FHA Single Family Housing Policy Handbook 4000.1, Part III — g. Early Default Intervention (10/01/2025)

FHA Single Family Housing Policy Handbook 4000.1, Part III — g. Early Default Intervention (10/01/2025)

g. Early Default Intervention (10/01/2025) The Mortgagee must determine the Borrower’s ability to make monthly Mortgage Payments and take loss mitigation action or commence foreclosure, if loss mitigation is not feasible, within six months of the date of Default, or within such additional time approved by HUD via Extensions and Variances Automated Requests System (EVARS). The Mortgagee must notify each Borrower, co-signer, and any other party requiring notice by state law that the Mortgage is in Default. i. Delinquent Mortgage Identification The Mortgagee must identify Delinquent Mortgages and their payment status to ensure appropriate servicing and collection actions are completed on a daily basis. The Mortgagee must report the Delinquency/Default Status Codes that accurately reflect the severity of Default and Mortgagee action taken in SFDMS. ii. Collection Communication Timeline (A) Definition The Collection Communication Timeline sets forth the servicing actions that Mortgagees must take when contacting a Borrower with a Delinquent Mortgage. (B) Standard The Mortgagee must perform in a timely manner the servicing actions set forth in the following Collection Communication Timeline. Day Mortgagee Action 1 Payment due date; no action required until the Mortgage becomes Delinquent. 10 The Mortgagee must begin attempts to contact Borrowers with a Delinquent Mortgage at risk of Early Payment Default or Re-Default in accordance with Specialized Collection Techniques for Early Payment Defaults and Re- Defaults. 25 The Mortgagee must begin attempts to contact Borrowers with a Delinquent Mortgage in accordance with Contact Efforts for Delinquent Borrowers. 31 The Mortgagee must report the delinquency to HUD via SFDMS. 32– 45 The Mortgagee must send the following: • Notice of Homeownership Counseling Availability; and • Servicemembers Civil Relief Act (SCRA) Notice Disclosure (form HUD- 92070). 32– 60 The Mortgagee must send the following: • Delinquency Notice Cover Letter; and • Save Your Home: Tips to Avoid Foreclosure (form HUD-2008-5-FHA). III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1191 Last Revised: 11/26/2025 Day Mortgagee Action 45 The Mortgagee should begin analysis to identify appropriate loss mitigation options, if any. If unable to reach the Borrower(s), the Mortgagee must perform an Occupancy Inspection. 61 The Mortgagee must conduct or make a reasonable effort to arrange the Interview with the Borrower no later than this date. 90 The Mortgagee must report the appropriate Default Reason Code for the Default in SFDMS. The Mortgagee must have evaluated all loss mitigation options to determine whether any are appropriate. The Mortgagee must reevaluate the Borrower for loss mitigation each month thereafter. (C) Required Documentation The Mortgagee must document in their Servicing File all communication efforts to reach the Borrower early in their delinquency. iii. Communication Methods (A) Selecting Best Method of Communication [Text was deleted in this section.] The Mortgagee must use the method or methods of communication most likely to receive a response from each Borrower and consider the Borrower’s expressed preference for using certain methods of communication. The Mortgagee must effectively communicate with persons with hearing, visual, and other communications-related disabilities, including the use of auxiliary aids and services in accessible formats. (B) Methods of Communication The Mortgagee may use mail, certified mail, in person, any acceptable method of electronic communication, or telephone contact attempts to establish contact with the Borrower. Acceptable methods of electronic communication that Mortgagees may use to contact the Borrower include: • Voice over Internet Protocol (VoIP) or other technology that allows voice calls; • interactive virtual communication methods; • email; • text messages; III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1192 Last Revised: 11/26/2025 • secure web portals (such as online account management tools accessible by Borrowers); and • other reliable communication methods through which the Mortgagee has been able to effectively communicate with Borrowers in the past. The Mortgagee must ensure that their electronic signature technology complies with all requirements of the Electronic Signatures in Global and National Commerce (ESIGN) Act, 15 U.S.C. § 7001 et seq. The Mortgagee must include within the electronic communication the Mortgagee’s email address, telephone number, and/or website address. iv. Specialized Collection Techniques for Early Payment Defaults and Re-Defaults (A) Definitions Early Payment Defaults refer to all Mortgages that become 60 Days Delinquent within the first six payments. A Re-Default is a mortgage Default occurring within six months after reinstatement or the successful use of a Permanent Home Retention Option. (B) Standard For Borrowers at risk of Early Payment Default or Re-Default, the Mortgagee must: • commence contact by the 10th Day of delinquency to remind Borrowers of Mortgage Payment time frames; • make a minimum of two attempts per week to contact the Borrower after the 10th Day of delinquency and must vary the times and days of the week of contact attempts to maximize the likelihood of contacting the Borrower, until: o contact is established; or o the Mortgagee determines that the contact information is inaccurate or no longer in service; and • make reasonable efforts to obtain an alternate contact method and/or follow up with the Borrower using other methods of communication until contact is established. If the Mortgagee is unable to establish contact, the Mortgagee must determine through an Occupancy Inspection if the Property is vacant or abandoned by the 45th Day of delinquency. (C) Required Documentation The Mortgagee must document in their Servicing File all specialized collection efforts to reach the Borrowers at risk of Early Payment Default or Re-Default. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1193 Last Revised: 11/26/2025 v. Contact Efforts for Delinquent Borrowers (A) Standard For Borrowers with a Delinquent Mortgage, the Mortgagee must: • commence contact by the 25th Day of delinquency; • make a minimum of two attempts per week and must vary the times and days of the week of contact attempts to maximize the likelihood of contacting the Borrower until: o contact is established; or o the Mortgagee determines that the contact information is inaccurate or no longer in service; and • make reasonable efforts to obtain an alternate contact method and/or follow up with the Borrower using other methods of communication until contact is established. Promptly after establishing contact, the Mortgagee must determine whether the Borrower is occupying the Property, ascertain the reason for the delinquency, and inform the Borrower about the availability of Loss Mitigation Options. If the Mortgagee is unable to establish contact, the Mortgagee must determine through an Occupancy Inspection if the Property is vacant or abandoned by the 45th Day of delinquency. (B) Required Documentation The Mortgagee must document in their Servicing File all communication efforts to reach a Borrower with a Delinquent Mortgage. vi. Assigned Loss Mitigation Personnel The Mortgagee must designate personnel to respond to the Borrower’s inquiries and to assist them with Loss Mitigation Options no later than the 45th Day of delinquency. The Mortgagee must provide the contact information of their loss mitigation or customer assistance hotline, offering direct phone access to assigned loss mitigation personnel, in the Delinquency Notice Cover Letter. vii. Required Notices to Borrower by 45th Day of Delinquency (A) Standard Beginning on the 32nd Day, but no later than the 45th Day from the date payment was due, the Mortgagee must send a: • Notice of Homeownership Counseling Availability; and • Servicemembers Civil Relief Act (SCRA) Notice Disclosure (form HUD- 92070). III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1194 Last Revised: 11/26/2025 (1) Notice of Homeownership Counseling Availability [Text was deleted in this section.] The Mortgagee must provide a Borrower with a Delinquent Mortgage with a notice describing the availability of housing counseling offered by HUD- approved housing counseling agencies. The notification must: • inform the Borrower with a Delinquent Mortgage of the availability of housing counseling services provided by HUD-approved housing counseling agencies; • provide instructions for locating a HUD-approved housing counseling agency in the Borrower’s area and includes the HUD Housing Counseling Agency Locator toll-free telephone number (800) 569-4287, through which Borrowers can obtain a list of housing counseling agencies; • provide instructions that HUD is prepared to accept calls from persons who are deaf or hard of hearing, as well as individuals with speech and communication disabilities. The Federal Communications Commission (FCC) has information on how to make an accessible phone call; and • describe housing counseling and the potential benefits of engaging in housing counseling. (2) Servicemembers Civil Relief Act Notice Disclosure The Mortgagee must send form HUD-92070 for the required notice of servicemember rights to all Borrowers in Default on a residential Mortgage and must include the toll-free Military OneSource number to call if servicemembers or their dependents require further assistance. (B) Required Documentation The Mortgagee must document in their Servicing File the dates on which it sent the Notice of Homeownership Counseling Availability and the SCRA Disclosure. The Mortgagee must be able to provide to HUD, upon request, the language in its Notice of Homeownership Counseling Availability. viii. Required Notices to Borrower by 60th Day of Delinquency (A) Standard Beginning on the 32nd Day but no later than the 60th Day from the date the Mortgage Payment was due, the Mortgagee must send the: • Delinquency Notice Cover Letter; and • Save Your Home: Tips to Avoid Foreclosure (form HUD-2008-5-FHA). (1) Delinquency Notice Cover Letter The Mortgagee must send the Save Your Home: Tips to Avoid Foreclosure with a Delinquency Notice cover letter that includes: III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1195 Last Revised: 11/26/2025 • the following information related to the Mortgage: o number of late payments; o total amount of any Late Charges incurred; o the month of each late payment; and o the original due date of each late payment; • if applicable, a list of information or documentation the Mortgagee needs to complete the loss mitigation analysis; and • contact information for the Mortgagee’s assigned loss mitigation personnel to include, at a minimum, a toll-free telephone number and information on how to locate a HUD-approved counseling agency online or by calling HUD’s interactive voice system at (800) 569-4287, and that HUD is prepared to accept calls from persons who are deaf or hard of hearing, as well as individuals with speech and communication disabilities. The Federal Communications Commission (FCC) has information on how to make an accessible phone call. (2) Save Your Home: Tips to Avoid Foreclosure Save Your Home: Tips to Avoid Foreclosure (form HUD-2008-5-FHA) is available in English, Spanish, Chinese, and Vietnamese. Mortgagees may reproduce electronic versions of the form at their own expense. The Mortgagee may not change the contents of the form in any way. (3) Resending Notices The Mortgagee must resend the cover letter and accompanying Save Your Home: Tips to Avoid Foreclosure (form HUD-2008-5-FHA) at 45 Days Delinquent unless a new delinquency occurs less than six months after a prior notice and brochure was mailed. (4) Exception for Borrowers in Bankruptcy The Mortgagee is not required to send the cover letter and Save Your Home: Tips to Avoid Foreclosure if the Borrower has filed bankruptcy before becoming 45 Days Delinquent, and, in the opinion of the Mortgagee’s legal counsel, providing the cover letter and brochure would be a violation of the automatic stay. The Mortgagee must send the cover letter and Save Your Home: Tips to Avoid Foreclosure once the Mortgagee has received notification that the automatic stay is lifted. (B) Required Documentation The Mortgagee must document in their Servicing File the dates on which it sent the Delinquency Notice cover letter and Save Your Home: Tips to Avoid Foreclosure. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1196 Last Revised: 11/26/2025 The Mortgagee must document a bankruptcy-related exception in the Servicing File. ix. Occupancy Inspections (A) Definitions An Occupancy Inspection is a visual inspection of a mortgaged Property by the Mortgagee to determine if the mortgaged Property has become vacant or abandoned and to confirm the identity of any occupants. An Occupancy Follow-Up is an attempt to communicate with the Borrower via letter, telephone, or other method of communication, other than on-site inspection, to determine occupancy when the Mortgage remains in Default after the initial inspection and the Mortgagee has not determined the Borrower’s occupancy status. (B) Standard If the Mortgagee is unable to reach the Borrower(s) by the 45th Day of delinquency, the Mortgagee must perform a visual inspection of the mortgaged Property to determine occupancy status. (1) Initial Occupancy Inspection The Mortgagee must perform the initial Occupancy Inspection no later than the 60th Day of delinquency when: • the Mortgage is in Default; • a payment has not been received within 45 Days of the due date; and • efforts to reach the Borrower or occupant have been unsuccessful. (2) Follow-Up Inspections If the Mortgagee is unable to determine the Borrower’s occupancy status through the initial Occupancy Inspection, the Mortgagee must perform an Occupancy Follow-Up. If necessary, the Mortgagee must continue Occupancy Inspections every 25-35 Days from the last inspection until the occupancy status is determined. (3) Occupancy Inspections during Bankruptcy When payments are not submitted as scheduled by a Borrower in bankruptcy, the Mortgagee must contact either the bankruptcy trustee or the Borrower's bankruptcy attorney for information concerning the status of the Borrower, to determine if an Occupancy Inspection is needed. The Mortgagee must continue to perform exterior-only visual inspections until the Default is cured, the Property is disposed of, or the bankruptcy court has granted III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1197 Last Revised: 11/26/2025 approval for the Mortgagee to contact the Borrower or to take any required Property Preservation and Protection (P&P) actions. If the Mortgagee determines that the Property is vacant or abandoned during the period in which the Mortgagee is prohibited from contacting the Borrower, the Mortgagee must note the following in the Servicing File: • the date it made its determination; and • that contact with the attorney or trustee has been made. (4) Determination that the Property is Vacant or Abandoned If the Mortgagee determines through an Occupancy Inspection that the Property is vacant or abandoned, the Mortgagee must: • send a letter, via a method providing delivery confirmation, to Borrowers at the property address informing them of the Mortgagee’s determination that the Property is vacant or abandoned. This letter must include the Mortgagee’s contact information; • commence Vacant Property Inspections; and • take appropriate Property P&P actions to secure and maintain the Property. If the Mortgagee fails to inspect the Property within the required time period, or fails to discover the vacancy, the vacancy date will be the last date on which the Mortgagee should have performed the inspection. If the Property becomes vacant prior to an inspection and the Mortgagee has knowledge of such vacancy, then the date the Property became vacant is the vacancy date. (C) Required Documentation The Mortgagee must retain in the Servicing File: • the dates and methods of Occupancy Follow-Up and vacancy letters; • evidence of payment to the inspector; • copies of all completed inspection reports; and • any accompanying follow-up documentation for Occupancy Inspections. For all Occupancy Inspections, the Mortgagee must retain in the inspection report: • date of the inspection; • identity of the individual inspector and the inspection company; • the general condition of the Property; • any actions taken to preserve and protect the Property; • photographs with a date and time stamp printed on each and labeled accordingly with a description of the contents of each photograph; • occupancy status of the Property; and • answers to the following questions, where applicable: o Is the house locked? o Is the grass mowed and/or are shrubs trimmed? III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1198 Last Revised: 11/26/2025 o Is there any apparent damage? o Is any exterior glass broken? o Are there any apparent roof leaks? o Does the house contain Personal Property and/or debris? o Are any doors or windows boarded? o Is the house winterized? o Are there any repairs necessary to adequately preserve and protect the Property? x. Interview (A) Standard The Mortgagee must have an interview with the Borrower or make a reasonable effort to arrange an interview no later than the 61st Day of delinquency, or no later than 30 days after default on a Repayment Plan, unless exempt. The interview should provide a delinquent Borrower the opportunity to meet with the Mortgagee to discuss available loss mitigation options, and, when possible, to be evaluated for these options. The Mortgagee may conduct the interview face-to-face or using alternative communication methods, such as phone interviews, video calling services, or other conferencing technology. (1) Meeting Not Required The Mortgagee is not required to conduct an interview if: • the Borrower has clearly indicated that they will not cooperate with an interview; • the Borrower’s payment is current due to an agreed-upon Repayment Plan, Forbearance Plan, or Trial Payment Plan (TPP); • a reasonable effort to arrange a meeting with the Borrower is unsuccessful; or • in the opinion of the Mortgagee’s legal counsel, it would be a violation of bankruptcy law. (2) Reasonable Effort in Arranging an Interview The Mortgagee must make two attempts to contact the Borrower to arrange the interview and include the following information: • the availability of interviews; and • how to schedule the interview. The Mortgagee may use mailings, telephone calls, in-person outreach, or any electronic or other communication method through which the Mortgagee is able to communicate with Borrowers. The Mortgagee may use a third-party vendor to III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1199 Last Revised: 11/26/2025 establish this contact with the Borrower and to schedule the Borrower’s interview with a Mortgagee representative. The Mortgagee may count compliance with any of the following as one or more of the required attempts to arrange the interview when information about the interview is also provided: • Contact Efforts for Delinquent Borrowers; • Delinquency Notice Cover Letter; • the Consumer Financial Protection Bureau’s (CFPB) early intervention requirements for Live contact in 12 CFR § 1024.39(a); or • the CFPB’s early intervention requirements for Written notice in 12 CFR § 1024.39(b). A second attempt is not required if the Mortgagee has established contact with the Borrower on the first attempt. (3) Mortgagee Representative Authority The Mortgagee must ensure that the employee representing the Mortgagee at interviews has the authority to propose and accept reasonable Repayment Plans. Where a Mortgagee’s representative exceeds their authority by agreeing to a Repayment Plan at the time of the interview, the Mortgagee must still accept the Repayment Plan agreed to by its representative, regardless of whether the representative overstepped their authority. (B) Required Documentation The Mortgagee must document in the Servicing File: • the reason the interview is not required, if exempt; • the dates and methods of its attempts to arrange an interview; and • the date of its interview with the Borrower. xi. Vacant Property Inspections (A) Definitions A First-Time Vacant (FTV) Property Inspection is the first inspection performed by the Mortgagee to ascertain the condition of a vacant or abandoned Property. A Follow-up Vacant Property Inspection is an inspection by the Mortgagee of a vacant or abandoned Property that occurs every 25-35 Days after the FTV Property Inspection until the mortgage Default is cured or until conveyance of the Property to HUD. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1200 Last Revised: 11/26/2025 (B) Standard The Mortgagee must take reasonable actions to protect the value of the security, including performing the following required inspections for vacant or abandoned Properties. The Mortgagee is liable for any damage resulting from the Mortgagee’s failure to preserve and protect the Property unless the Mortgagee can prove that the damage occurred prior to the date the Property became vacant. (1) First-Time Vacant Property Inspection The Mortgagee must perform the FTV Property Inspection as soon as reasonably practicable, but no more than 15 business days following the determination that the Property is vacant and/or abandoned. The Mortgagee must: • secure the Property, if possible; • upload documentation and photographs showing any damage resulting from the Borrower that is identified using the FTV Property Inspection into P260; • pressure-test all water supply and upload photographs of the results of the test into P260; • address all imminent and urgent safety hazards and determine what repairs are required to prevent damage to the Property; and • photograph the primary exterior facades and interior areas of the primary and secondary Structures, including any damage found. (2) Follow-up Vacant Property Inspections The Mortgagee must perform Follow-up Vacant Property Inspections every 25-35 Days after the FTV Property Inspection until the mortgage Default is cured or until conveyance of the Property to HUD. In areas of high vandalism or where local ordinances require more frequent Follow-up Vacant Property Inspections, Mortgagees may perform Follow-up Vacant Property Inspections more frequently than HUD’s 25-35 Day requirement and request reimbursement for these inspection costs. At each inspection, the Mortgagee must: • photograph the overall condition of the interior and exterior of the primary and all secondary Structures; • monitor the security and maintenance of the Property; • assess and manage damage that requires repair, replacement, or removal; and • address and resolve all emergency repairs. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1201 Last Revised: 11/26/2025 (C) Required Documentation For all Vacancy Inspections, the Mortgagee must retain in the Servicing File: • evidence of payment to the inspector; • any police reports and/or letters from a local law enforcement agency evidencing the need for additional protective measures; and • copies of all completed inspection reports that must include: o date of the inspection; o identity of the individual inspector and the inspection company; o the general condition of the Property; o any actions taken to protect and preserve the Property; o photographs with a date and time stamp printed on each and labeled accordingly with a description of the contents of each photograph; o occupancy status of the Property; and o answers to the following questions, where applicable: ▪ Is the house locked? ▪ Is the grass mowed and/or are shrubs trimmed? ▪ Is there any apparent damage? ▪ Is any exterior glass broken? ▪ Are there any apparent roof leaks? ▪ Does the house contain Personal Property and/or debris? ▪ Are any doors or windows boarded? ▪ Is the house winterized? ▪ Are there any repairs necessary to adequately preserve and protect the Property? The Mortgagee must document all Property P&P activities performed on vacant Properties. xii. Use of Early Default Intervention Tools As part of early default intervention, the Mortgagee must review the Borrower for the Early Default Intervention Tools.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part III — g. Early Default Intervention (10/01/2025) · source URL · snapshot 8c03836f77f317e1