For any Owner-Occupant FHA Borrower who is eligible for COVID-19 Loss Mitigation Options, the Mortgagee must evaluate the Borrower for the COVID-19 Standalone Partial Claim.
 
The COVID-19 Recovery Standalone Partial Claim reinstates the Mortgage through the use of a Partial Claim for Borrowers impacted by COVID-19 who are able to resume their Mortgage Payments.  The Mortgagee must evaluate Owner-Occupant Borrowers impacted by COVID-19 for a COVID-19 Recovery Standalone Partial Claim.

Eligibility
The Mortgagee must ensure that:

• the Borrower indicates they have the ability to resume making on-time Mortgage Payments; and
• the Property is owner-occupied.

Terms
The Mortgagee must ensure that:

• the COVID-19 Recovery Standalone Partial Claim fully reinstates the Mortgage;
• the COVID-19 Recovery Standalone Partial Claim amount includes only arrearages, which refers to any amounts needed to bring the Borrower current and includes:
  • Mortgagee advances for escrow items;
  • projected escrow shortage amount; and
  • related legal fees and foreclosure and bankruptcy costs not higher than the foreclosure-related fees and costs HUD has identified as customary and reasonable; and
• for a COVID-19 Recovery Standalone Partial Claim, the Partial Claim must not exceed 25 percent of the unpaid principal balance as of the date of Default at the time of payment of the initial Partial Claim less any previous Partial Claims paid.
  • The Mortgagee must first calculate 25 percent of the unpaid principal balance as of the date of Default at the time of payment of the initial Partial Claim.
  • The Mortgagee must then subtract any previous Partial Claims paid to determine the available Partial Claim amount that can be used for the COVID-19 Recovery Standalone Partial Claim.

Mortgagees must ensure that all Late Charges and penalties are waived.  Mortgagees are not required to waive Late Charges and penalties, if any, accumulated prior to March 1, 2020

Eligible Borrowers may receive more than one COVID-19 Recovery Standalone Partial Claim

Document Delivery Requirements
The Mortgagee must submit all required documentation for COVID-19 Recovery Standalone Partial Claims as listed under FHA-HAMP Loan Documents, except that no TPP is required (see Handbook 4000.1 III.A.2.k.v(J)(6)) .

Delivery of Partial Claim Documents
The Mortgagee is automatically granted a 90-Day extension to the six-month deadline for the recorded Mortgage.  If a Mortgagee experiences additional delays out of their control, including past the automatic 90-Day extension for the recorded Mortgage, that impact delivery of the Partial Claim documents, Mortgagees may file requests for an additional extension in accordance with Requests for Extensions of Time for Delivery of Partial Claim Documents (see Handbook 4000.1 (III.A.2.k.v(J)(7)).

Required Documentation

• Servicing/Claim Review File - The Mortgagee must retain the following in the Servicing File and the Claim Review File: 
  • a copy of the executed Partial Claim promissory Note and subordinate Mortgage;
  • evidence that the Mortgage was timely submitted for recording; and
  • the date the Mortgagee received the executed Partial Claim documents from the Borrower and the date the subordinate Mortgage was sent to be recorded.
• Reporting to HUD - The Mortgagee must report the use of a COVID-19 Recovery Standalone Partial Claim in SFDMS.

For additional information, see:

• Handbook 4000.1 III.A.2.o.iii(C)(1) 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.