How long does the Mortgagee remain responsible for a property being conveyed to HUD?

The Mortgagee is responsible for the Property until all HUD regulatory requirements leading to conveyance have been complied with, including:
  • filing for record the deed to the Secretary of HUD; and
  • filing form HUD-27011 in FHA Connection (FHAC) for claim processing and payment.  
The Mortgagee remains responsible for the Property and any loss or damage thereto should the claim be suspended due to the need for review or correction of a hard edit error, notwithstanding the filing of the deed to the Secretary.
 
HUD will presume that any damage discovered during HUD's first inspection of the Property after conveyance occurred while the Mortgagee had possession, unless the Mortgagee is able to provide evidence to the contrary.
 
Without the express written approval of the Mortgagee Compliance Manager (MCM), the Mortgagee must not incur expenses for Preservation and Protection (P&P) of the Property or for eviction of the occupant on or after the date the deed is filed for record.

HUD will not reimburse P&P or property-related expenses incurred after the deed has been recorded in HUD’s name, other than payment of certain utility bills or Homeowners’ Association (HOA) payments.
 
The Mortgagee must request the hazard insurance be canceled as of the date the deed is filed for record. The Mortgagee may calculate the amount of the return premium due on a short-rate basis.
 
HUD considers a Property conveyed by the Mortgagee to HUD when:
  • the Mortgagee has deeded the Property to HUD; and
  • HUD accepts conveyance of the Property, as evidenced by the payment of Part A of the claim from HUD to the Mortgagee. For suspended claims, the Mortgagee remains responsible for the Property, and any loss or damage thereto, notwithstanding the filing of the deed to the Secretary for record, and such responsibility is retained by the Mortgagee until HUD regulations have been fully complied with.  
HUD MCM’s contact information is on HUD’s web page, Mortgagee Compliance Manager (MCM) Information, available at: https://www.hud.gov/program_offices/housing/sfh/nsc/mcm

Additional questions may be directed to the HUD National Servicing Center at (877) 622-8525.

For policy information see Handbook 4000.1 Section III.A.2.t.vi. & viii. available 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-04512