When must the Commissioner’s Adjusted Fair Market Value (CAFMV) be used?

Unless otherwise required by statute or jurisdiction, mortgagees 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:
A. The FHA mortgage insurance is currently active for the FHA Case Number;
B. The FHA-insured loan is not currently subject to an indemnification;
C. 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;
D. The property has no surchargeable damage; and
E. The mortgagee’s projected conveyance claim amount would be equal to or greater than the CAFMV.
Note: FHA is permitting, but not requiring, the use of CAFMV by Small Servicers, defined in
12 CFR 1026.41(e)(4)(ii).
Additional questions may be directed to the HUD National Servicing Center at (877) 622-8525
HUD’s standard for the CAFMV is located in HB 4000.1, III.A.2.p.ii.(B) 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-05154