Lenders that service home loans insured by the Federal Housing Administration will face new deadlines on insurance claims under a proposed regulation.
Currently, there are no regulations about how long an FHA mortgagee has to file a claim on an FHA-insured mortgage.
Since the housing market downturn, mortgagees have not been prompt in filing claims, instead accumulating multiple claims and filing them all at once.
The uncertainty surrounding claim filing deadlines and the elevated number of claims being filed at a single point in time is straining FHA’s resources and hampering the agency’s ability to protect the future soundness of the Mutual Mortgage Insurance Fund.
So
the Department of Housing and Urban Development has proposed a rule — Federal Housing Administration (FHA): Single Family Mortgage Insurance Maximum Time Period for Filing Insurance Claims, Curtailment of Interest and Dis-allowance of Operating Expenses Incurred Beyond Certain Established Timeframes — which was published in the Federal Register Monday.
The proposal includes a formal deadline for filing FHA claims.
“In general, proposed § 203.372 will prohibit the filing of a claim for insurance benefits after the passage of a specified amount of time following certain events relating to the submission of a claim,” the filing states. “Additionally, it will prohibit the filing of any claim more than 12 months after expiration of a period of time from the date of default that is equal to the amount of time provided in the reasonable diligence timeframe established under § 203.356(b).”
On completed foreclosures, the claim would need to be filed within three months of the latest of either the foreclosure sale date, the expiration of the redemption period, the date the mortgagee took possession of the property, or the date that an authorized HUD official approved in writing.
On pre-foreclosure sales and deeds in lieu, a claim needs to be filed within three months of the closing or conveyance.
Mortgagees that miss a deadline would would lose the contract of insurance. No written notice by HUD would be required.
Also included is a proposal to
revise HUD’s policies about the curtailment of interest and disallow certain expenses incurred by a mortgagee as a result of its failure to timely start foreclosure or take other actions needed to submit claims.
Comments can be submitted by mail to
Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500; or electronically at . The docket number is 2015-16479.
