Is an extension to commence foreclosure available for a HECM borrower receiving Hardest Hit funds?

When a Home Equity Conversion Mortgage (HECM) borrower is receiving funds through a Hardest Hit Fund (HHF) program, Mortgagees may request a 45-day extension to the deadline to initiate foreclosure or reasonable diligence in completing foreclosure provided that: 

  • the Mortgagee obtains a copy of the conditional commitment from the State Housing Finance Agency or other entity administering a state’s HHF; and 
  • the Mortgagee reviews its servicing file and confirms that the borrower’s account is still active and due and payable.  

To submit a request to delay initiation of foreclosure, the Mortgagee must:

  • email the request to HUD’s loan servicing contractor, along with documentation of the borrower’s participation in the HHF program; and
  • upload copies of the request and documentation to the “HERMIT Document” tab.  

If foreclosure has already been initiated and/or is resumed, the Mortgagee must fully document in HERMIT any delays in foreclosure completion in order to prevent curtailment.
The HHF program funds must be received and applied within the 45-day extension period. When the HHF program funds are received and applied to the HECM loan and the default is cured within such time, the mortgagee must email HUD’s loan servicing contractor to request rescission of the HECM Due and Payable approval. The rescission request and supporting documentation must be uploaded to the “HERMIT Document” tab.

When the funds are not received, are not disbursed on behalf of the borrower, or do not adequately cure the default within the 45-day extension period, the Mortgagee must proceed in accordance with the applicable foreclosure timeframes. The Mortgagee must retain documentation regarding this delay in initiating or completing foreclosure in its servicing file in order to avoid curtailment.
 
For more information see Mortgagee Letter 15-10 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 answers@hud.gov.  Persons with hearing or speech impairments may reach this number by calling the Federal Information Relay Service at (800) 877-8339.


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-05081