FHA Proposes New Deadline for Lenders Filing Insurance Claims

The Federal Housing Administration (FHA) is proposing to create a maximum time period for lenders to file insurance claims on single-family mortgages, as well as plans to revise its policy on reimbursing lenders and servicers when claim filing deadlines are missed.

This proposed rule would establish the maximum time period within which an FHA-approved mortgagee must file a claim with FHA for insurance benefits, according to the rule proposed in the Federal Register.

The guidance does not include Home Equity Conversion Mortgages, a spokesman from the Department of Housing and Urban Development (HUD) confirmed to RMD via email.

Since the economic downturn, FHA notes that many services delayed filing claims for insurance benefits, instead opting to wait and file large numbers of claims with the agency at the same time. As a result, this puts a strain on FHA resources and “negatively impacts the FHA’s ability to project the future state of the Mutual Mortgage Insurance Fund,” the agency stated in the proposed rule.

Currently, HUD regulations are “silent” with respect to a deadline by which a claim for insurance benefits must be filed with FHA, states the proposed rule. 

The new proposal, however, would require lenders to submit claims three months from the point at which they obtain marketable title to the property or successfully sell the property to a third party. 

FHA’s proposal would also eliminate the requirement that lenders and services forfeit reimbursement for eligible expenses and debenture interest after missing a foreclosure or claim filing deadline. 

In this regard, lenders and services will now receive this reimbursement, subject to a deduction based on the number of days the foreclosure or claim filing deadline was past due. 

This reimbursement calculation will allow lenders and servicers to recover amounts they normally would have lost while mitigating the cost to FHA associated with missed deadlines, FHA stated. 

The proposed rule will be open for public comment for 60 days. 

View the proposed rule in the Federal Register. 

Written by Jason Oliva

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