borrower’s case does not meet the criteria for a Home Disposition Option, or the Mortgagee has been unable to locate the Borrower, and the Property is vacant or has been abandoned by the Borrower;
  • the Property has no Surchargeable Damage; and
  • the Mortgagee’s projected conveyance claim amount would be equal to or greater than the CAFMV.
 
Either the Mortgagee or a third party will be the successful bidder at the foreclosure sale. Notwithstanding the foreclosure sale, the Borrower or a third party may exercise a legal right and redeem the Property.
 
Any questions may be directed to the FHA Resource Center Toll-Free Telephone Number at (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 Relay Service at (800) 877-8339. 

See policy in Handbook 4000.1 Section III.A.2.p.ii.(B) and III.A.2.p.v. at:
https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

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-03900