Laws & Regs

Office of Assistant Secretary for Housing, HUD
defaulted mortgage, or within such additional time as the Secretary authorizes in writing, the mortgagee must file
the assignment for record.
(Information collection requirements in
paragraph (b) were approved by the Office of
Management and Budget under control number 2502–0169)
[51 FR 21872, June 16, 1986, as amended at 52
FR 48202, Dec. 21, 1987; 53 FR 9869, Mar. 28,
1988; 53 FR 13404, Apr. 25, 1988; 55 FR 282, Jan.
4, 1980; 61 FR 35018, July 3, 1996]

§ 203.351 Application for insurance
benefits and fiscal data.
On the date the assignment of the
mortgage is filed for record, the mortgagee shall forward to the Commissioner the prescribed application for
insurance benefits and fiscal data pertaining to the mortgage transaction,
together with the receipts covering all
disbursements, as required by the fiscal
data form. In addition, the following
requirements shall be met:
(a) Items to be included with application. The following items shall be forwarded to the Commissioner with the
application:
(1) Credit and security instrument. The
original credit and security instruments assigned without recourse or
warranty, except that no act or omission of the mortgagee shall have impaired the validity and priority of the
mortgage.
(2) Recorded assignment instrument.
The original of the recorded assignment of mortgage. If the original of the
assignment is not available, a copy
shall be furnished and the original forwarded as soon as possible.
(3) Hazard insurance. All hazard insurance policies held in connection
with the mortgaged property, together
with a copy of the mortgagee’s notification to the carrier authorizing the
amendment of the loss payable clause
substituting the Commissioner as the
mortgagee.
(4) Rights and interests. An assignment of all rights and interests arising
under the mortgage, and all claims of
the mortgagee against the mortgagor
or others arising out of the mortgage
transaction.
(5) Property. All property of the mortgagor held by the mortgagee or to
which it is entitled (other than the

§ 203.355

cash items which are to be retained by
the mortgagee).
(6) Records and accounts. All records,
ledger cards, documents, books, papers
and accounts relating to the mortgage
transaction.
(7) Additional information. Any additional information or data which the
Commissioner may require.
(8) Title evidence. All title evidence
held by the mortgagee. It need not be
extended to include the recordation of
the assignment. If a mortgagee’s title
policy is furnished, the Commissioner
shall be a named insured under such
policy.
(b) Items to be retained by mortgagee.
The mortgagee shall retain all cash
amounts held or deposited for the account of the mortgagor or to which it
is entitled under the mortgage transaction that have not been applied in reduction of the principal mortgage indebtedness.
(c) Title evidence for mortgages insured under § 203.43d as set forth in
§ 203.385 shall accompany the application for insurance benefits.
[36 FR 24508, Dec. 22, 1971, as amended at 37
FR 7693, Apr. 10, 1972; 42 FR 57435, Nov. 2,
1977]

§ 203.353 Certification by mortgagee.
At the time of assignment of the
mortgage, the mortgagee shall certify
to the Commissioner that:
(a) Priority of mortgage to liens. The
mortgage is prior to all mechanics’ and
materialmen’s liens filed of record, regardless of when such liens attach, and
prior to all liens and encumbrances, or
defects which may arise except such
liens or other matters as may have
been approved by the Commissioner;
(b) Amount due. The amount stated in
the instrument of assignment is actually due and owing under the mortgage;
(c) Offsets or counterclaims. There are
no offsets or counterclaims thereto and
the mortgagee has a good right to assign.
CLAIM PROCEDURE
§ 203.355 Acquisition of property.
(a) In general. Upon default of a mortgage, except as provided in paragraphs
(b) through (i) of this section, the

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§ 203.355

24 CFR Ch. II (4–1–06 Edition)

mortgagee shall take one of the following actions within nine months
from the date of default, or within any
additional time approved by the Secretary or authorized by §§ 203.345 or
203.346. For mortgages where the date
of default is on or after February 1,
1998, the mortgagee shall take one or a
combination of the following actions
within six months of the date of default or within such additional time
approved by HUD or authorized by
§§ 203.345 or 203.346:
(1) Obtain a deed-in-lieu of foreclosure (see §§ 203.357, 203.389 and
203.402(f) of this part) with title being
taken in the name of the mortgagee or
the Secretary;
(2) Commence foreclosure;
(3) Enter into a special forbearance
agreement under § 203.614;
(4) Complete a modification of the
mortgage under § 203.616;
(5) Complete a refinance of the mortgage under § 203.43(c);
(6) Complete an assumption under
§ 203.512;
(7) File a partial claim under § 203.371;
or
(8) Initiate a pre-foreclosure sale
under § 203.370.
(b) Vacant or abandoned property.
With respect to defaulted mortgages on
vacant or abandoned property, if the
mortgagee discovers, or should have
discovered, that the property is vacant
or abandoned, the mortgagee must
commence foreclosure within the later
of 120 days after the date the property
became vacant, or 60 days after the
date the property is discovered, or
should have been discovered, to be vacant or abandoned; but no later than
the number of months from the date of
default as provided in paragraph (a) of
this section. The mortgagee must not
delay foreclosure on vacant or abandoned property because of the requirements of § 203.606.
(c) Prohibition of foreclosure within
time limits. If the laws of the State in
which the mortgaged property is located, or Federal bankruptcy law:
(1) Do not permit the commencement
of foreclosure within the time limits
described in paragraphs (a), (b), (g), (h)
and (i) of this section, the mortgagee
must commence foreclosure within 90
days after the expiration of the time

during which foreclosure is prohibited;
or
(2) Require the prosecution of a foreclosure to be discontinued, the mortgagee must recommence the foreclosure within 90 days after the expiration of the time during which foreclosure is prohibited.
(d) Property located on Indian land.
Upon default of a mortgage on property
located on Indian land insured pursuant to section 248 of the National Housing Act (see § 203.43h of this part), the
mortgagee
must
comply
with
§§ 203.350(b) and 204.664 of this part.
(e) Property located on Hawaiian home
lands. Upon default of a mortgage on
property located on Hawaiian home
lands insured pursuant to section 247 of
the National Housing Act (see § 203.43i
of this part), the mortgagee must comply with §§ 203.350(c) and 203.665 of this
part.
(f) Property located on the Allegany
Reservation of the Seneca Nation of Indians. Upon default of a mortgage on
property located on the Allegany Reservation of the Seneca Nation of Indians authorized by section 203(q) of the
National Housing Act (see § 203.43j of
this part), the mortgagee must comply
with §§ 203.350(d) and 203.666 of this
part, unless the mortgagor and the lessor have executed a lease renewal or a
new lease either with a term of not less
than five years beyond the maturity
date of the mortgage, or with a term
established by arbitration award. If a
lease renewal or new lease has been executed, the mortgagee must comply
with paragraph (a) of this section.
(g) Pre-foreclosure sale procedure.
Within 90 days of the end of a mortgagor’s participation in the pre-foreclosure sale procedure, or within the
time limit described in paragraph (a) of
this section, whichever is later, if no
closing of an approved pre-foreclosure
sale has occurred, the mortgagee must
obtain a deed in lieu of foreclosure,
with title being taken in the name of
the mortgagee or the Secretary, or undertake one of the actions listed at
§ 203.355(a). The end-of-participation
date is defined as:
(1) Four months after the date of
commencement of participation, if
there is no signed Contract of Sale at

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Office of Assistant Secretary for Housing, HUD
that time, unless extended by the Commissioner;
(2) Six months after the date of commencement of participation, if there is
a signed contract but settlement has
not occurred by that date, unless extended by the Commissioner;
(3) The date the mortgagee is notified
of the mortgagor’s withdrawal from
the Pre-foreclosure Sale procedure; or
(4) The date of the letter sent by the
mortgagee to the mortgagor prior to
the expiration of the customary participation period, terminating the
mortgagor’s opportunity to participate
in the Pre-foreclosure Sale procedure.
(h) Special forbearance. If the mortgagor fails to meet the requirements of
a special forbearance under § 203.614 and
the failure continues for 60 days, the
mortgagee must undertake one of the
actions listed at § 203.355(a) within the
time limit described in paragraph (a) of
this section or 90 days after the mortgagor’s failure to meet the special forbearance requirements, whichever is
later.
(i) Modification under § 203.616, refinance under § 203.43(c), or assumption
under § 203.512. Provided that the mortgagee has established the mortgagor’s
eligibility within the time frame provided in § 203.355(a), if a mortgagee enters into a loss mitigation relief measure (i.e., modification under § 203.616,
refinance under § 203.43(c), or assumption under § 203.512) and it fails, the sixmonth period provided in § 203.355(a) is
extended by an additional 90 days to
allow the mortgagee to try another
loss mitigation tool or go to foreclosure.
[57 FR 47970, Oct. 20, 1992, as amended at 59
FR 50143, Sept. 30, 1994; 60 FR 57678, Nov. 16,
1995; 61 FR 35018, July 3, 1996; 62 FR 60129,
Nov. 6, 1997]

§ 203.356 Notice of foreclosure and
pre-foreclosure
sale;
reasonable
diligence requirements.
(a) Notice of foreclosure and pre-foreclosure sale. The mortgagee must give
notice to the Secretary, in a format
prescribed by the Secretary, within 30
days after the institution of foreclosure proceedings. The mortgagee
must give notice to the Secretary, in a
format prescribed by the Secretary,
within the time-frame prescribed by

§ 203.357

the Secretary, of the acceptance of any
mortgagor into the pre-foreclosure sale
procedure.
(b) Reasonable diligence. The mortgagee must exercise reasonable diligence in prosecuting the foreclosure
proceedings to completion and in acquiring title to and possession of the
property. A time frame that is determined by the Secretary to constitute
‘‘reasonable diligence’’ for each State
is made available to mortgagees.
[61 FR 36265, July 9, 1996]

§ 203.357 Deed in lieu of foreclosure.
(a) Mortgagors owning one property. In
lieu of instituting or completing a foreclosure, the mortgagee may acquire
property from one other than a corporate mortgagor by voluntary conveyance from the mortgagor who certifies
that he does not own any other property subject to a mortgage insured or
held by FHA. Conveyance of the property by deed in lieu of foreclosure is approved subject to the following requirements:
(1) The mortgage is in default at the
time the deed is executed and delivered;
(2) The credit instrument is cancelled
and surrendered to the mortgagor;
(3) The mortgage is satisfied of
record as a part of the consideration
for such conveyance;
(4) The deed from the mortgagor contains a covenant which warrants
against the acts of the grantor and all
claiming by, through, or under him and
conveys good marketable title;
(5) The mortgagee transfers to the
Commissioner good marketable title
accompanied by satisfactory title evidence.
(b) Corporate mortgagors. A mortgagee
may accept a deed in lieu of foreclosure
from a corporate mortgagor in compliance with the requirements of paragraph (a) of this section, if the mortgagee obtains the prior written consent
of the Commissioner.
(c) Mortgagors owning more than one
property. The mortgagee may accept a
deed in lieu of foreclosure in compliance with the provisions of paragraph
(a) of this section, from an individual
who owns more than one property
which is subject to a mortgage insured
or held by the FHA if the mortgagee

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