FHA Single Family Housing Policy Handbook 4000.1, Part IV — a. Lender Option to Proceed Against the Security (05/09/2022)

FHA Single Family Housing Policy Handbook 4000.1, Part IV — a. Lender Option to Proceed Against the Security (05/09/2022)

a. Lender Option to Proceed Against the Security (05/09/2022) After acceleration of the maturity on a Defaulted Loan, the Lender may file a claim under its Contract of Insurance. If the Loan is secured, the Lender may opt instead to collect the Loan by proceeding against the loan security rather than via claim submission to HUD. The Lender might opt to collect via the security (rather than via its Title I insurance) if the Lender determines that it will likely recover more than the 90 percent insurance payment it will receive from HUD and/or if the Lender wishes to avoid a reduction in its Title I insurance coverage reserve account. i. Prior Approval Required If the Lender wants to proceed against the loan security and later file a Title I insurance claim for any remaining loss, the Lender must obtain prior approval from HUD. The Lender must submit a written request for prior approval to the Home Mortgage Insurance Division. The request should include: • the status of the Title I Loan, and an appraisal of the Property; • the amount and position of all unpaid liens against the Property; • estimated costs of foreclosure and disposition; and • the anticipated time to acquire and dispose of the Property. ii. Deficiency Judgment Required In proceeding against the security, the Lender must comply with all applicable state and local laws, and must take all actions necessary to preserve its rights to obtain a valid and enforceable deficiency Judgment against the Borrower.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part IV — a. Lender Option to Proceed Against the Security (05/09/2022) · source URL · snapshot 8c03836f77f317e1