WASHINGTON (7/8/15)--A three-month maximum time period for lenders to file single family mortgage insurance claims to the Federal Housing Administration (FHA) was proposed by the agency Tuesday. The proposal would revise the FHA’s policy on reimbursement of eligible expenses and debenture interest when foreclosure and claim filing deadlines are missed.
The economic downturn has led many loan servicers to delay filing insurance benefit claims, opting to wait and file a large number of claims with the FHA at the same time. According to the FHA, this leads to increased costs due to the delayed filing and the large number of simultaneous claims.
The agency’s proposed rule would require lenders to submit claims within three months from the point they obtain a marketable title to the property or successfully sell the property to a third party.
The proposal would also eliminate the requirement that lenders/servicers forfeit reimbursement for eligible expenses and debenture interest after missing a foreclosure or claim filing deadline.
Under the proposal, lenders/servicers would 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/servicers to recover amounts they normally would have lost while mitigating the cost to FHA associated with missed deadlines.
Comments are due to the FHA by Sept. 4.