Critical Updates for Title Professionals: HUD Mortgage Changes
This week we wanted to alert you to the fact that the U.S. Department of Housing and Urban Development (HUD) is planning on both extending the recording time for Mortgagees to record their security documents as well as modifying their procedures to request Payoff Letters for the “Partial Claim Mortgages.” If you are not familiar with a “Partial Claim Mortgage, please note that t he Federal Housing Administration (FHA), as part of HUD, offers loan modification programs for FHA-insured loans (FHA Loan) to homeowners facing financial hardships by authorizing the deferral of some or all defaulted amounts. These deferred amounts may be set aside for future payoff, resulting in a modification to the loan. As part of the modification process, the deferred amounts are assigned to HUD and a second mortgage is recorded to secure the additional obligation. The mortgage in favor of HUD is referred to as a “Partial Claim Mortgage.”
In our efforts to bring you the most comprehensive information and updates available from the Title industry, below you will find a link to our is a link to the American Land Title Association’s (ALTA) memo on this latest initiative from HUD which will provide you with important details on the proposed recording extension and payoff request modification related to “Partial Claim Mortgages.”
https://www.alta.org/news-and-publications/news/20250116-HUD-to-Modify-Procedures-for-Partial-Claim-Payoffs-Extend-Recording-Time
On the Title side, it will be critical to carefully review all Mortgage Payoff letters, as well as to obtain confirmation from current Owners (via appropriate Affidavit) whether the mortgagor has deferred a portion of the underlying mortgage through the HUD program so that we can ensure that the entire mortgage lien is satisfied at Closing.
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