HUD Mortgagee Letter 2024-02 — Payment Supplement

hud-ml-2024-02

HUD ML 2024-02 establishes the Payment Supplement loss mitigation option, combining a standalone Partial Claim to bring the Mortgage current with a new Monthly Principal Reduction (MoPR) for a three-year period, and establishes related servicing-transfer responsibilities and SFDMS reporting requirements for Mortgages in a Payment Supplement Period.

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source:
  type: regulation
  id: hud-ml-2024-02
  authority: HUD Mortgagee Letter 2024-02 — Payment Supplement
  description: |
    HUD ML 2024-02 establishes the Payment Supplement loss mitigation option,
    combining a standalone Partial Claim to bring the Mortgage current with a
    new Monthly Principal Reduction (MoPR) for a three-year period, and
    establishes related servicing-transfer responsibilities and SFDMS
    reporting requirements for Mortgages in a Payment Supplement Period.
obligations:
  - id: hud-ml-2024-02-servicing-laws-compliance
    canonical_id: hud-ml-2024-02-servicing-laws-compliance
    section: HUD ML 2024-02 — Laws and Requirements Applicable to Mortgage Servicing (III.A.1.a.ii(A))
    description: |
      [LENDER], as an FHA-approved Mortgagee servicing FHA-insured Mortgages,
      must comply with all laws, rules, and requirements applicable to mortgage
      servicing, including full compliance with the applicable requirements
      under the purview of the Consumer Financial Protection Bureau (CFPB)
      (including RESPA and TILA), and, if applicable, Ginnie Mae's
      mortgage-backed securities requirements. FHA requirements that are more
      stringent or restrictive than applicable law (as set forth in Handbook
      4000.1) override the lesser standard.
    type: do
    audit_question: Can [LENDER] evidence that its FHA mortgage-servicing program operates in full compliance with CFPB-administered requirements (RESPA, TILA), Ginnie Mae MBS requirements where applicable, and the more-stringent FHA requirements in Handbook 4000.1?
    program_review: Do the servicing P&Ps ensure full compliance with CFPB-administered RESPA/TILA, Ginnie Mae MBS requirements where applicable, and the more-stringent FHA Handbook 4000.1 requirements?
    file_review: Review servicing P&Ps, training, and QA samples; confirm coverage of RESPA/TILA, Ginnie Mae MBS where applicable, and the more-stringent FHA requirements.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: default_servicing_analyst
    secondary_owner_role: compliance_officer
    cadence: continuous
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hud-ml
      - fha
      - servicing
      - cross-regulator-compliance
      - promoted
    primary_source:
      tier: 1
      authority: HUD ML 2024-02 — III.A.1.a.ii(A)
      source_class: hud-ml-pdf
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2024-02hsgml.pdf
      snapshot_id: cc5f3927701cb91d
      fetched_at: '2026-05-22T19:54:43Z'
      content_hash: sha256:5d8f93a36285a3bf371f4d5311a7bbc693e7b1c92a80d4a20d11a54586e6126f
      paragraph_quote: |-
        Mortgagees must comply with all laws, rules, and requirements applicable 
        to mortgage servicing, including full compliance with the applicable 
        requirements under the purview of the Consumer Financial Protection 
        Bureau (CFPB), including the Real Estate Settlement Procedures Act 
        (RESPA) and the Truth in Lending Act (TILA), and, if applicable, Ginnie 
        Mae’s mortgage-backed securities requirements.
      drafter_attestation: |
        Copied verbatim from snapshot cc5f3927701cb91d (content.txt) at
        2026-05-22T20:00Z. Substring corresponds to the Laws and Requirements
        Applicable to Mortgage Servicing standard incorporated in
        Handbook 4000.1 III.A.1.a.ii(A) by ML 2024-02.
    promoted_at: '2026-05-22T20:03:40+00:00'
    promoted_from: hud-ml-2024-02-roundb-v1.yaml
  - id: hud-ml-2024-02-sfdms-payment-supplement-reporting
    canonical_id: hud-ml-2024-02-sfdms-payment-supplement-reporting
    section: 'HUD ML 2024-02 — SFDMS Default Reporting: Types of Mortgages to Report (III.A.2.h.ii(B)(1))'
    description: |
      Each month, [LENDER] must report Default servicing activities through
      HUD's Single Family Default Monitoring System (SFDMS) for all Mortgages
      that are 30, 60, and 90 Days or more in Default, and for all Mortgages
      in a Payment Supplement Period, as of the last Day of the month.
    type: do
    audit_question: For each monthly SFDMS reporting cycle, can [LENDER] demonstrate that it reported Default servicing activities for every FHA-insured Mortgage that was 30, 60, or 90+ Days delinquent, and for every Mortgage in a Payment Supplement Period, as of the last Day of the month?
    program_review: Do the P&Ps ensure monthly SFDMS reporting covers every Mortgage 30/60/90+ Days in Default and every Mortgage in a Payment Supplement Period as of month-end?
    file_review: Pull a monthly SFDMS cycle; confirm reporting for all 30/60/90+-day-delinquent loans and all Payment-Supplement-Period loans as of the last day of the month.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: default_servicing_analyst
    secondary_owner_role: compliance_officer
    cadence: monthly
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hud-ml
      - fha
      - servicing
      - sfdms-reporting
      - payment-supplement
      - promoted
    primary_source:
      tier: 1
      authority: HUD ML 2024-02 — III.A.2.h.ii(B)(1)
      source_class: hud-ml-pdf
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2024-02hsgml.pdf
      snapshot_id: cc5f3927701cb91d
      fetched_at: '2026-05-22T19:54:43Z'
      content_hash: sha256:5d8f93a36285a3bf371f4d5311a7bbc693e7b1c92a80d4a20d11a54586e6126f
      paragraph_quote: |-
        Each month, the Mortgagee must report Default servicing activities for all 
        Mortgages that are 30, 60, and 90 Days or more in Default and all 
        Mortgages in a Payment Supplement Period, as of the last Day of the month.
      drafter_attestation: |
        Copied verbatim from snapshot cc5f3927701cb91d (content.txt) at
        2026-05-22T20:00Z. Substring is the SFDMS reporting standard
        incorporated into Handbook 4000.1 III.A.2.h.ii(B)(1) by ML 2024-02
        and extended to cover Payment Supplement Period mortgages.
    promoted_at: '2026-05-22T20:03:40+00:00'
    promoted_from: hud-ml-2024-02-roundb-v1.yaml
  - id: hud-ml-2024-02-servicing-transfer-payment-supplement
    canonical_id: hud-ml-2024-02-servicing-transfer-payment-supplement
    section: HUD ML 2024-02 — Responsibility during Transfers of Servicing Rights (III.A.1.b.i(B))
    description: |
      Where [LENDER] is the Transferee Servicing Mortgagee on a Transfer Date,
      [LENDER] must ensure transfer of any outstanding Payment Supplement
      Account and associated servicing records, and assume responsibility for
      all servicing actions associated with the Payment Supplement — including
      accounting of funds held in the Payment Supplement Account, administration
      of the Borrower's Payment Supplement, obtaining the complete Payment
      Supplement files, and obtaining any outstanding funds in the Payment
      Supplement Account.
    type: do
    audit_question: For every servicing-rights transfer involving an FHA-insured Mortgage with an active Payment Supplement, can [LENDER] (as Transferee Servicing Mortgagee) evidence transfer of the Payment Supplement Account, associated servicing records, complete Payment Supplement files, and outstanding Payment Supplement Account funds on or about the Transfer Date?
    program_review: Does the program account for the Payment-Supplement transfer condition — as Transferee Servicing Mortgagee, ensuring transfer of the Payment Supplement Account, associated records, complete Payment Supplement files, and outstanding funds on/about the Transfer Date?
    file_review: Spot-check servicing-transfer-in events with an active Payment Supplement; confirm transfer of the Payment Supplement Account, records, files, and outstanding funds.
    judgment: false
    feeds: []
    workflow_phase: servicing
    owner_role: default_servicing_analyst
    secondary_owner_role: compliance_officer
    cadence: per-servicing-transfer
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hud-ml
      - fha
      - servicing
      - servicing-transfer
      - payment-supplement
      - promoted
    primary_source:
      tier: 1
      authority: HUD ML 2024-02 — III.A.1.b.i(B)
      source_class: hud-ml-pdf
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2024-02hsgml.pdf
      snapshot_id: cc5f3927701cb91d
      fetched_at: '2026-05-22T19:54:43Z'
      content_hash: sha256:5d8f93a36285a3bf371f4d5311a7bbc693e7b1c92a80d4a20d11a54586e6126f
      paragraph_quote: |-
        The Transferee Servicing Mortgagee must also ensure transfer of any 
        outstanding Payment Supplement Account and associated servicing records.
      drafter_attestation: |
        Copied verbatim from snapshot cc5f3927701cb91d (content.txt) at
        2026-05-22T20:00Z. Substring is the Transferee Servicing Mortgagee
        Payment Supplement transfer requirement added to Handbook 4000.1
        III.A.1.b.i(B) by ML 2024-02.
    promoted_at: '2026-05-22T20:03:40+00:00'
    promoted_from: hud-ml-2024-02-roundb-v1.yaml
_promotion_history:
  - promoted_at: '2026-05-22T20:03:40+00:00'
    candidate_path: obligations\_remediation\_round_b_drafts\hud-ml-2024-02-roundb-v1.yaml
    candidates_promoted: 3
    candidates_skipped_existing: 0

Verbatim regulatory text (3)

Verbatim provisions from HUD Mortgagee Letter 2024-02 — Payment Supplement — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

HUD ML 2024-02 — Laws and Requirements Applicable to Mortgage Servicing (III.A.1.a.ii(A))

Mortgagees must comply with all laws, rules, and requirements applicable to mortgage servicing, including full compliance with the applicable requirements under the purview of the Consumer Financial Protection Bureau (CFPB), including the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), and, if applicable, Ginnie Mae’s mortgage-backed securities requirements.

Source: HUD ML 2024-02 — III.A.1.a.ii(A) · source URL · snapshot cc5f3927701cb91d

HUD ML 2024-02 — SFDMS Default Reporting: Types of Mortgages to Report (III.A.2.h.ii(B)(1))

Each month, the Mortgagee must report Default servicing activities for all Mortgages that are 30, 60, and 90 Days or more in Default and all Mortgages in a Payment Supplement Period, as of the last Day of the month.

Source: HUD ML 2024-02 — III.A.2.h.ii(B)(1) · source URL · snapshot cc5f3927701cb91d

HUD ML 2024-02 — Responsibility during Transfers of Servicing Rights (III.A.1.b.i(B))

The Transferee Servicing Mortgagee must also ensure transfer of any outstanding Payment Supplement Account and associated servicing records.

Source: HUD ML 2024-02 — III.A.1.b.i(B) · source URL · snapshot cc5f3927701cb91d