source:
  type: guide
  id: hud-4000-1-iii-d-initiation-of-foreclosure-and-reasonable-diligence-time-fram
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — d. Initiation
    of Foreclosure and Reasonable Diligence Time Frames (03/25/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — d. Initiation
    of Foreclosure and Reasonable Diligence Time Frames (03/25/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-d-initiation-of-foreclosure-and-reasonable-diligence-time-fram-full
  canonical_id: hud-4000-1-iii-d-initiation-of-foreclosure-and-reasonable-diligence-time-fram-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — d. Initiation
    of Foreclosure and Reasonable Diligence Time Frames (03/25/2024)
  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 — d. Initiation
      of Foreclosure and Reasonable Diligence Time Frames (03/25/2024)
    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: 'd. Initiation of Foreclosure and Reasonable Diligence Time Frames
      (03/25/2024) i. Initiation of Foreclosure (A) Case Numbers Assigned before September
      19, 2017 If a HECM has not been satisfied or the default cured in response to
      a Due and Payable notification to the Borrower, the Mortgagee must commence
      foreclosure by taking the first legal action identified in Appendix 6.0 as required
      by the state in which the Property is located. The first legal action to initiate
      foreclosure must occur: • no later than six months after the earliest of either:
      • the death of the last surviving Borrower, unless there is an applicable Deferral
      Period; • the end of any applicable Deferral Period; or • the Mortgagee’s notice
      to the Borrower that the HECM is Due and Payable when the HECM is Due and Payable
      for reasons other than death; or • within an extended time frame as approved
      by HUD. If federal bankruptcy law or the laws of the state, city, or municipality
      in which the HECM Property is located do not permit the commencement of foreclosure
      within the above referenced time frame, the Mortgagee must commence foreclosure
      within six months after the period during which foreclosure is prohibited by
      such laws. Where state privacy laws impair the Mortgagee’s ability to acquire
      relevant information about the death of a Borrower or an Eligible NBS, the Mortgagee
      must initiate foreclosure within three months from the date of the expiration
      of such period of impairment. (B) Case Numbers Assigned on or after September
      19, 2017 If a HECM has not been satisfied or the default cured in response to
      a Due and Payable notification, the Mortgagee must commence foreclosure by taking
      the first legal action identified in Appendix 6.0 as required by the state in
      which the Property is located. The first legal action to initiate foreclosure
      must occur: • no later than six months after the earliest of either: • the date
      the Mortgagee notifies, or should have notified, HUD of the death of the last
      surviving Borrower unless there is an applicable Deferral Period; • the end
      of any applicable Deferral Period; • HUD’s Due and Payable approval when the
      HECM is Due and Payable for reasons other than death; or • the date the Mortgagee
      notifies, or should have notified, HUD of the conveyance of all title and no
      Borrower remains on title to the Property; or • within the extended time frame
      as approved by the Secretary. III. SERVICING AND LOSS MITIGATION B. Title II
      Insured Housing Programs Reverse Mortgages 2. Default Servicing Handbook 4000.1
      1504 Last Revised: 11/26/2025 If federal bankruptcy law or the laws of the state,
      city, or municipality in which the HECM Property is located do not permit the
      commencement of foreclosure within the above referenced time frame, the Mortgagee
      must commence foreclosure within six months after the time during which foreclosure
      is prohibited by such laws. Where state privacy laws impair the Mortgagee’s
      ability to acquire relevant information about the death of a Borrower or an
      Eligible NBS, the Mortgagee must initiate foreclosure within three months from
      the date of the expiration of such period of impairment. (C) Required Documentation
      The Mortgagee must provide notice to HUD via HERMIT within 30 Days of initiating
      foreclosure using the appropriate timeline. ii. Reasonable Diligence in Prosecuting
      Foreclosure The Mortgagee must exercise reasonable diligence in prosecuting
      foreclosure proceedings from first legal action to completion, as indicated
      by acquiring title to and possession of the Property. Appendix 6.0 provides
      the Reasonable Diligence Time Frame established by HUD for each state. iii.
      Available Extensions (A) Borrower-Initiated Requests for Extensions to Sell
      the Property or Otherwise Satisfy the HECM The Borrower or other party holding
      legal title to the Property may request additional time to: • market and sell
      a Property securing a HECM if evidence can be provided demonstrating: • the
      Property is being actively marketed; or • closing or payoff delays associated
      with an executed sales contract; or • satisfy a HECM if evidence can be provided
      demonstrating attempts to satisfy the HECM balance. If the Mortgagee receives
      such a documented request, the Mortgagee must submit a 90-Day extension request
      with documentation to HUD through the appropriate HERMIT timeline. The Mortgagee
      may submit no more than two 90-Day Borrower- initiated extension requests under
      this section. (B) Mortgagee Extension after Borrower’s Failure to Sell or Satisfy
      the HECM The Mortgagee may utilize one 90-Day extension to commence foreclosure
      following a fully documented, failed attempt by the Borrower, or the Borrower’s
      estate or heir, or other party with legal authority to sell the Property or
      otherwise satisfy the HECM. The Mortgagee must include in the Servicing File
      evidence of the active marketing of III. SERVICING AND LOSS MITIGATION B. Title
      II Insured Housing Programs Reverse Mortgages 2. Default Servicing Handbook
      4000.1 1505 Last Revised: 11/26/2025 the Property or attempts to satisfy the
      HECM balance, and document the use of the extension when submitting the claim.
      This extension is provided only for the Mortgagee’s operational purposes of
      meeting the deadline for taking first legal action to foreclose. (C) Mortgagee
      Extension for Property Charge Loss Mitigation Where the Mortgagee is willing
      to offer the Borrower an available Loss Mitigation Option, the Mortgagee may
      request a property charge loss mitigation extension to the foreclosure time
      frame in HERMIT using the appropriate timeline, provided all requirements established
      in this section are met. Any approved extension of the foreclosure time frames
      ceases immediately if, at any point, the Mortgagee determines: • that no Loss
      Mitigation Options are viable; • the Borrower is unwilling to reimburse the
      property charge payments advanced on their behalf evidenced either by self-certification
      or non- communication with a Mortgagee for 60 Days; • the Borrower is unable
      to cure the default; or • the last surviving Borrower dies. Any request for
      an extension to a foreclosure time frame due to the Mortgagee’s election to
      offer a permissible Loss Mitigation Option under this section must include documentation
      that the eligibility requirements have been met. (D) Mortgagee Extension for
      Borrower Participation in Local, State, or Other Government Property Charge
      Assistance Programs (1) Definition Local, State, or Other Government Property
      Charge Assistance Programs, for purposes of HECM, refers to funds available
      from state agency programs to assist Borrowers with resolving property charge
      defaults. The funds from these programs are a lump sum provided to the Mortgagee
      to be used to cure the Borrower’s default. (2) Standard When a Borrower is receiving
      funds through a local, state, or other government property charge assistance
      program, the Mortgagee may request a 60-Day extension to the time frames for
      commencing foreclosure or reasonable diligence in completing foreclosure, provided
      that: • the Mortgagee receives notification from the local, state, or other
      government property charge assistance program, that the Borrower has applied
      for funds; III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs
      Reverse Mortgages 2. Default Servicing Handbook 4000.1 1506 Last Revised: 11/26/2025
      • the Mortgagee obtains a copy of the Borrower’s approval from the state Housing
      Finance Agency (HFA) or other entity administering a state’s program; or • the
      program requires a foreclosure action to be suspended. If the Mortgagee elects
      to pursue this extension, the Mortgagee must submit the request with documentation
      to HUD using the appropriate HERMIT timeline. The program funds must be received
      and applied within the 60-Day extension period. After a property charge default
      is cured, the Mortgagee must request rescission of the HECM’s Due and Payable
      approval through the appropriate timeline in HERMIT. If the program funds are
      not received, are not disbursed on behalf of the Borrower, or do not adequately
      cure the default within the 60-Day extension period, the Mortgagee must proceed
      in accordance with the applicable foreclosure time frames. The Mortgagee must
      retain documentation regarding any local, state, or other government property
      charge assistance program-related delay in initiating or completing foreclosure
      in its Servicing File in order to avoid curtailment. iv. Curing the Default
      (A) To Reinstate the HECM At any time prior to a foreclosure sale, the Mortgagee
      must permit the Borrower to cure the default and reinstate the HECM, unless:
      • the Mortgagee has accepted reinstatement of the HECM within the past two years
      immediately preceding the current notification to the Borrower that the HECM
      is Due and Payable; • reinstatement will preclude foreclosure if the HECM becomes
      Due and Payable at a later date; or • reinstatement will adversely affect the
      priority of the HECM lien. The Mortgagee may require the Borrower to pay any
      foreclosure costs and reasonable attorney fees incurred in connection with a
      canceled foreclosure by adding the expenses to the outstanding HECM balance.
      (B) To Reinstate a Deferral Period At any time prior to a foreclosure sale,
      the Mortgagee must permit an Eligible NBS to cure the condition that resulted
      in the Deferral Period ceasing, and reinstate the Deferral Period, unless: •
      the Mortgagee has reinstated the Deferral Period within the past two years immediately
      preceding the latest notification to the Eligible NBS that the HECM is Due and
      Payable; • reinstatement of the Deferral Period will preclude foreclosure if
      the HECM becomes Due and Payable at a later date; or III. SERVICING AND LOSS
      MITIGATION B. Title II Insured Housing Programs Reverse Mortgages 2. Default
      Servicing Handbook 4000.1 1507 Last Revised: 11/26/2025 • reinstatement of the
      Deferral Period will adversely affect the priority of the first and second HECM
      liens. To reinstate the Deferral Period, the Mortgagee may require the Eligible
      NBS to pay any costs the Mortgagee incurred in connection with a canceled foreclosure.
      The Mortgagee must not add these costs to the outstanding HECM balance. v. Bidding
      at Foreclosure Sale At the foreclosure sale, the Mortgagee must bid the lesser
      of: • the full debt, consisting of the outstanding HECM balance and any and
      all other incurred expenses; or • the current appraised value of the Property.
      vi. Deed-in-Lieu of Foreclosure (A) Definitions A Deed-in-Lieu (DIL) of Foreclosure
      is an option for a property owner to deed a mortgaged Property to the Mortgagee
      in lieu of the Mortgagee taking title through a foreclosure action. Due and
      Payable Date refers to the date when the Mortgagee notifies or should have notified
      the Commissioner that the Mortgage is Due and Payable under the conditions stated
      in the Mortgage or the date that a Deferral Period ends, or the date the Commissioner
      approved a Due and Payable request submitted by the Mortgagee. (B) Standard
      The Mortgagee must accept a DIL of Foreclosure from the Borrower or other party
      with legal right to dispose of the Property provided: • the Mortgagee is able
      to obtain good and marketable title; and • for HECMs with FHA case numbers assigned
      on or after September 19, 2017, the Mortgagee files the DIL of Foreclosure for
      recording within nine months of the due date. Within 30 Days of receipt of the
      executed and delivered DIL, the Mortgagee must: • deliver to the Borrower the
      canceled Note; • record the satisfaction of the HECM lien; and • where applicable,
      request that HUD release the second HECM lien. vii. Cash for Keys Consideration
      (A) Definition Cash for Keys refers to a monetary consideration offered as an
      incentive to expedite a DIL, a Short Sale, or as an alternative to legal eviction
      III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse
      Mortgages 2. Default Servicing Handbook 4000.1 1508 Last Revised: 11/26/2025
      (B) Standard The Mortgagee may offer the Cash for Keys where: • the Borrower
      or other party with a legal right to do so vacates the Property and provides
      a DIL to the Mortgagee; • the Borrower or other party with a legal right to
      do so sells the Property as a Short Sale consistent with FHA requirements; or
      • all occupants vacate the Property prior to an eviction completed by the Mortgagee.
      The Mortgagee must send a Cash for Keys offer letter using a delivery method
      that provides the date of delivery. The date of the Cash for Keys offer letter
      for determining the amount of the Cash for Keys incentive is the date the offer
      is received by the Borrower or occupants of the Property. The total claim calculated
      before the addition of any incentive or Cash for Keys must not exceed the MCA.
      The total claim, including any claimable incentive or Cash for Keys, must not
      exceed the FHA Statutory MCA for the HECM. The Statutory MCA means the mortgage
      limit for a one-family residence secured by a HECM as of the date of loan closing.
      The amount of Cash for Keys may not exceed the amounts described in the table
      below: Cash For Keys Incentives Incentive Type Time Frame Incentive DIL Completed
      within 365 Days from Due and Payable Date $7,500.00 + probate costs not to exceed
      $5,000.00 (Any probate costs claimed over $500.00 require supporting documentation.)
      Completed 366 Days to 547 Days from Due and Payable Date $5,000.00 + probate
      costs not to exceed $5,000.00 (Any probate costs claimed over $500.00 require
      supporting documentation.) Short Sale Completed within 365 Days from Due and
      Payable Date $7,500.00 + probate costs not to exceed $5,000.00 (Any probate
      costs claimed over $500.00 require supporting documentation.) III. SERVICING
      AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages 2.
      Default Servicing Handbook 4000.1 1509 Last Revised: 11/26/2025 Cash For Keys
      Incentives Completed 366 Days to 547 Days from Due and Payable Date $5,000.00
      + probate costs not to exceed $5,000.00 (Any probate costs claimed over $500.00
      require supporting documentation.) Post-Foreclosure Eviction Avoidance If the
      Property is vacated within 60 Days of the Cash for Keys offer $7,500.00 If the
      Property is vacated within 90 Days of the Cash for Keys offer $5,000.00 Before
      releasing the funds for a DIL or a post-foreclosure eviction avoidance incentive,
      the Mortgagee must inspect the Property to ensure that: • the Property is in
      Broom-swept Condition; and • all built-in appliances and fixtures remain in
      the Property. Allowable probate costs are court costs, attorney’s fees, notary
      fees, fees for required notices, and mailing/copy fees. (C) Required Documentation
      Where Cash for Keys is offered in relation to a DIL, the Mortgagee must provide
      documentation with the claim in HERMIT showing the date and amount of consideration
      offered, along with the date: • the DIL was executed and returned to the Mortgagee;
      • the DIL was filed for recording; • the occupant vacated the Property; and
      • the occupant received the funds. Where Cash for Keys is offered as part of
      a Short Sale, the Mortgagee must provide documentation with the claim in HERMIT
      showing: • the date of the sale closing; • the date and amount of the offer;
      and • the date the occupant received the funds. Where Cash for Keys is offered
      to an occupant as an alternative to eviction post- foreclosure, the Mortgagee
      must provide documentation with the claim in HERMIT showing: • the date of the
      foreclosure sale; • evidence the Mortgagee was the successful bidder; • the
      date and amount of the relocation offer; III. SERVICING AND LOSS MITIGATION
      B. Title II Insured Housing Programs Reverse Mortgages 2. Default Servicing
      Handbook 4000.1 1510 Last Revised: 11/26/2025 • the date of the actual vacancy;
      and • the date the occupant received the funds. Mortgagees must provide supporting
      documentation for any probate costs over $500.00 as part of their claim by uploading
      the documentation into the HERMIT system.'
  judgment: false
