source:
  type: guide
  id: hud-4000-1-iv-e-claim-type-07-pre-foreclosure-sales
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part IV — e. Claim
    Type 07 - Pre-Foreclosure Sales (09/26/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part IV — e. Claim
    Type 07 - Pre-Foreclosure Sales (09/26/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iv-e-claim-type-07-pre-foreclosure-sales-full
  canonical_id: hud-4000-1-iv-e-claim-type-07-pre-foreclosure-sales-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part IV — e. Claim Type
    07 - Pre-Foreclosure Sales (09/26/2022)
  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 IV — e. Claim
      Type 07 - Pre-Foreclosure Sales (09/26/2022)
    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: 'e. Claim Type 07 - Pre-Foreclosure Sales (09/26/2022) The Mortgagee
      may file a claim for a PFS incentive and insurance benefits under Claim Type
      07. i. Computation of Interest (A) Standard HUD will pay debenture interest
      as follows: • on the unpaid principal balance from the date of Default to the
      date of the closing of the PFS; • on the difference between the unpaid principal
      balance, plus allowable costs and advances, and the net PFS proceeds from the
      date of the closing of the PFS to the date of claim settlement; • on allowable
      costs and advances from the date of expenditure to the date of the closing of
      the PFS; and • when a Default under an SFB-Unemployment Agreement or SFB Agreement
      is involved, from the last date of the mortgage interest calculation to the
      date of the closing of the PFS. (B) Calculating Interest for an Expenditure
      The Mortgagee must calculate the amount of interest to be claimed for an expenditure
      as follows: • multiply the Daily Interest Rate Factor (see Appendix 8.c Daily
      Interest Rate Factor in the Claim Filing Technical Guide) by the amount paid;
      then • multiply this result by the number of Days from the date paid (or Default
      date, if later) for each Item to the date of closing of the PFS, as listed in
      Item 10. ii. Computation of Claim Amount (A) Allowable Costs HUD will reimburse
      the Mortgagee for reasonable and customary costs as follows. (1) Mortgagee Advances
      for Escrow Funds The Mortgagee may claim reimbursement for advances of escrow
      funds as provided for in Escrow Funds. IV. CLAIMS AND DISPOSITION A. Title II
      Claims 2. Claim Types Handbook 4000.1 1613 Last Revised: 11/26/2025 (2) Property
      Preservation and Protection Costs The Mortgagee may claim reimbursement for
      the cost of inspections and P&P actions performed in accordance with HUD guidance
      for the current Default, for costs incurred before the Closing Date of the PFS.
      (3) Taxes, Assessments, Hazard Insurance, and Other Allowable Items The Mortgagee
      may claim reimbursement for disbursements for taxes, assessments, Hazard Insurance
      and other allowable items payable which were not satisfied at closing. HUD will
      only reimburse property-related costs which were incurred before the PFS Closing
      Date. (4) Attorney’s Fees for Postponed Foreclosure For a foreclosure that was
      postponed pending the successful completion of the PFS, the Mortgagee may claim
      reimbursement for attorney fees commensurate with the work actually performed
      up to the point of the cessation of the legal action, not exceeding 75 percent
      of the amount established as reasonable and customary in Appendix 5.0 – HUD
      Schedule of Standard Possessory Action and Deed-In-Lieu of Foreclosure Attorney
      Fees (applies to Servicing only). (5) Satisfaction of Junior Liens The Mortgagee
      may claim reimbursement for the amounts paid to satisfy or release junior liens
      Paid Outside Closing (POC), as long as these amounts are not included in the
      Closing Disclosure or similar legal document. (6) Appraisal and Title Search
      The Mortgagee may claim reimbursement for reasonable and customary costs of
      the appraisal, Broker’s Price Option (BPO) or Automated Valuation Model (AVM),
      and title search, if not included in the Closing Disclosure or similar legal
      document. (7) Borrower Consideration The Mortgagee may not claim reimbursement
      for the amount of the PFS Borrower Consideration, which is to be included on
      the Closing Disclosure. (8) PFS Incentive Payment HUD will pay the Mortgagee
      a financial incentive for the use of the PFS Option in compliance with all regulatory
      requirements and procedures relating to the submission of incentive claims in
      FHAC. IV. CLAIMS AND DISPOSITION A. Title II Claims 2. Claim Types Handbook
      4000.1 1614 Last Revised: 11/26/2025 (B) Disallowable Costs HUD will not reimburse
      the Mortgagee for the following costs. (1) Items Already Included on Closing
      Disclosure The Mortgagee may not claim reimbursement for costs that have already
      been included on the Closing Disclosure or similar legal document. (2) Eviction
      Costs The Mortgagee may not claim reimbursement for any costs incurred to evict
      residents from the mortgaged Property. (3) Property Preservation and Protection
      Costs Incurred after Closing The Mortgagee may not claim reimbursement for Property
      P&P costs incurred after the date of closing of the PFS. (4) Hazard Insurance
      Premiums Paid after Closing The Mortgagee may not claim reimbursement for hazard
      insurance premiums for the period after the PFS closing. (C) Deductions from
      Claim Amount HUD will deduct the following items from the total claim amount.
      (1) Money Received after Closing HUD will deduct all amounts received by the
      Mortgagee on the Mortgage after closing of the PFS. (2) Rent or Other Income
      HUD will deduct from the claim any amount by which Rental Income exceeds rental
      expenses. (3) Money Retained by Mortgagee HUD will deduct from the claim any
      amounts retained by the Mortgagee for the Borrower’s account which have not
      been applied to reduction of principal. (4) Sales Proceeds HUD will deduct from
      the claim amount all amounts received by the Mortgagee relating to the sale
      of the Property. IV. CLAIMS AND DISPOSITION A. Title II Claims 2. Claim Types
      Handbook 4000.1 1615 Last Revised: 11/26/2025 iii. Extensions to the Time Requirement
      to Initiate Foreclosure To reflect the use of HUD’s automatic extension to the
      time requirement to initiate foreclosure in order to utilize a PFS, the Mortgagee
      must enter into form HUD-27011: • the ending date of the terminated or failed
      PFS transaction in Item 20 of Part A; and • in Item 19, a date that is no more
      than 90 Days after the date listed in Item 20. iv. Submission of Claim Form
      Parts to HUD for PFS The Mortgagee must submit Parts A and B simultaneously
      to HUD no later than 30 Days after the PFS Closing Date and retain the original
      Parts in the Claim File. If submitting the claim via FHA Catalyst, the Mortgagee
      must submit Parts A through E.'
  judgment: false
