Are Mortgagees required to terminate the FHA mortgage insurance upon completion of a Pre-Foreclosure Sale?

The Mortgagee must not submit a mortgage insurance termination on Pre-Foreclosure Sale (PFS) transactions. HUD can only pay FHA mortgage insurance benefits when the status of the mortgage insurance is “active.”

Additional questions may be directed to the HUD National Servicing Center at (877) 622-8525.

For policy information see Handbook 4000.1 III.A.2.l.ii.(Q) 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-05201