For Home Equity Conversion Mortgage (HECM) loans with set-aside accounts for the purpose of paying property charges, the mortgage will be considered in default if:
- The set-aside account has been exhausted of available funds to make property charge payments; and
- The borrower, after being notified of their outstanding property charge obligation, fails to remit the property charge payment in full within 30 days as required; and
- The Principal Limit has been exhausted, requiring the Mortgagee to make the property charge payment using corporate funds.
The guidance in Mortgagee Letter (ML) 15-11 will apply to all mortgages with a set-aside account either required by the mortgagee at origination or elected by the borrower.
For more information see ML 15-11 available at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee
Any questions may be directed to the FHA Resource Center at Toll-Free (800) CALLFHA (225-5342) or by email to firstname.lastname@example.org. Persons with hearing or speech impairments may reach this number by calling the Federal Information Relay Service at (800) 877-8339.