July 15, 2014
New FHA Loan Rules For Deed-in-Lieu and Pre-Foreclosure Sale Options
The FHA and HUD recently updated the rules for “non-home retention options” for borrowers at risk of going into default and/or foreclosure on FHA mortgage loans. Two of those options are deed-in-lieu (DIL) of foreclosure and the pre-foreclosure sale (PFS). Under FHA loan rules, the borrower must be evaluated for eligibility for one or both of these options, as described in FHA Mortgagee Letter 2014-15: “If none of FHA’s loss mitigation home retention options are available or appropriate, the mortgagee must evaluate the borrower for a non-home retention option. The priority order of FHA’s Loss Mitigation non-home retention options requires that a mortgagor in default or at imminent risk of default be evaluated for a PFS transaction before being evaluated for a DIL transaction. Therefore, the mortgagee must first determine | more...