FHA Condo Approval Specialist – Two New Mortgagee Letters
HUD released two new Mortgagee Letters last week.
The first of these updates lenders regarding HUD’s policies regarding unpaid taxes and fees for foreclosed properties prior to conveyance to HUD. You can read it in its entirety but here is the gist of the sections:
· Mortgagees (lenders) must pay all taxes prior to conveyance to HUD. It also spells out the requirements to maintain copies of the receipts and invoices for all taxes paid prior to conveyance. If the lender does not pay the taxes on time, HUD ruled that it is not responsible for reimbursing the lender for any late fees or penalties. Repeat offenders will be referred to the Office of Lender Activities
· Mortgagees must pay HOA fees prior to conveyance. This section outlines the necessary steps for the foreclosure process when the property is a condominium and what to do if the HOA fees survive the foreclosure process. HUD reimburses lenders 100% of the fees paid to the HOA, which also include late fees and other penalties imposed by the HOA on the mortgagor.
· Mortgagees must pay all unpaid water, sewer and other assessments. It is the lender’s responsibility to research and pay any and all outstanding water, sewer or other assessments on the property prior to conveyance to HUD.
· Mortgagees to provide title evidence for manufactured homes. It must ensure that the home is attached to the land on the title, that the home is classified and taxes as real estate and that the manufactured home’s title has not been surrendered or purged (in accordance with local jurisdiction).
Mortgagee Letter ML 12-12 simply states that the lenders must adhere to local and State laws while in possession of the repossessed properties.