FHA Single Family Housing Policy Handbook 4000.1, IV. CLAIMS AND DISPOSITION > A. Title II Claims > 3. Payment of Claims — a. Processing of Claim Forms

HUD Handbook 4000.1 IV.A.3

Effective 2020-01-02 · publisher's stamp for this provision

a. Processing of Claim Forms (01/02/2020) HUD will generate payment to the Mortgagee if: • the Mortgagee’s submission of Parts A and B pass all system edits and control checks; and • the Mortgagee provides all required documentation or makes all necessary updates to the suspended claim. HUD may reduce the claim payment if the claim lists unusually high disbursements that are not supported by documentation. HUD may require reimbursement of any amounts that are found to be excessive or not supported by appropriate documentation. When a Mortgagee files a claim, other than a supplemental claim or Loss Mitigation Incentive claim, after the expiration of a designated time period, HUD will accept these claims, which will be subject to interest curtailment. i. Initial Payment (A) Definition The Initial Claim Payment, which is referred to as the Partial Payment on the Advice of Payment, is the disbursement to the Mortgagee of funds relating to Part A of form HUD-27011. (B) Standard HUD will pay the unpaid principal balance plus debenture interest upon receipt and processing of Part A and required attachments. Before debenture interest is calculated, HUD will reduce the unpaid principal balance by the greater of any damage or insurance recovery reported in Item 27. HUD’s Claims system will determine the amount of debenture interest. ii. Final and Full Payments (A) Definition The Final Claim Payment is the disbursement to the Mortgagee of funds relating to Part B of form HUD-27011 for conveyance claims. The Full Claim Payment is the disbursement to the Mortgagee of funds relating to Part A and Part B of form HUD-27011 for claims other than conveyance claims. (B) Standard As Final Claim Payment for conveyance claims, HUD will pay the Mortgagee’s expenses, allowances, and debenture interest upon receipt and processing of Part B and required attachments. As Full Claim Payment for claims other than conveyance claims, HUD will pay unpaid principal balance, the Mortgagee’s expenses, allowances, and debenture interest upon receipt and processing of Part A and Part B claims and required attachments. b. Method of Payment (09/30/2016) HUD makes all claim disbursements through the U.S. Treasury Electronic Funds Transfer (EFT) wire transfer application. c. Disbursement of Claim (09/30/2016) For Claim Type 31 only, HUD will disburse the incentive payment to the Servicer. For all other Claim Types, HUD will not honor requests for claim payments to be disbursed to any entity other than the holder of the Mortgage.

Source: FHA Single Family Housing Policy Handbook 4000.1, Update 18 (issued 2026-08-12) · source URL · snapshot e1bca3432cf19e09