The Federal Housing Administration (FHA) has published a mortgage letter on changes regarding Title II mortgage as well as reverse mortgages. The letter updates three specific areas necessary in aligning FHA’s foreclosure timelines with the industry’s experience throughout the country: HUD’s Reasonable Diligence timeframes, the Schedule of Allowable Attorney Fees for all jurisdictions and Cash for Keys’ Relocation allowance.
The policies in this letter supersede all prior Reasonable Diligence timeframes, Attorney Fee schedules and Cash for Keys’ Relocation allowances, FHA said, beginning Jan. 1, 2016.
The updated Reasonable Diligence timeframes are effective for all cases in which the First Legal Action to initiate foreclosure occurs on or after Jan. 1, 2016. The letter outlines the timeline of First Legal Action and Reasonable Diligence timeframes by state which HUD expects its lenders to comply with all federal, state and local laws when prosecuting foreclosures and pursuing possession actions.
The updated Schedule of Attorney Fees reflects rising legal costs and helps to better align HUD’s schedule of attorney fees with those of the industry. The new fees are effective for all cases in which any of the following actions occurs on or after Jan. 1, 2016:
- First legal action to foreclose is initiated;
- Bankruptcy clearance is undertaken;
- Possessory action has begun; or
- Deed-in-lieu of foreclosure is recorded.
The Cash for Keys’ Relocation allowance is being raised to $3,000 per property (from $2,000) to provide a greater incentive for occupants to voluntarily vacate a property. The new allowance is effective for all FHA-insured mortgages for which a foreclosure sale or non-conveyance transaction is scheduled on or after Jan. 1, 2016.