1. A loss mitigation technique used with HUD insured loans wherein HUD pays a claim to the loan servicer which brings the account current.
2.
This applies to FHA mortgages only - a lender may be able to work with a homeowner to obtain a one-time payment from the FHA-Insurance fund to bring a delinquent mortgage current.
A homeowner may qualify for a Partial Claim if:
- The loan is at least 4 months delinquent but no more than 12 months delinquent;
- The property owner is able to begin making full mortgage payments.
When a lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay the lender the amount necessary to bring the mortgage current. The homeowner must execute a Promissory Note, and a Lien will be placed on the property until the Promissory Note is paid in full.
The Promissory Note is interest-free and is due when the first mortgage is paid in full or when the property is sold.
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