What are the causes for Curtailment of Interest for Non-Compliance with HECM Program Requirements?

Causes for curtailment of interest include, but are not limited to, the Mortgagee’s failure to:
  • timely request due and payable approval from HUD;
  • timely provide notice to HUD of the death of the last surviving borrower or of conveyance of title;
  • timely provide the required Due and Payable Notice to the borrower, their estate, or heirs, or other party with legal title to the property that the HECM is due and payable;
  • comply with the required appraisal time frames;
  • timely commence foreclosure, when applicable;
  • timely provide notice to HUD after commencing foreclosure, meeting reasonable diligence requirements, or meeting reporting requirements, pursuant to Mortgagee Letter (ML) 16-03; and
  • timely file claims for payment of insurance benefits.  
Mortgagees are responsible for self-curtailing claims for failure to comply with FHA’s regulatory requirements and timeframes of 24 C.F.R 206.125 and 206.127 except to the extent those timeframes are extended by ML 15-15. In that event, Mortgagees are responsible for self-curtailing claims when they fail to comply within the extended time. Mortgagees must state the reason for curtailment in the “Mortgagee Comments” section of the Form HUD-27011 in the Home Equity Reverse Mortgage Information Technology (HERMIT) system.
Mortgagee Letters 16-03 and 15-15 are available at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee

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-04818