source:
  type: guide
  id: hud-4000-1-iii-m-non-monetary-default
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — m. Non-Monetary
    Default (12/21/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — m. Non-Monetary
    Default (12/21/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-m-non-monetary-default-full
  canonical_id: hud-4000-1-iii-m-non-monetary-default-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — m. Non-Monetary
    Default (12/21/2022)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — m. Non-Monetary
      Default (12/21/2022)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'm. Non-Monetary Default (12/21/2022) By executing the deed of
      trust and Note for an FHA-insured Mortgage, the Borrower agrees to submit the
      monthly Mortgage Payment by the first of each month and to adhere to the uniform
      covenants listed in the deed of trust and Note. The following provides guidance
      associated with the Borrower’s failure to adhere to these covenants. i. Definition
      Non-Monetary Default is when the Borrower fails to perform obligations, other
      than making monthly payments, contained in the mortgage security instrument
      for a period of 30 Days. III. SERVICING AND LOSS MITIGATION A. Title II Insured
      Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1281
      Last Revised: 11/26/2025 ii. Mortgagee Cure When the Non-Monetary Default may
      be cured or otherwise resolved by Mortgagee action without resorting to foreclosure
      action, the Mortgagee must advance and charge the Borrower all amounts due for
      servicing activities, as defined in the mortgage agreement, if: • the Borrower
      fails to make required payments or charges; • the Borrower fails to perform
      any other covenants and agreements contained in the security instrument; or
      • there is a legal proceeding that may affect the Mortgagee’s rights in the
      Property. iii. Hazard and Flood Insurance If the Borrower fails to maintain
      adequate Hazard and/or Flood Insurance coverage when it is stated as an obligation
      in the Mortgage, the Mortgagee may advance funds or force- place insurance as
      follows. (A) Mortgagee Advances The Mortgagee may advance the funds to pay the
      renewal premiums. The Mortgagee must renew the same type of policy and the same
      coverage carried previously by the Borrower. (B) Force-Placed Insurance If Borrowers
      fail to renew the Hazard and/or Flood Insurance coverage when required, the
      Mortgagee may force-place Hazard and/or Flood Insurance where consistent with
      federal regulations. While the Mortgagee may, at its discretion, obtain more
      coverage than is necessary to protect the Mortgagee’s interest, HUD limits its
      reimbursement of these premiums. If the Mortgagee force-places a Private Flood
      Insurance (PFI) policy to satisfy the mandatory Flood Insurance purchase requirement,
      the PFI must meet the requirements for Flood Insurance. iv. Taxes, Assessments,
      and Government or Municipal Charges The Mortgagee may advance funds and charge
      the Borrower when the Borrower fails to pay taxes, assessments, water rates,
      and other governmental or municipal charges, fines, or impositions not included
      in the Borrower’s monthly Mortgage Payment. v. Homeowners’ Association Fees
      If the Borrower fails to pay HOA/Condominium Fees, the Mortgagee must take any
      action necessary to protect the first lien position of the FHA-insured Mortgage
      against foreclosure actions brought by a HOA/condominium or any other junior
      lien holder. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing
      Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1282 Last Revised:
      11/26/2025 vi. Code Violations If the Borrower fails to address a code violation
      notice from the municipality where the Property is located, the Mortgagee must
      perform activities necessary to preserve and protect the Property, as authorized
      under the security instruments. See Mortgagee Property Preservation and Protection
      Action. vii. Demolition Orders The Mortgagee must forward copies of all notices
      pertaining to demolition orders and hearings to HUD’s MCM immediately upon discovery.
      The MCM will advise the Mortgagee as to whether to proceed with the demolition
      or to postpone the demolition until after conveyance to HUD. viii. Due-on-Sale
      Clause The Mortgagee must review the Mortgage’s legal documents to determine
      any covenant restrictions pertaining to assumption. See Assumptions for more
      information. n. Distressed Asset Stabilization Program RESERVED FOR FUTURE USE
      This section is reserved for future use, and until such time, FHA-approved Mortgagees
      and any other interested participants must continue to comply with all applicable
      law and existing Handbooks, Mortgagee Letters, Notices and outstanding guidance
      applicable to their participation in FHA programs.'
  judgment: false
