Can mortgagees utilize an independent third party to conduct foreclosure and post-foreclosure sales?

An Independent Third-Party Provider is a party that conducts the foreclosure sale or additional Post-Foreclosure Sales Efforts under Claims Without Conveyance of Title (CWCOT) procedures.
 
Mortgagees may utilize an Independent Third-Party Provider to conduct the foreclosure sale and market a Property (securing an FHA-insured Mortgage) prior to such sale, where permitted by jurisdiction.
 
The Mortgagee must ensure that the Independent Third-Party Provider is not one of the following: 
  • an affiliate or subsidiary of the mortgagee;
  • any entity over which the mortgagee has significant influence; or
  • any entity with which the mortgagee has a conflict of interest in fact or appearance.
For successful third-party sales, HUD will reimburse Mortgagees for Independent Third-Party Provider service fees incurred up to an amount that does not exceed 5 percent of the Property’s net sales price. Revenue sharing agreements of the reimbursed fee between the Mortgagee and the Independent Third-Party Provider are not permitted.

Any questions may be directed to the FHA Resource Center Toll-Free Telephone Number at (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 Relay Service at (800) 877-8339. 
 
HUD’s Independent third-party providers standard is located in Handbook 4000.1, Section III.A.2.p.iv.(A)-(B) 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-05156