A new mortgagee letter (ML) posted by the Federal Housing Administration (FHA) offered lenders an opportunity to review an updated draft of its policy on “Partial Claim Document Recording and Payoff Statements” on the Office of Single-Family Housing Drafting Table and provide feedback.
The updated version includes revisions to the payoff statement section based on feedback to the original ML posted on Sept. 12, 2024.
The draft ML aims to inform borrowers, closing agents, attorneys, and title agents of the partial claim subordinate lien amount owed on the mortgage loan, ensuring the partial claim payoff is provided to the party requesting the payoff statement for the FHA-insured first mortgage.
FHA said it expects this to help minimize losses to its Mutual Mortgage Insurance Fund and prevent challenges related to the subordinate lien for those refinancing or selling their home.
Additionally, the draft aims to partially alleviate an operational burden on mortgagees by increasing the time allowed to record partial claim security instruments from five to 15 days from: the date of receipt from the borrower; bankruptcy court approval, if required; and a receipt from the U.S. Department of Housing and Urban Development, if required.
It would establish a new procedure when the mortgagee receives a payoff request for an FHA-insured mortgage and there are outstanding partial claims or payment supplements associated with the mortgage.
Feedback on the draft ML will be accepted through March 10 here.