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, including marketing efforts in support of such sales under Claims Without Conveyance of Title (CWCOT) procedures, and who 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.
Where permitted by the jurisdiction, the Mortgagee may utilize an independent third-party provider to market the Property prior to any foreclosure or Post-Foreclosure Sale Efforts or to conduct such sales to ensure maximum competition for both the foreclosure sale and Post-Foreclosure Sales. 
The Mortgagee may only use an independent third-party provider that agrees, in writing, to share sales and auction reporting information with the Mortgagee and HUD. 
For successful third-party sales, HUD will reimburse expenses relating to the Mortgagee’s use of an independent third-party provider to market or conduct the foreclosure sale or Post-Foreclosure Sales Efforts, provided the Property was marketed for a minimum of 15 Days before each scheduled sale. HUD will reimburse such independent third-party provider expenses incurred for successful third-party sales up to an amount that does not exceed:
  • 3 percent of the Property’s sales price where the independent third-party provider markets the Property, but does not conduct the sale; or
  • 5 percent of the Property’s sales price where the independent third-party provider markets the Property and conducts the sale. 
Closing costs of the sale are to be paid by the third-party purchaser or the Mortgagee. Revenue sharing agreements of the reimbursed fee between the Mortgagee and the independent third-party provider are prohibited.

Any questions may be directed to the FHA Resource Center by email at:, or by toll-free telephone number (800) CALLFHA (225-5342). 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:
Mortgagee Letter 2020-21 is available at:

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