In utilizing the Loan Modification option to bring an asset current, can the
Mortgagee include all fees and corporate advances??
Mortgagee Letter
2008-21 states in part: Legal fees and related foreclosure costs for work
actually completed and applicable to the current default episode may be
capitalized into the modified principal balance.
May
a Mortgagee perform an interior inspection of the property if they have
concerns about property condition?
Yes, per Mortgagee
Letter 2000-05, page 20, the Mortgagee may conduct any review it deems
necessary to verify that the property has no physical conditions which
adversely impact the Mortgagor's continued ability to support the modified
mortgage payment.
Can a Mortgagee include late charges in the Loan Modification?
Mortgagee
Letter 2008-21 states that the goal in providing the Mortgagor a Loan
Modification is to bring the delinquent mortgage current and give the Mortgagor
a new start, the Mortgagee should waive all accrued late fees.
When utilizing a Loan Modification option, can a Mortgagee capitalize an escrow
advance for Homeowner's Association fees?
HUD
Handbook 4330.1 REV-5 (Paragraph 2-1, Section B, Escrow Obligations)
states: Mortgagees must also escrow funds for those items which, if not paid,
would create liens on the property positioned ahead of the FHA-insured
mortgage.
Is there a new basis interest rate which Mortgagees may assess when completing
a Loan Modification?
Yes, Mortgagee
Letter 2009-35 states that the Mortgagee shall reduce the Loan Modification
note rate to the current Market Rate. Please refer to Mortgagee
Letter 2009-35 for more details.
Are Mortgagees required to re-amortize the total amount due over 360 month
period?
Yes, per Mortgagee
Letter 2009-35, the Mortgagee must re-amortize the total unpaid amount due
over a 360 month period from the due date of the first installment required
under the modified mortgage.
What date is utilized when determining the correct interest rate for a Loan
Modification?
The date the
Mortgagee approves the Loan Modification (all verification completed and
servicing notes documented, reported to SFDMS) is the date that Mortgagees are
to use in determining the interest rate.
Will HUD subordinate a Partial Claim, should a Mortgagor subsequently default
and qualify for a Loan Modification?
If a Mortgagor
subsequently defaults and qualifies for a Loan Modification, HUD will
subordinate the Partial Claim.
Are Mortgagees required to perform an escrow analysis when completing a Loan
Modification?
Yes, Mortgagees are
to perform a retroactive escrow analysis at the time the Loan Modification to
ensure that the delinquent payments being capitalized reflect the actual escrow
requirements required for those months capitalized.
Can a Mortgagee qualify an asset for the Loan Modification option when the
Mortgagor is unemployed, the spouse is employed, but the spouse name is not on
the mortgage?
Based upon this
scenario, the Mortgagee should conduct a financial review of the household
income and expenses to determine if surplus income is sufficient to meet the
new modified mortgage payment, but insufficient to pay back the arrearage. Once
this process has been completed the Mortgagee should then consult with their
legal counsel to determine if the asset is eligible for a Loan Modification
since the spouse is not on the original mortgage.
