source:
  type: regulation
  id: hud-4000-1-iii-a-2-d
  authority: HUD Handbook 4000.1 III.A.2.d — Partial Payments for Mortgages in Default
  description: 'HUD Single-Family Housing Policy Handbook 4000.1, Section III.A.2.d.

    See obligation entries for operative requirements and verbatim

    primary-source citations.

    '
obligations:
- id: hud-4000-1-iii-a-2-d-full
  canonical_id: hud-4000-1-iii-a-2-d-full
  section: HUD Handbook 4000.1 III.A.2.d
  description: "Partial Payments for Mortgages in Default: d. Partial Payments for Mortgages in Default\
    \ (10/01/2025) \ni. Acceptance of Partial Payments \nUnless subject to the exceptions in the Return\
    \ of Partial Payments for Mortgage in \nDefault section, the Mortgagee must accept any Partial Payment\
    \ and either: \n• apply the payment to the Borrower’s account;…"
  type: do
  tags:
  - regulator-direct
  - section-complete
  - hud
  - 4000-1
  - curated
  primary_source:
    tier: 1
    authority: HUD Handbook 4000.1 III.A.2.d.i — Acceptance of Partial Payments
    source_class: hud-handbook-4000-1
    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. Partial Payments for Mortgages in Default (10/01/2025) \ni. Acceptance of Partial\
      \ Payments \nUnless subject to the exceptions in the Return of Partial Payments for Mortgage in\
      \ \nDefault section, the Mortgagee must accept any Partial Payment and either: \n• apply the payment\
      \ to the Borrower’s account; or \n• identify the payment with the Borrower’s account and hold the\
      \ payment in a \nsuspense account. When a full monthly installment due under the Mortgage is \n\
      accumulated, the Mortgagee must apply that amount to the Borrower’s account. \nii. Application of\
      \ Partial Payments Totaling a Full Monthly Payment \nWhen Partial Payments held for disposition\
      \ total a full monthly Mortgage Payment, \nthe Mortgagee must apply Borrower payments, in the following\
      \ order, to: \n• MIPs due, if any; \n\n \n• charges for Ground Rents, taxes, special assessments,\
      \ including any \nassessments related to a PACE obligation, flood insurance premiums, if \nrequired,\
      \ and fire and other hazard insurance premiums; \n• interest on the Mortgage; \n• amortization of\
      \ the principal of the Mortgage; and \n• Late Charges, provided that any amounts owed for Late Charges\
      \ must be \nhandled consistent with Truth in Lending Act (TILA) regulations. \nThis application\
      \ of Partial Payments as a full monthly installment advances the date \nof the oldest unpaid installment,\
      \ but not the initial date of Default. \nWhen applying Partial Payments totaling a full monthly\
      \ Mortgage Payment, the \n• report the appropriate Status Code in the Single Family Default Monitoring\
      \ \nSystem (SFDMS); and \n• advance the Oldest Unpaid Installment (OUI) date one month. \niii. Return\
      \ of Partial Payments for Mortgages in Default \nIf the Mortgage is in Default, the Mortgagee may\
      \ return the Partial Payment to the \nBorrower with a letter of explanation only under the following\
      \ circumstances: \n• when the payment represents less than half of the full amount due under the\
      \ \nterms of the Mortgage, including Late Charges, at the time the payment is \ntendered; \n• when\
      \ the payment is less than the amount agreed to in a Forbearance or \nRepayment Plan; \n• when the\
      \ payment is less than the amount stated in an approved Trial Payment \nPlan (TPP) Agreement; \n\
      • when the Property is occupied by a rent-paying tenant and the rents are not \nbeing applied to\
      \ the Mortgage Payments; \n• when the first legal action to initiate foreclosure has been completed;\
      \ or \n• when it is 14 Days or more after the Mortgagee has mailed the Borrower a \nstatement of\
      \ the full amount due, including Late Charges, which advises that it \nintends to refuse to accept\
      \ future Partial Payments (see Application of \nSubsequent Payment to Unpaid Late Charges), and\
      \ either of the following \nconditions have occurred: \no four or more full monthly installments\
      \ are due but unpaid; or \no a delinquency of any amount, including Late Charges, has continued\
      \ for at \nleast six months since the account first became Delinquent."
    drafter_attestation: Verbatim section from snapshot 8c03836f77f317e1; boundary human-curated + substring-verified
      (2026-07-23).
  judgment: false
