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Partial Claim


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If you have fallen behind in payments after entering into an unsuccessful repayment program (Loan Modification or Special Forbearance) but have resolved your financial hardship, you may talk to your lender about what is known as your last option called the Partial Claim. Please note that the Partial Claim option is only applicable to people with a FHA loan.

 

Under this option, your lender may agree to help you with a one-time payment from the Federal Insurance Fund through the cooperation of the Department of Housing and Urban Development (HUD). In other words, if you qualify for a Partial Claim, your lender may tap into the Federal Insurance Fund to pay your delinquent payments as an advance in an amount necessary to reinstate your delinquent loan. The cost to you as the borrower for having access to these funds (the advance amount necessary to reinstate your delinquent loan) is at zero interest or interest free.

 

The Partial Claim is due or payable when the borrower has paid off the first mortgage or no longer owns the property.

           

You may qualify for a Partial Claim if your loan is:

 

  1. 4 months due but unpaid. Total delinquency may not exceed 12 monthly payments principal, interest, taxes and insurance.
  2. Borrower (Mortgagor) must have resolved or overcome the cause of default.
  3. Owner-occupant and committed to continuing occupancy as primary residence.

 

The lender will need to verify if the borrower was not able to repay the delinquent amount through the Loan Modification or Special Forbearance option.

 

If you qualify for a Partial Claim, a Subordinate Mortgage and Note in the amount of the advance will be prepared in the name of the Secretary of HUD (Housing Urban Development).

 

  • The Partial Claim cannot be used to make the loan current for the purpose of sale or assumption. 
  • Partial Claim may be used as a stand-alone option.
  • Partial Claim cannot be used in conjunction with a Loan Modification.
  • Administration fees associated with completing the Partial Claim documents will not be passed on to the borrower.
  • Late fees associated with the current default episode will be waived.
  • Partial Claim must be calculated in the total indebtedness for the purpose of a Pre-Foreclosure sale.

 

Preparation steps to obtaining a Partial Claim

 

  1. Contact your lender and they will send you a list of HUD contacts including all the necessary documentation for processing your Partial Claim.
  2. Prepare a letter of explanation addressed to HUD the reasons why you fell behind in your mortgage payments and how you have overcome your financial problem.
  3. Provide proof of your income to HUD. This way HUD can verify that you are capable of repayment.
  4. Be prepared to provide full copies of your tax returns for the past 2 years. This must be included when submitting for a Partial Claim.
  5. Include your bank statements for the past 3 to 6 months. The duration range may vary depending on your lender.
  6. Send the package to your lender. Make sure that you have provided everything requested by your lender so as to avoid any delays in the processing of your Partial Claim. When sending in your package via FedEx, UPS, DHL or certified mail, ensure to request for a signature. This way you can track your package and minimize the risk of it getting lost.

 

Procedure for approval

 

  1. Lender will perform an analysis on borrower’s household income and living expenses.
  2. Determine surplus income percentage for a minimum of 3 months.
  3. If borrower’s income percentage is 0 percent of less, the Partial Claim will be denied.
  4. If approved, Partial Claim must fully reinstate the loan.

 

Payoff Procedure

 

As a reminder, Partial Claim is due and payable when the first mortgage is paid off or when the borrower no longer owns the property. Payments are you to be delivered to:

 

HUD

C/O C&L Services/Morris Griffin,

2488 East 81st Street, Suite 700,

Tulsa, OK 74137

 

Tel: (866) 377-8667

Fax: (866) 249-0626

 

  1. Payoff request together with mortgagor’s (borrower) authorization along with either a copy of mortgage/deed of trust or title search are faxed to the Customer Service Department.
  2. Upon verification of the information on HUD’s database system, Customer Service Department will then set up a payoff request.
  3. Cash Management will verify the amount, prepare and fax payoff.
  4. Once the payoff funds have been received and verified, the account will be posted and finally, the Satisfaction Of Mortgage is prepared and submitted to the county for recordation.


For further inquiries, you may contact the National Servicing Center at:

http://www.hud.gov/offices/hsg/sfh/nsc/nschome.cfm

Email: hsg-lossmit@hud.gov

1-888-297-8685