source:
  type: regulation
  id: hud-4000-1-iii-a-3-loss-mit
  authority: "HUD Handbook 4000.1 Part III.A.2 — Loss Mitigation (Forward Mortgages)"
  description: 'HUD Handbook 4000.1 Part III.A.2 (Loss Mitigation Review subchapter)

    governs the FHA Loss Mitigation Program: Mortgagee duties to

    address delinquency early, follow the Collection Communication

    Timeline, use the 9-option Loss Mitigation Waterfall (Repayment

    Plan, Forbearance, Partial Claim, Loan Modification, Combination,

    Payment Supplement, OWL, Pre-Foreclosure Sale, Deed-in-Lieu), and

    re-evaluate delinquent loans. Includes 90-Day Review pre-4-

    installment-default evaluation rule, SCRA-protection duty for

    servicemember Borrowers, and consideration of Owner-Occupant +

    Non-Occupant Borrowers for all options. Fills HUD 4000.1 Part III

    Loss Mitigation gap.

    '
obligations:
- id: hud-4000-1-iii-a-3-loss-mit-address-delinquency-earliest-time
  canonical_id: hud-4000-1-iii-a-3-loss-mit-address-delinquency-earliest-time
  section: "HUD Handbook 4000.1 III.A.2 — Address delinquency at earliest possible time"
  description: 'In implementing HUD''s Loss Mitigation Program, [LENDER]

    (Mortgagee) shall consider all reasonable means to address

    delinquency at the earliest possible time. The early-engagement

    duty is the foundation of FHA loss mitigation; delay reduces

    workout-success likelihood and increases foreclosure risk.

    '
  type: do
  audit_question: For every Delinquent FHA-insured Mortgage, can [LENDER] evidence (via servicing logs, contact-attempt records, early-stage workout-option offers) that all reasonable means were considered to address delinquency at the earliest possible time?
  workflow_phase: default_collections
  owner_role: loss_mitigation_specialist
  secondary_owner_role: chief_servicing_officer
  cadence: continuous
  consequence: Late-engagement loss mitigation reduces workout-success and is a FHA Servicing Guide deficiency.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - loss-mitigation
  - early-engagement
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 III.A.2 — Loss Mitigation Program"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 'consider all reasonable means to address delinquency at the earliest possible time

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. III.A.2 address-

      delinquency-earliest-time operative duty.

      '
  promoted_at: '2026-05-25T20:42:37+00:00'
  promoted_from: hud-4000-1-iii-a-3-loss-mit-roundd-v1.yaml
  program_review: Do the P&Ps facilitate early engagement so all reasonable means to address delinquency are considered at the earliest possible time?
  file_review: Review the delinquency file (contact logs, early-stage workout offers); the compliance person judges whether all reasonable means were considered at the earliest time.
  judgment: true
- id: hud-4000-1-iii-a-3-loss-mit-reevaluate-each-delinquent
  canonical_id: hud-4000-1-iii-a-3-loss-mit-reevaluate-each-delinquent
  section: "HUD Handbook 4000.1 III.A.2 — Re-evaluate each Delinquent Mortgage for Loss Mitigation Options"
  description: "[LENDER] (Mortgagee) shall re-evaluate each Delinquent Mortgage\nfor Loss Mitigation Options, as required. Re-evaluation is\nongoing, not one-shot — circumstances change and prior workout\nineligibility may resolve; [LENDER] cannot lock a Borrower\ninto a single point-in-time eligibility determination.\n"
  type: do
  audit_question: For every Delinquent FHA-insured Mortgage, can [LENDER] evidence a re-evaluation schedule and produce subsequent-evaluation records reflecting any change in Borrower circumstances?
  workflow_phase: default_collections
  owner_role: loss_mitigation_specialist
  secondary_owner_role: compliance_officer
  cadence: continuous
  consequence: One-shot loss-mit determinations missing re-evaluation are a FHA Servicing Guide breach + CFPB Reg X dual-tracking exposure.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - loss-mitigation
  - re-evaluation
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 III.A.2 — Loss Mitigation Program"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 're-evaluate each Delinquent Mortgage for Loss Mitigation Options, as required.

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. III.A.2 re-

      evaluate-each-delinquent operative requirement.

      '
  promoted_at: '2026-05-25T20:42:37+00:00'
  promoted_from: hud-4000-1-iii-a-3-loss-mit-roundd-v1.yaml
  program_review: Do the P&Ps ensure ongoing re-evaluation of each Delinquent Mortgage for loss-mit options as circumstances change, rather than a one-shot eligibility determination?
  file_review: Pull long-delinquency files; confirm subsequent-evaluation records reflecting changes in Borrower circumstances.
  judgment: false
- id: hud-4000-1-iii-a-3-loss-mit-consider-owner-occupant-and-non-occupant
  canonical_id: hud-4000-1-iii-a-3-loss-mit-consider-owner-occupant-and-non-occupant
  section: "HUD Handbook 4000.1 III.A.2.iii(A)(1)(b) — Consider Owner-Occupant AND Non-Occupant Borrowers for all Loss Mitigation Options"
  description: "[LENDER] (Mortgagee) shall consider Owner-Occupant Borrowers AND\nNon-Occupant Borrowers for all Loss Mitigation Options.\nInvestor-occupancy or non-occupancy is NOT a categorical\ndisqualifier from loss mitigation — both occupancy classes get\nthe full waterfall review.\n"
  type: do
  audit_question: For every Loss Mitigation evaluation, can [LENDER] evidence that occupancy status (Owner-Occupant vs Non-Occupant) was NOT used to disqualify the Borrower from waterfall consideration?
  workflow_phase: default_collections
  owner_role: loss_mitigation_specialist
  secondary_owner_role: compliance_officer
  cadence: per-loss-mit-evaluation
  consequence: Excluding Non-Occupant Borrowers from waterfall review is a FHA Servicing Guide breach + potential fair-housing / ECOA exposure.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - loss-mitigation
  - occupancy-neutral
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 III.A.2.iii(A)(1)(b) — Occupancy Standard"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 'The Mortgagee must consider Owner-Occupant Borrowers and Non-Occupant Borrowers for all Loss Mitigation Options.

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. III.A.2.iii(A)(1)(b)

      consider-both-occupancy-classes operative requirement.

      '
  promoted_at: '2026-05-25T20:42:38+00:00'
  promoted_from: hud-4000-1-iii-a-3-loss-mit-roundd-v1.yaml
  program_review: Do the P&Ps ensure occupancy status is NOT used to disqualify a Borrower — both Owner-Occupant and Non-Occupant Borrowers get the full loss-mit waterfall review?
  file_review: Pull Non-Occupant-Borrower loss-mit files; confirm occupancy status was not used to disqualify them from waterfall consideration.
  judgment: false
- id: hud-4000-1-iii-a-3-loss-mit-90-day-review-before-4-installments
  canonical_id: hud-4000-1-iii-a-3-loss-mit-90-day-review-before-4-installments
  section: "HUD Handbook 4000.1 III.A.2.iii(B) — 90-Day Review: complete Loss Mit evaluation before 4 monthly installments + send written Notice"
  description: '[LENDER] (Mortgagee) is required to complete an evaluation of a

    Defaulted Mortgage for appropriate Loss Mitigation Options

    BEFORE four monthly installments are due and unpaid AND send a

    written Notice to Borrower with the determination of

    eligibility. The 90-Day Review pre-4-installment bright-line

    caps the loss-mit-evaluation-completion deadline for FHA loans

    in default.

    '
  type: do
  audit_question: For every Defaulted FHA-insured Mortgage, can [LENDER] evidence (a) Loss Mitigation evaluation completed BEFORE the 4th monthly installment came due unpaid, AND (b) written Notice to Borrower with determination of eligibility?
  workflow_phase: default_collections
  owner_role: loss_mitigation_specialist
  secondary_owner_role: compliance_officer
  cadence: per-defaulted-loan
  consequence: Missing the pre-4-installment evaluation or written notice is a 90-Day Review breach; FHA Servicing Guide defect + potential dual-tracking risk under Reg X.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - loss-mitigation
  - 90-day-review
  - written-notice
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 III.A.2.iii(B) — 90-Day Review"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 'A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower with the determination of eligibility.

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. III.A.2.iii(B)

      90-day-review operative deadline + written-notice requirement.

      '
  promoted_at: '2026-05-25T20:42:38+00:00'
  promoted_from: hud-4000-1-iii-a-3-loss-mit-roundd-v1.yaml
  auditor_minimum_evidence:
    derivation: snapshot_extract
    derivation_source:
      snapshot_id: 3bf33edadcf6461d
      paragraph_quote: "A Mortgagee is required to complete an evaluation of a Defaulted Mortgage for appropriate Loss Mitigation Options before four monthly installments are due and unpaid and send a written Notice to Borrower with the determination of eligibility."
      page_or_section: "HUD Handbook 4000.1 III.A.2.iii(B)"
      fetched_at: '2026-05-25T14:10:11Z'
    pathway_selection_kind: mutually_exclusive_by_facts
    pathways:
    - pathway_id: csh-amep-hud-iii-a-3-90day-eligible
      name: "Borrower eligible: pre-4-installment evaluation completed + Loss Mit Option offered in written Notice"
      evidence_items:
      - evidence_id: csh-ev-hud-iii-a-3-90day-default-date-timestamp
        kind: timestamp
        description: "System-of-record Default-date timestamp for the FHA-insured Mortgage (30-day uncorrected-failure per III.A.2.a.i)."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
      - evidence_id: csh-ev-hud-iii-a-3-90day-eval-completed-pre-4th-installment
        kind: record
        description: "Internal Loss Mit evaluation record dated BEFORE the 4th monthly installment came due unpaid, documenting [LENDER]'s review of the Borrower against the FHA 9-option waterfall (Repayment Plan / Forbearance / Partial Claim / Loan Mod / Combination / Payment Supplement / OWL / Pre-Foreclosure Sale / DIL)."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
      - evidence_id: csh-ev-hud-iii-a-3-90day-eligibility-notice-with-offer
        kind: document
        description: "Copy of written Notice to Borrower with eligibility determination AND specific Loss Mit Option(s) offered, mailed/delivered pre-4-installment-default."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
    - pathway_id: csh-amep-hud-iii-a-3-90day-ineligible
      name: "Borrower ineligible: pre-4-installment evaluation completed + ineligibility-determination written Notice"
      evidence_items:
      - evidence_id: csh-ev-hud-iii-a-3-90day-default-date-timestamp-ineligible
        kind: timestamp
        description: "System-of-record Default-date timestamp for the FHA-insured Mortgage."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
      - evidence_id: csh-ev-hud-iii-a-3-90day-eval-ineligible-rationale
        kind: record
        description: "Internal Loss Mit evaluation record documenting ineligibility per III.A.2.iii(A) (e.g., other FHA-insured property held / prior FHA claim in last 3 years / debarment-suspension-LDP / unresolved delinquent Federal Debt for Partial Claim or modification options)."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
      - evidence_id: csh-ev-hud-iii-a-3-90day-ineligibility-notice
        kind: document
        description: "Copy of written Notice to Borrower stating ineligibility determination with specific basis cited, mailed/delivered pre-4-installment-default."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
    pathway_selection_logic: |
      Two pathways selected by facts: pathway A (eligible) when the Borrower passes the III.A.2.iii(A) eligibility criteria; pathway B (ineligible) when the Borrower fails one or more eligibility criteria. Both pathways share the bright-line pre-4-installment evaluation deadline and written-notice content requirement; pathway B's notice differs only by ineligibility-rationale content vs eligible's option-offer content.
  program_review: Do the P&Ps ensure the loss-mit evaluation of a Defaulted Mortgage completes BEFORE four monthly installments are due and unpaid, with a written Notice to Borrower stating the eligibility determination?
  file_review: Pull defaulted files; confirm the evaluation completed before the 4th unpaid installment and the written Notice to Borrower with the determination.
  judgment: false
- id: hud-4000-1-iii-a-3-loss-mit-servicemember-scra-protections
  canonical_id: hud-4000-1-iii-a-3-loss-mit-servicemember-scra-protections
  section: "HUD Handbook 4000.1 III.A.2.ii — Offer SCRA mortgage protections to eligible servicemember Borrowers"
  description: '[LENDER] (Mortgagee) shall offer eligible servicemember Borrowers

    mortgage protections under the SCRA and Servicing FHA-Insured

    Mortgages for Servicemember-Borrowers. The SCRA + FHA-

    servicemember dual-rule layering provides comprehensive

    protection during military service.

    '
  type: do
  audit_question: For every Defaulted FHA-insured Mortgage where the Borrower is or may be a servicemember, can [LENDER] evidence (a) SCRA-eligibility verification (DMDC check, military orders) and (b) offer of the applicable SCRA mortgage protections?
  workflow_phase: default_collections
  owner_role: loss_mitigation_specialist
  secondary_owner_role: compliance_officer
  cadence: per-servicemember-borrower
  consequence: Missing SCRA protections expose [LENDER] to federal SCRA enforcement + FHA Servicing Guide breach + DOJ exposure (SCRA private right of action).
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - scra
  - servicemember-protection
  - loss-mitigation
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 III.A.2.ii — Servicemember Status"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 'The Mortgagee must offer eligible servicemember Borrowers mortgage protections under the SCRA and Servicing FHA-Insured Mortgages for Servicemember-Borrowers.

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. III.A.2.ii SCRA-

      servicemember-protections operative requirement.

      '
  promoted_at: '2026-05-25T20:42:38+00:00'
  promoted_from: hud-4000-1-iii-a-3-loss-mit-roundd-v1.yaml
  auditor_minimum_evidence:
    derivation: snapshot_extract
    derivation_source:
      snapshot_id: 3bf33edadcf6461d
      paragraph_quote: "The Mortgagee must offer eligible servicemember Borrowers mortgage protections under the SCRA and Servicing FHA-Insured Mortgages for Servicemember-Borrowers."
      page_or_section: "HUD Handbook 4000.1 III.A.2.ii"
      fetched_at: '2026-05-25T14:10:11Z'
    pathway_selection_kind: parallel_satisfaction
    pathways:
    - pathway_id: csh-amep-hud-iii-a-3-scra-federal-protections
      name: "Federal SCRA protections layer: 50 USC §3937 6% interest rate cap, §3953 foreclosure stay, §3955 default judgment protections"
      evidence_items:
      - evidence_id: csh-ev-hud-iii-a-3-scra-eligibility-check
        kind: record
        description: "DMDC (Defense Manpower Data Center) Servicemember Civil Relief Act verification result OR Borrower-supplied military orders confirming active-duty status during the relevant period."
        retention_rule_ref: scra-50usc-3937
        examiner_question_ref: "Servicemembers Civil Relief Act (50 U.S.C. §3901 et seq.) — DOJ enforcement (no exam manual)"
        cite_verified: true
      - evidence_id: csh-ev-hud-iii-a-3-scra-6pct-interest-application
        kind: record
        description: "Account-level evidence that the 6% pre-service interest rate cap was applied during eligible active-duty period (per 50 USC §3937), with effective-date triggers documented."
        retention_rule_ref: scra-50usc-3937
        examiner_question_ref: "Servicemembers Civil Relief Act (50 U.S.C. §3901 et seq.) — DOJ enforcement (no exam manual)"
        cite_verified: true
      - evidence_id: csh-ev-hud-iii-a-3-scra-foreclosure-stay-record
        kind: record
        description: "If foreclosure was initiated, evidence of 50 USC §3953 foreclosure-stay compliance: stay imposed during active-duty period plus 12-month post-service window (or applicable extension)."
        retention_rule_ref: scra-50usc-3953
        examiner_question_ref: "Servicemembers Civil Relief Act (50 U.S.C. §3901 et seq.) — DOJ enforcement (no exam manual)"
        cite_verified: true
    - pathway_id: csh-amep-hud-iii-a-3-fha-servicemember-overlay
      name: "FHA-specific servicemember overlay: Servicing FHA-Insured Mortgages for Servicemember-Borrowers (HUD 4000.1 III.A.2.ii)"
      evidence_items:
      - evidence_id: csh-ev-hud-iii-a-3-fha-servicemember-policy
        kind: document
        description: "[LENDER]'s written policy explicitly applying the FHA-Servicemember overlay rules (special hardship review, military-PCS-relocation protections, additional loss-mit consideration weight)."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
      - evidence_id: csh-ev-hud-iii-a-3-fha-servicemember-loss-mit-offer
        kind: record
        description: "For each eligible servicemember default, the loss-mit-evaluation record showing the FHA-Servicemember-overlay was considered (in addition to standard III.A.3 evaluation), with offer specifically referencing servicemember status if applicable."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
    pathway_selection_logic: |
      Pathway A (Federal SCRA) AND Pathway B (FHA-Servicemember overlay) BOTH apply simultaneously for any eligible servicemember Borrower on an FHA-insured Mortgage. SCRA protections are federally mandated regardless of investor; FHA overlay is required by HUD 4000.1 III.A.2.ii in addition to (not instead of) the SCRA. Satisfying only one pathway leaves the other obligation unsatisfied — this is parallel-satisfaction, not lender-selectable.
  program_review: Does the program account for the servicemember condition — verifying SCRA eligibility (DMDC/military orders) and offering the applicable SCRA mortgage protections layered with FHA servicemember-servicing rules?
  file_review: Spot-check defaulted files where the Borrower is or may be a servicemember; confirm SCRA-eligibility verification and the offer of applicable SCRA protections.
  judgment: false
_promotion_history:
- promoted_at: '2026-05-25T20:42:38+00:00'
  candidate_path: obligations\_remediation\round-d-investor-guides\hud-4000-1-iii-a-3-loss-mit-roundd-v1.yaml
  candidates_promoted: 5
  candidates_skipped_existing: 0
