source:
  type: guide
  id: hud-4000-1-iii-r-conveyance-of-acquired-properties
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part III — r. Conveyance
    of Acquired Properties (11/07/2023)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part III — r. Conveyance
    of Acquired Properties (11/07/2023).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iii-r-conveyance-of-acquired-properties-full
  canonical_id: hud-4000-1-iii-r-conveyance-of-acquired-properties-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part III — r. Conveyance
    of Acquired Properties (11/07/2023)
  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 — r. Conveyance
      of Acquired Properties (11/07/2023)
    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: 'r. Conveyance of Acquired Properties (11/07/2023) i. HUD Contact
      (A) Mortgagee Compliance Manager HUD’s MCM is the single point of contact to
      administer Mortgagee compliance functions and Property P&P activities. (B) P260
      P260 is HUD’s web-based internet portal, which allows Mortgagees to submit requests,
      notifications, and documents and obtain approvals for pre- and post- conveyance
      activities. ii. Conveyance Time Frame The Mortgagee must acquire clear, marketable
      title and transfer the Property to HUD within 30 Days of the latter of: • recordation
      of the foreclosure deed; • recordation date of a DIL of Foreclosure; • acquisition
      of the Property; • expiration of the redemption period; or • HUD-approved extensions
      of time. In cases where the Mortgagee arranges for a direct conveyance of the
      Property to the Secretary, the Mortgagee must convey the Property to HUD within
      30 Days of the end of the Reasonable Diligence Time Frame. iii. Condition of
      Properties (A) Acceptable Conveyance Condition (1) Definitions Acceptable Conveyance
      Condition refers to the required condition of a Property at the time of conveyance
      to HUD. Broom-swept Condition refers to the condition of a Property that is,
      at a minimum, reasonably free of dust and dirt and free of hazardous materials
      or conditions, Personal Property, and interior and exterior debris. (2) Standard
      At the time of conveyance to HUD, the Mortgagee must ensure that the Property
      meets all Acceptable Conveyance Conditions as follows: III. SERVICING AND LOSS
      MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default
      Servicing Handbook 4000.1 1309 Last Revised: 11/26/2025 • The Property is undamaged
      by fire, flood, earthquake, hurricane, tornado, boiler explosion (if a condominium),
      or Mortgagee Neglect. • The Property is secured and, if applicable, winterized.
      • All insured damages including theft and vandalism, if any, are repaired per
      the scope of work indicated on the insurance documents. • Interior and exterior
      debris is removed, with the Property’s interior maintained in Broom-swept Condition,
      the lawn is maintained, and all vehicles and any other Personal Property are
      removed in accordance with state and local requirements. • The Mortgagee has
      good and marketable title. (B) Mortgagee Property Preservation and Protection
      Action (1) Definitions Property Preservation and Protection (P&P) actions are
      maintenance, security, and repair work required by HUD in order to ensure that
      the Property meets HUD’s conveyance condition standards. Mortgagee Neglect refers
      to the Mortgagee’s failure to take action to preserve and protect the Property
      from the time it is determined (or should have been determined) to be vacant
      or abandoned, until the time it is conveyed to HUD. (2) Standard The Mortgagee
      must preserve and protect Properties that are the security for FHA-insured Mortgages
      that are in Default or presently in foreclosure. The Mortgagee is responsible
      for the management, scheduling, and execution of all activities and actions
      taken to preserve, secure, maintain and protect the Property, regardless of
      the amount that HUD may reimburse. Mortgagees may use any qualified individual
      or business to perform P&P services on Properties that were secured by FHA-insured
      Mortgages; however, the Mortgagee remains fully responsible to HUD for its actions
      and the actions of its agents, individuals, and firms that performed such services.
      The Mortgagee remains responsible for property damage or destruction to a vacant
      or abandoned Property resulting from Mortgagee Neglect. Such neglect includes,
      but is not limited to: • failure to adequately and accurately verify the occupancy
      status of a Property; • failure to complete timely and accurate property inspections;
      • failure to promptly and appropriately secure and continue to preserve and
      protect all vacant Properties according to HUD standards; and • failure to promptly
      notify the MCM of receipt of code violations and demolition notices and/or take
      appropriate action. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing
      Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1310 Last Revised:
      11/26/2025 To ensure that the Mortgagee is not held liable for damage or delayed
      maintenance to the Property by the Borrower, their heirs, successors, or assigns,
      the Mortgagee must document and photograph any damage resulting from the Borrower
      that is identified during the First-Time Vacant Property Inspection. (3) Photograph
      Requirements The Mortgagee must use digital photography to document: • the condition
      of the Property at the FTV Property Inspection and any damage identified; and
      • the before and after conditions of the Property when performing Property P&P
      actions. The Mortgagee must ensure a date stamp is printed within each photograph
      and is labeled accordingly with a description of the contents of the photograph.
      (4) Required Documentation The Mortgagee must: • take before and after photographs
      and upload them into P260 for each claimed Property P&P expense; • upload into
      P260 documentation and photographs showing any damage resulting from the Borrower
      that is identified using the FTV Property Inspection; and • retain in the Servicing
      File and the Claim File: o all copies of paid invoices or receipts or other
      documentation supporting all Property P&P expenses claimed by the Mortgagee;
      and o a chronology of the Mortgagee’s Property P&P actions. If documentation
      is incomplete, inadequate, or not provided, HUD will not accept a Mortgagee’s
      certification of property condition and may: • reconvey the Property to the
      Mortgagee; or • seek reimbursement from the Mortgagee for HUD’s estimate of
      the cost of the repairs required to repair and restore the Property to conveyance
      condition. HUD requires repayment of all or part of any claim reimbursement
      if it is determined that expenses claimed and paid were unnecessary or excessive,
      or that services claimed were not performed or were performed improperly or
      incompletely. The Mortgagee will not be reimbursed for the costs of protecting,
      operating, or preserving the Property, or removing debris from the Property
      after the time the Property should have been conveyed to HUD (24 CFR § 203.402(g)).
      III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward
      Mortgages 2. Default Servicing Handbook 4000.1 1311 Last Revised: 11/26/2025
      (5) Property Preservation Allowances (a) Definition The Maximum Property Preservation
      Allowance is a pre-approved reimbursement for the aggregate of all property
      preservation expenses that do not exceed the line item allowances listed in
      HUD’s Property Preservation Allowances and Schedules. (b) Standard The Maximum
      Property Preservation Allowance is $5,000 per Property. The following expenses
      are subject to the line item allowances in HUD’s Property Preservation Allowances
      and Schedules but are not included in the $5,000 maximum cost limit per Property:
      • debris removal; • grass cutting; • boarding; • inspections; • securing swimming
      pools; • sump pumps; • demolition; • vacant property registration fees; and
      • utilities. (c) Requests for Exceeding Maximum Property Preservation Allowances
      (i) Standard The Mortgagee must request approval for expenses that exceed the
      Maximum Property Preservation Allowances from the MCM via P260 when: • the aggregate
      of all Property P&P expenses (excluding those not included in the $5,000 maximum
      cost limit) exceeds the Maximum Property Preservation Allowance; • a Property
      P&P cost will exceed the maximum line item allowance listed in the Property
      Preservation Allowances and Schedules; or • there is no specific line item allowance
      stated in the schedule for the expense. When the Mortgagee submits an over-allowance
      request to exceed the Maximum Property Preservation Allowance, the Mortgagee
      must demonstrate their incurred P&P costs are at or near the Maximum Property
      Preservation Allowance. III. SERVICING AND LOSS MITIGATION A. Title II Insured
      Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1312
      Last Revised: 11/26/2025 (ii) Required Documentation The Mortgagee must upload
      all supporting documentation into P260, including a detailed description of
      what actions will be or were taken, an itemized list of the repairs and materials
      that will be or were used, relevant room dimensions, receipts, photographs,
      and a chronological listing of all Property P&P expenses incurred before submittal
      of the over-allowable expense request. Requests must be submitted at least five
      business days prior to the conveyance due date. The following chart details
      requirements for over-allowable requests. If Claimed Property Preservation Expenses
      are: And the Cost of a Single Line Item Expense is: Need Over- allowable Approval?
      $5,000* or less Greater than Appendix 7.0.A Yes $5,000* or less Equal to or
      less than Appendix 7.0.A No Greater than $5,000* Greater than Appendix 7.0.A
      Yes Greater than $5,000* Equal to or less than Appendix 7.0.A Yes* *The $5,000
      maximum cost limit does not include the cost of the following expenses: debris
      removal, grass cutting, boarding, inspections, securing of swimming pools, sump
      pumps, demolition, vacant property registration fees, and utilities. These expenses
      do not require an over-allowable request when the cost is equal to or less than
      Appendix 7.0.A. (d) Appeals of Over-Allowable Request Decisions The Mortgagee
      may appeal an initial over-allowance decision via P260, for review by the MCM.
      The Mortgagee may submit a second appeal via P260 to the MCM. The MCM reviews
      and approves or denies the appeal or determines if further review by HUD is
      needed. The decision on the second appeal is final and no further appeals are
      accepted. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs
      Forward Mortgages 2. Default Servicing Handbook 4000.1 1313 Last Revised: 11/26/2025
      (6) Property P&P Requirements of Authorities Having Jurisdiction (a) Definition
      An Authority Having Jurisdiction (AHJ) refers to a state or local government,
      HOA, or other organization responsible for enforcing the requirements of a property-related
      code or standard including state law and local ordinance. (b) Standard Mortgagees
      are not exempt by HUD policy from adhering to state and local laws relating
      to the P&P of Properties securing FHA-insured Mortgages. The Mortgagee must
      review the AHJ requirements, including those relating to occupancy of the Structures,
      to determine applicability for repair or remediation prior to conveyance of
      the Property to HUD. Where state or local law inhibits the Mortgagee performing
      HUD’s required Property P&P actions, such as connecting or disconnecting utilities,
      the Mortgagee must submit in P260 to the MCM notice of the restriction on the
      Property P&P action and a proposal on how the Mortgagee will otherwise protect
      the Property from damage. Where the AHJ requires additional or more extensive
      P&P actions than required by HUD for conveyance, the Mortgagee may submit an
      over- allowance request via P260. The Mortgagee must upload with its request
      all documentation supporting the proposed additional work requirements and expenses
      necessary for compliance. (c) Required Documentation Where state or local law
      inhibits the Mortgagee performing HUD’s required Property P&P actions, the Mortgagee
      must note the restriction in the Servicing File and the Claim File and include
      a copy of the notice to the MCM, the MCM’s approval or denial of the Mortgagee’s
      proposal, and the applicable state, local, or AHJ requirement. (7) Securing
      and Maintaining the Property (a) Standard The Mortgagee must secure the Property
      to prevent unauthorized entry and protect against weather-related damage, and
      must visibly display 24-hour emergency telephone contact information in a weather-tight
      location on a window or door or as otherwise required by an AHJ. Securing the
      Property should take place as soon as reasonably practicable, but no more than
      five Days following the determination that the Property is vacant and/or III.
      SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages
      2. Default Servicing Handbook 4000.1 1314 Last Revised: 11/26/2025 abandoned
      post-foreclosure, or 15 business days following the determination that the Property
      is vacant and/or abandoned pre-foreclosure. (i) Locksets Where the Property
      has been conveyed to the Mortgagee after the foreclosure sale, the Mortgagee
      must: • ensure that the lockset on the main entranceway remains secured; and
      • rekey or replace all locksets on all secondary external entranceways and secure
      interior doorways, including attached garages and basements. When rekeying,
      the Mortgagee must reset all locksets at the Property to a random identical
      key code and document the key code in the “Mortgagee’s comments” of Part A of
      form HUD-27011. If locksets cannot be replaced or rekeyed or are antique or
      architectural locksets, the Mortgagee may utilize alternative methods to secure
      the door and prevent damage to the hardware or door. (ii) Exterior Doors The
      Mortgagee must secure all exterior doors. For exterior sliding glass doors,
      the Mortgagee must latch these doors and install or provide slider locks, anti-lift
      blocks, security bars, or another secondary security mechanism. The Mortgagee
      must not brace, nail shut, or otherwise block or damage the door. If no other
      locking mechanism exists, the Mortgagee must board/secure access doors, pet
      doors, and other panels providing access to basements and crawl spaces, where
      permitted by state or local law. (iii)Garage/Overhead Doors The Mortgagee must
      secure the garage or overhead doors by: • using existing locksets at garage/overhead
      doors if they can be rekeyed to the random identical key code for the Property;
      • securing the garage/overhead doors with a padlock and hasp if no other locking
      mechanism exists; • repairing or replacing inoperable garage doors; and • disconnecting
      automatic garage door openers, if present, and leaving any remote keys or transmitters
      securely in the Property. (iv) Outbuildings The Mortgagee must secure sheds
      and outbuildings by: III. SERVICING AND LOSS MITIGATION A. Title II Insured
      Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1315
      Last Revised: 11/26/2025 • reusing and rekeying existing locksets at sheds and
      outbuildings to the dwelling key code, if possible; • securing shed and outbuilding
      doors with a padlock and hasp if no other locking mechanism exists; and • boarding/securing
      the outbuildings if no doors or other securing mechanism exists. The Mortgagee
      may convey with boarded/secured outbuildings and sheds without prior approval.
      (v) Windows and Glazing The Mortgagee must secure all windows by: • employing
      or installing locking mechanisms on all windows; • removing all broken glass
      debris from the interior and exterior of the Property; and • replacing broken
      or cracked window glazing. Where the AHJ requires replacement of dual-pane,
      tempered, thermal-sealed or other specialized glazing in kind, the Mortgagee
      must obtain prior over-allowance approval from the MCM. The Mortgagee must not
      brace, nail shut, or otherwise block or damage the windows. (vi) Boarding/Securing
      of Property Openings Resecuring due to Vandalism or Unauthorized Property Access
      The Mortgagee must resecure and reglaze windows, doors, and other access openings
      when the Property has been vandalized or accessed without authorization. Boarding/Securing
      Required by the AHJ The Mortgagee may secure windows, doors, and other access
      openings by boarding/securing, if required by an AHJ, and may convey with such
      boarding/securing in place. Boarding/Securing where Unable to Secure by Other
      Methods The Mortgagee may request approval from the MCM to board/secure openings
      that cannot be protected by any other method or where an imminent safety hazard
      exists, and to convey with boarding in place. All boarding/securing materials
      that are leased or rented for the Mortgagee’s convenience must be removed prior
      to conveyance of the Property to HUD. III. SERVICING AND LOSS MITIGATION A.
      Title II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook
      4000.1 1316 Last Revised: 11/26/2025 (b) Roof Assembly Repair The Mortgagee
      must ensure that all roof assemblies, including those securing attached garages,
      porches and patios, detached garages and any secondary structures associated
      with the origination collateral, and related weatherproofing are free of active
      leaks or other sources of water intrusion. When a roof assembly leak is discovered,
      the Mortgagee must immediately repair the roofing system and mitigate further
      damage. The Mortgagee may provide such temporary repairs as tarping or patching
      until the permanent repair or replacement can be installed. The Mortgagee must
      ensure that permanent repairs or replacements, with materials matching or similar
      in color and material type, have been completed prior to conveyance to HUD.
      The Mortgagee is not required to obtain prior HUD approval for temporary repairs
      for which costs do not exceed the temporary roof repair line item allowance
      amount. (c) Pools, Hot Tubs, and Spas (i) In-Ground Pools, Hot Tubs, and Spas
      Mortgagees must secure all in-ground swimming pools, hot tubs, and spas as required
      by local laws, codes, and ordinances. The Mortgagee must: • secure the pool,
      hot tub, and/or spa with a removable safety cover anchored to the pool deck
      or, if a cover cannot be anchored to the pool deck, board or otherwise secure
      the pool, hot tub, and/or spa; and • secure and repair any fences around the
      pool, hot tub, and/or spa to restrict access. The Mortgagee must not drain operational
      in-ground pools. If the pool is empty, it is not necessary to refill the pool.
      The Mortgagee must drain hot tubs or spas located indoors or outdoors. The Mortgagee
      must perform monthly maintenance and chemical treatments for operational pools.
      Where the Mortgagee must repair or drain the pool to mitigate damage or safety
      hazards, the Mortgagee must submit an over-allowance request. (ii) Above-Ground
      Pools Mortgagees must secure all above-ground swimming pools as required by
      local laws, codes, and ordinances. In addition to local requirements, the Mortgagee
      must: • drain the pool; • secure the pool with a removable cover; and III. SERVICING
      AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2.
      Default Servicing Handbook 4000.1 1317 Last Revised: 11/26/2025 • secure and
      repair any fences around the pool in order to restrict access. Where the above-ground
      pool is in poor condition or cannot be secured, the Mortgagee must: • remove
      the above-ground pool and any built-up decking; and • remediate any resulting
      depression in the ground that may constitute a hazard. (iii)Ponds or Gardens
      The Mortgagee must drain, if feasible, or cover any small backyard ponds, water
      gardens, or other water features. (d) Drainage Systems and Basements The Mortgagee
      must reattach, replace, repair and clear debris from existing roof drainage
      and foundation drainage systems. If no drainage system exists at the time of
      the FTV Property Inspection, the Mortgagee is not required to provide or install
      new systems. The Mortgagee must ensure that downspouts provide positive drainage
      away from the Structure and that gutters are cleared and do not prevent drainage.
      If the FTV Property Inspection reveals basement flooding, the Mortgagee must
      drain or pump the basement, identify the water sources, and make other such
      repairs to prevent equipment damage, mold and organic growth, and structural
      and material damage. (e) Mold, Fungus, Discoloration, and Related Moisture Damage
      and Organic Growth (i) Standard When mold or related moisture damage is found
      in the Property during the FTV Property Inspection, the Mortgagee must mitigate
      the source of the moisture to prevent further damage. HUD will not reimburse
      costs related to mold or organic growth abatement if it determines that such
      mold or organic growth is due to Mortgagee Neglect. The Mortgagee must thoroughly
      document the condition and scope of the moisture damage at the FTV Property
      Inspection. (ii) Over-Allowance Request The Mortgagee must submit an over-allowance
      request to the MCM for approval in the following circumstances: III. SERVICING
      AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2.
      Default Servicing Handbook 4000.1 1318 Last Revised: 11/26/2025 • initial efforts
      to eliminate the mold or organic growth and to remove moisture are ineffective
      and additional treatments are needed to remove moisture and prevent mold and
      moisture damage; or • the mold or organic growth poses a potential health and
      safety hazard. Where the mold or organic growth poses a potential health or
      safety hazard, the Mortgagee must provide with its request: • a written report
      and/or any lab reports or other testing data supporting the health or safety
      hazard determination; • photographs of the discoloration; • dimensions of the
      affected areas; • a description of the initial mitigation efforts, including
      the basis for the selection of the method used; • the proposed scope of work
      for the abatement; and • at least two bids from licensed or certified mold remediation
      or hazardous materials contractors. (f) Debris Removal, Cleaning, and Minor
      Repair The Mortgagee must ensure that all interior and exterior debris is removed
      from the Property, including attics, basements, barns, storage spaces, and outbuildings,
      and that the Property is in Broom-swept Condition. The Mortgagee may request
      reimbursement for the storage or disposition of any Personal Property removed
      from the Property when such storage and disposition is required by the AHJ.
      (i) Equipment, Fixtures, and Appliances The Mortgagee must ensure that all equipment,
      fixtures, and appliances present at the FTV Property Inspection and associated
      with origination collateral remain in the Property, unless approved by HUD for
      disposal. The Mortgagee must empty and wipe clean the interior of all refrigerators
      and freezers. The Mortgagee must secure exterior clothes dryer vents and similar
      openings to prevent entry of pests. The Mortgagee must ensure that bathtubs,
      sinks, and toilets are cleaned and emptied. (ii) Graffiti The Mortgagee must
      remove or cover with similar or matching color all exterior and interior graffiti
      on all Structures and fencing. III. SERVICING AND LOSS MITIGATION A. Title II
      Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1
      1319 Last Revised: 11/26/2025 (iii)Exterior Debris The Mortgagee must ensure
      that the Property is free of external debris by removing all vehicles, boats,
      trailers, any unsafe or hazardous structures, and other Personal Property, as
      allowed and in accordance with state and local law requirements. The Mortgagee
      may allow affixed Personal Property in sound and usable condition to remain
      in place that may add value to the Property, such as fountains, children’s play
      structures, sheds, ramadas, pergolas, or gazebos. (iv) Fences The Mortgagee
      must ensure that fences and gates present at the FTV Property Inspection are
      maintained in secure and upright condition, with no missing panels or sections.
      (v) Pests The Mortgagee must ensure that the Property is free of animals, vermin,
      and insect infestation and that any dead animals, vermin, and insects are removed
      from the Property. When the Mortgagee determines the Property is infested with
      pests and that the infestation and removal may constitute a health or safety
      hazard, the Mortgagee may obtain professional pest control services; otherwise,
      the Mortgagee may employ over-the-counter pest control products. When evidence
      of live wood boring insects is discovered, the Mortgagee must request an over-allowance
      for an inspection by a professional pest control service, and provide the report
      and treatment recommendations for over-allowance consideration to abate. (vi)
      Floors and Walkways The Mortgagee must ensure that interior walking surfaces
      are safe or otherwise patched, replaced, or repaired to be free of hazards as
      follows: • any floor finishes, including carpeting, sheet vinyl, wood, laminate,
      ceramic or vinyl tiles, and all tack strips and fittings that are damaged, loose,
      or otherwise hazardous, must be removed. The Mortgagee is not required to replace
      these finishes once removed; and • holes or openings in interior walking surfaces
      must be patched, replaced, or repaired. Weak or spongy flooring must be inspected
      and, if needed, repaired to address hazardous conditions with an approved over-allowance.
      III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward
      Mortgages 2. Default Servicing Handbook 4000.1 1320 Last Revised: 11/26/2025
      The Mortgagee must repair damaged or missing handrails or stair treads on elevated
      exterior porches, patios, decks, and balconies where the distance from the finished
      floor to the ground surface is greater than 18 inches. If repair is not feasible,
      the Mortgagee must provide temporary rails, fencing, or other means to prevent
      or mitigate falls. (vii) Regulated Hazardous Materials The Mortgagee must handle
      and dispose of hazardous materials regulated by federal, state, or local law
      in accordance with those laws. Where removal of hazardous materials exceeds
      HUD’s reimbursable amounts for debris removal, the Mortgagee must submit an
      over- allowance request prior to incurring those costs. The Mortgagee must include
      with the request: • the relevant code or regulation describing the specific
      handling or disposal requirements; • if testing is required to confirm the presence
      of hazardous materials, detailed reports or test results, with information on
      the location of the materials, the scope of the work, and recommended methods
      for removal, abatement or remediation of the materials; and • at least two bids
      from licensed or certified hazardous materials contractors. (8) Yard Maintenance
      and Snow Removal (a) Definitions Grass Cuts are the Property P&P actions of
      mowing, weeding, edge trimming, sweeping of all paved areas, and removing all
      lawn clippings, related cuttings, and debris. (b) Standard The Mortgagee is
      responsible for maintaining lawn and yard areas and trees, shrubs, and vines
      in compliance with AHJ requirements by performing Grass Cuts. The Mortgagee
      must ensure that yards are maintained as follows: • Grass must be cut to a maximum
      of two inches in height. • Grass and weeds must be cut to the edge of the property
      line, and trimmed around foundations, bushes, trees, and planting beds. • Grass,
      trees, tree limbs, shrubs, and other vegetation that are obstructing the public
      right of way must be trimmed or removed. III. SERVICING AND LOSS MITIGATION
      A. Title II Insured Housing Programs Forward Mortgages 2. Default Servicing
      Handbook 4000.1 1321 Last Revised: 11/26/2025 • Desert, xeriscape, or rock scape
      landscaping maintenance must be maintained through removal or spraying of weeds,
      grass trimming or cutting, and the removal of related cuttings and incidental
      debris. • Dead trees or tree limbs that pose a safety hazard or may potentially
      damage the Property must be removed or trimmed. (c) Grass Cuts (i) Standard
      The Mortgagee must complete initial and ongoing Grass Cuts and desert landscaping
      according to the timelines set in the Grass Cut Schedule. Should a Property
      require earlier or more frequent Grass Cuts or desert landscaping maintenance
      due to specific micro-climate conditions or other property requirements, the
      Mortgagee must perform such cuts or landscaping. If additional or more frequent
      Grass Cuts are required as a result of code violations or neighbor complaints,
      the Mortgagee must submit to the MCM a request to exceed the allowable amount
      and documentation supporting the amended timeline. (ii) Required Documentation
      Should a Property require earlier or more frequent Grass Cuts or desert landscaping
      maintenance due to specific micro-climate conditions or other property requirements,
      or if additional or more frequent Grass Cuts are required as a result of code
      violations or neighbor complaints, the Mortgagee must include in the Servicing
      File and the Claim File documentation supporting the Mortgagee’s amended timeline.
      (d) Shrubs The Mortgagee must trim shrubs and remove cuttings once in a growing
      season, between April 1 and October 31. (e) Snow Removal The Mortgagee must
      ensure that the Property is safe and accessible throughout the winter season
      by: • removing snow from the entire entryway, public and other front yard walkways,
      porch, and driveway, following a minimum three-inch accumulation; and • complying
      with local codes and ordinances governing the removal of snow and ice. III.
      SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages
      2. Default Servicing Handbook 4000.1 1322 Last Revised: 11/26/2025 (f) HOA Yard
      Maintenance If an HOA or Condominium Association provides for the yard maintenance
      and snow removal actions, the Mortgagee must not order duplicate yard maintenance
      and snow removal actions. (9) Winterization Requirements (a) Time Frame for
      Winterization The Mortgagee must winterize the Property once, according to the
      Winterization Schedule. All Properties located in the state of Alaska must remain
      winterized at all times. Where earlier or extended winterization is required
      due to specific micro- climate conditions or other property requirements, the
      Mortgagee must perform such winterization and include in the Servicing File
      and the Claim File documentation supporting the Mortgagee’s amended winterization
      timeline. Where the initial winterization is no longer effective, the Mortgagee
      must re- winterize the Property and include in the Servicing File and the Claim
      File documentation demonstrating the need to re-winterize. (b) Utilities (i)
      Standard The Mortgagee must turn all utilities off unless: • prohibited by state
      or local law; • required to remain on per HOA or Condominium Association requirements;
      • the Property is an attached unit or a dwelling with shared systems such as
      a row house, townhouse or Condominium; • required to remain on to protect the
      Property; • required to operate equipment such as sump pumps, swimming pools,
      wells, dehumidifiers, or other equipment or systems required to remain in operation;
      or • where the Mortgagee determines that utility disconnection fees and charges
      make it cost effective to maintain utility service rather than disconnect the
      service. The Mortgagee must ensure that active piping and exposed electrical
      wiring is capped, valved, or otherwise terminated. If utilities remain on, the
      Mortgagee must note in the Servicing File and the Claim File the reasons for
      maintaining utility service and, if III. SERVICING AND LOSS MITIGATION A. Title
      II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook
      4000.1 1323 Last Revised: 11/26/2025 applicable, include a copy of the state
      or local requirement for maintaining utility service. (ii) Sump Pumps The Mortgagee
      must ensure that all installed or required sump pumps are in place and operational
      at all times, where state or local law permits electricity to remain on. The
      Mortgagee must repair or replace any non- functioning or missing equipment.
      (iii)Utility Accounts The Mortgagee must retain all utility accounts in its
      name until conveyance of the Property to HUD. In states or jurisdictions where
      utilities should remain on, if there is any reason to believe that a Borrower
      may abandon a Property, the Mortgagee must contact the utility company to request
      notification of non-payment of utilities so that utilities can be transferred
      to the Mortgagee’s name if the Borrower vacates the Property. (iv) Propane and
      Oil Systems In jurisdictions requiring heat to remain on, the Mortgagee must
      put a “KEEP FULL” contract on with a local supplier when the Property has a
      propane or oil heating system. Otherwise, the Mortgagee must ensure that active
      piping is capped, valved, or otherwise terminated and all fuel tanks are emptied.
      (v) Domestic Water The Mortgagee must not cut water lines or remove water meters,
      unless required by the AHJ. (vi) Wells If the water supply is a private well,
      the Mortgagee must: • turn off the well at the breaker panel; • secure the breaker;
      • disconnect and cap, valve, or otherwise terminate the water supply line between
      the Property and pressure tank; • install a hose bib on the pressure tank side
      of the breaker, tagging the hose bib “For Water Testing;” • drain all pressure
      tanks; • drain pump housing if the pump is surface-mounted; III. SERVICING AND
      LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default
      Servicing Handbook 4000.1 1324 Last Revised: 11/26/2025 • disconnect the check
      valve and drain all pump, suction, and discharge pipes, if the pump is submersible;
      and • winterize all fixtures. (vii) Water, Plumbing, and Heating Systems The
      Mortgagee must: • shut off or disconnect the domestic water supply at the curb;
      • drain all plumbing and heating systems; and • ensure that all toilets are
      cleaned and emptied. Where a toilet or other plumbing fixture has been compromised
      by an unauthorized entry or wastewater backflow, the Mortgagee must complete
      re-winterization and cleaning. (c) Winterization of Swimming Pools During the
      winterization period, the Mortgagee must drain all lines and filters and secure
      and maintain operational swimming pools to prevent damage. (d) Additional Winterization
      Requirements for Properties Located in Alaska In addition to the winterization
      requirements described above, the Mortgagee must ensure that for all Properties
      located in the state of Alaska: • the heat remains on, with the thermostat set
      at 55 degrees Fahrenheit; and • all utilities remain connected and in working
      order, where permitted by state or local law. (e) Responsibility for Damage
      Due to Freezing The Mortgagee is responsible for any damage to plumbing and
      heating systems, sump pumps, and wells caused by untimely, inadequate, or improper
      maintenance or winterization. HUD considers any damage caused by freezing and
      not documented at the FTV Property Inspection to be the responsibility of the
      Mortgagee and not reimbursable by HUD. (10) Demolition If the Mortgagee proposes
      to demolish or remove a primary dwelling structure, a significant section of
      the Structure, or a secondary structure that is associated with the origination
      collateral, the Mortgagee must request approval from the MCM to demolish and
      convey as a vacant lot. The Mortgagee is not required to request HUD approval
      to demolish damaged or unusable sheds and outbuildings that were III. SERVICING
      AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2.
      Default Servicing Handbook 4000.1 1325 Last Revised: 11/26/2025 not included
      in the Property Value at origination. For requests to demolish a primary dwelling
      structure, the Mortgagee must submit to the MCM: • a BPO analysis estimating
      the value of the Property “As-Is” and as a vacant lot; • proposed demolition
      costs; and • a detailed chronology of the servicing and Property P&P actions
      related to the Property, including all efforts to address any damages or violations.
      Where a local jurisdiction mandates demolition of a Property after foreclosure,
      the Mortgagee must provide the following to the MCM immediately upon discovery
      of the demolition order: • copies of all notices pertaining to demolition orders
      and hearings; and • inspection reports and photographic documentation establishing
      the condition of the Property when the Mortgagee first entered or took possession
      of the Property. The MCM advises the Mortgagee as to whether to proceed with
      the demolition or to postpone the demolition until after conveyance to HUD.
      (a) Requests Less than Five Business Days before Conveyance The MCM rejects
      any requests received less than five business days before the end of the time
      frame to convey to HUD, unless the Mortgagee can demonstrate that it received
      the demolition notification with insufficient time to make a request by this
      deadline. (b) Cost of Demolition The cost of demolition is not included in the
      maximum cost limit per Property. (c) Damage due to Mortgagee Neglect If HUD
      determines that the damage to the Property is due to Mortgagee Neglect, the
      Mortgagee is responsible for the cost to demolish the Property. The MCM determines
      the acceptance of the vacant lot. (C) Conveyance of Damaged Properties (1) Conveyance
      without Prior HUD Approval The Mortgagee may convey Properties without prior
      written approval when: • the Property is in conveyance condition, with no Surchargeable
      Damage; and • the aggregate of all allowable Property P&P expenses does not
      exceed the Maximum Property Preservation Allowance and claimed P&P costs do
      not exceed the Property Preservation Allowances line item. III. SERVICING AND
      LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default
      Servicing Handbook 4000.1 1326 Last Revised: 11/26/2025 (2) Conveyance Requiring
      HUD Approval (a) Request to HUD The Mortgagee must request and obtain approval
      from the MCM before conveyance under any of the following circumstances: • conveyance
      of a Property damaged while under the control of the Mortgagee or as a result
      of Mortgagee Neglect; • conveyance of a Property with unrepaired insurable damage
      and insurance repair proceeds; • conveyance of a Property “As-Is” with unfinished
      renovations, violations, liens, or other outstanding state law and local code
      compliance issues; and • demolition and/or conveyance of a vacant lot. (b) Required
      Documentation for Request In its request to convey the damaged Property, the
      Mortgagee must include the following documentation: • the date of vacancy; •
      evidence validating the property condition at vacancy; • supporting documentation
      including inspection reports, photographs, repair bids, and receipts; • a chronology
      of actions performed by the Mortgagee to preserve and protect the Property;
      • for damaged Properties with approval to convey with insurance proceeds, all
      related damage reimbursement funding, including insurance deductibles, recoverables,
      and depreciation; and • for Properties with unfinished renovations, violations,
      liens, or other outstanding state and local law compliance issues: o the BPO
      showing the value of the Property “As-Is” and the value with repairs completed;
      o copies of violations, liens, or relevant state or local law; o hazard insurance
      claim information, including hazard insurance denials; o a detailed description
      of the reason(s) that the Mortgagee cannot feasibly repair or secure the Property,
      proposed actions or actions taken, and a detailed repair estimate of the damages;
      and o a detailed estimate of cost to repair the Property. If no documentation
      or inadequate documentation is received from the Mortgagee, HUD attributes all
      damage to the Mortgagee. III. SERVICING AND LOSS MITIGATION A. Title II Insured
      Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1327
      Last Revised: 11/26/2025 (3) Mortgagee Failure to Obtain Required HUD Approval
      If the Mortgagee fails to obtain HUD approval when required, prior to conveying
      a damaged Property, HUD may: • reconvey the Property; • require a reduction
      to the claim for insurance benefits: o the hazard insurance recovery or HUD’s
      estimate of the cost of repairing damage; or o the cost to repair and restore
      the Property to required conveyance condition; or • take other such action as
      permitted by regulation. (4) Appeal of Surchargeable Damage Decision The Mortgagee
      may appeal a Surchargeable Damage request decision via P260. The Mortgagee may
      submit an additional appeal to HUD via P260. The second appeal decision is final
      and no further appeals are accepted. (D) Hazard Insurance Recovery The Mortgagee
      must take all appropriate action to recoup all available hazard insurance proceeds,
      including recoverable depreciation. (1) Extension of Time to Convey Title to
      HUD Where conveyance of title to HUD jeopardizes the Mortgagee’s ability to
      receive hazard insurance proceeds, the Mortgagee must request an extension of
      time from the MCM, providing a specific reason why the extension is warranted.
      (2) Reimbursement for Recoverable Depreciation The Mortgagee must seek reimbursement
      for any recoverable depreciation after repairs have been completed; all damages
      must be repaired prior to conveyance. (3) Recovery for Vandalism or Theft (a)
      Standard If there is evidence of vandalism or theft resulting in damage or missing
      built- in appliances, equipment, or fixtures, the Mortgagee must file a claim
      to obtain all available insurance proceeds for damages to the Property. Unless
      the Mortgagee obtains HUD approval to convey with unrepaired insurable damage
      and insurance repair proceeds, the Mortgagee must use these insurance proceeds
      or corporate funds to fully repair or replace the damaged structures, appliances,
      equipment, or fixtures. III. SERVICING AND LOSS MITIGATION A. Title II Insured
      Housing Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1328
      Last Revised: 11/26/2025 (b) Required Documentation The Mortgagee must document
      in the Servicing File and the Claim File all relevant claim correspondence with
      the insurance company. (E) Requests for Pre-Conveyance Inspection (1) Definition
      A Pre-Conveyance Inspection is an inspection performed by HUD, at the Mortgagee’s
      request, before conveyance to determine if a Property meets HUD’s conveyance
      standards. (2) Standard The Mortgagee may request a Pre-Conveyance Inspection
      of a Property that has sustained damage due to Borrower neglect, Surchargeable
      Damage, or Mortgagee Neglect. (3) Submission of Pre-Conveyance Inspection Request
      The Mortgagee may submit a request for a Pre-Conveyance Inspection to the MCM
      before the deed to HUD is recorded or sent for recording, and before the submittal
      of a claim. (4) HUD Review of Request The MCM reviews the request to determine
      whether a Pre-Conveyance Inspection is needed and may consider the following
      criteria in its decision: • the Property has completed over-allowance repairs
      exceeding $10,000; • the Property is affected by re-occurring vandalism and
      the Mortgagee is requesting approval to convey the Property “As-Is” to HUD;
      • the Property has code violations and the Mortgagee is requesting approval
      to convey the Property “As-Is” to HUD; • the Property is located in a PDMDA
      and has completed repairs exceeding $10,000; • the Property has an insurable
      claim with completed repairs exceeding $5,000; • the Property has unrepaired
      Borrower neglect damage affecting mechanical, electrical, plumbing, or structural
      system integrity; and • the Property has uninsurable and unfinished renovations,
      and the Mortgagee is requesting approval to convey the Property “As-Is” to HUD.
      (5) Pre-Conveyance Inspection If the request for the Pre-Conveyance Inspection
      is approved, the MCM orders the Pre-Conveyance Inspection from HUD’s Field Service
      Manager (FSM), who III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing
      Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1329 Last Revised:
      11/26/2025 contacts the Mortgagee to coordinate the inspection. Upon completion
      of the inspection, the FSM provides an inspection report indicating: • whether
      the Property is in conveyance condition; or • further actions the Mortgagee
      must take to place the Property into Acceptable Conveyance Condition. The Mortgagee
      must ensure that all required actions identified on the Pre- Conveyance Inspection
      report are completed before conveyance to HUD. iv. Condition of Title The Mortgagee
      must convey good and marketable title to the Secretary. HUD regulations list
      certain specific and common exceptions to title in 24 CFR §§ 203.385–203.391
      to which HUD will not object. HUD may waive additional objections, based on
      local practice and the general marketability of title clouded by those objections,
      or if the Mortgagee is willing to accept a reduced claim for mortgage insurance
      benefits. (A) Liens HUD will not accept title subject to liens, other than the
      following: • IRS liens; • Section 235 liens; and • a PACE obligation. (1) IRS
      Liens HUD will not object to title where there is a lien in favor of the IRS,
      regardless of its position, if the following conditions are met: • the IRS has
      been notified of the foreclosure; • the IRS lien was established after the date
      of the mortgage lien; and • the Mortgagee bid at least the full amount of the
      indebtedness plus the cost of foreclosure. (2) Section 235 Liens HUD will accept
      title subject to a junior lien securing the repayment of Section 235 assistance
      payments. (3) Property Assessed Clean Energy Obligation HUD will allow a notice
      of lien recorded in the land records securing repayment of a PACE obligation
      that may only become subject to an enforceable claim (i.e., a lien) for delinquent
      regularly scheduled PACE special assessment payments and otherwise complies
      with the eligibility and acceptability criteria for Properties encumbered with
      a PACE obligation provided in PACE Obligation Review. III. SERVICING AND LOSS
      MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2. Default
      Servicing Handbook 4000.1 1330 Last Revised: 11/26/2025 (B) Payment of Taxes
      (1) Taxes at Conveyance (a) Standard Prior to the conveyance of a Property to
      HUD, the Mortgagee must satisfy all taxes and special assessments, including
      any PACE assessments: • due and payable prior to or on the date of conveyance;
      or • due and payable within 30 Days after the date of conveyance. (b) Required
      Documentation The Mortgagee must: • certify that all available tax and assessment
      bills due at conveyance and within 30 Days of conveyance are paid as of the
      date of conveyance; • document payment and identify the most recent period for
      which taxes were paid in Item 32, “Schedule of Tax Information,” of form HUD-
      27011, Part A; and • upload to P260 documentation validating that on-time payment
      was made, such as a paid receipt, a copy of the Mortgagee’s tax payment history
      screen, or a report, or screenshot of a report, from a tax monitoring service.
      The Mortgagee must also retain invoices, paid bill receipts, or other proof
      of payment in the Servicing File and the Claim File. (2) Tax Penalties When
      late fees and/or interest penalties are incurred as a result of the Mortgagee’s
      failure to pay taxes prior to conveyance, HUD will not reimburse the Mortgagee
      for late fees and/or interest penalties paid by the Mortgagee, and the Mortgagee
      must reimburse HUD for any late fees and/or interest penalties paid by HUD.
      (3) Mortgagee Failure to Pay Taxes, Late Fees, and/or Interest Penalties Where
      taxes, late fees and/or interest penalties are owed to the taxing authority
      when a Property is conveyed to HUD, HUD may elect to: • Reconvey the Property
      back to the Mortgagee; or • refuse to accept the conveyance. III. SERVICING
      AND LOSS MITIGATION A. Title II Insured Housing Programs Forward Mortgages 2.
      Default Servicing Handbook 4000.1 1331 Last Revised: 11/26/2025 (C) Payment
      of HOA/Condominium Fees (1) Definitions A Homeowners’ Association (HOA)/Condominium
      Assessment is a periodic payment required of property owners by an HOA or Condominium
      Association. HOA/Condominium Fees are HOA/Condominium Assessments plus interest,
      Late Charges, collection/attorney fees, and other penalties. (2) Standard Prior
      to the conveyance of a Property to HUD, the Mortgagee must pay HOA/Condominium
      Fees that are due and that become due within 30 Days of the date of conveyance.
      While the payment of HOA/Condominium Fees is the Borrower’s responsibility,
      Mortgagees must ensure that Properties conveyed to HUD have clear title. The
      Mortgagee must take the following actions: • provide notice of foreclosure proceedings
      to HOA/condominium management companies; • unless prohibited by state law, ensure
      that outstanding HOA/Condominium Fees are included as part of the foreclosure
      proceedings in the event the HOA/condominium management company does not pursue
      these amounts in foreclosure; • negotiate the amount required to obtain a release
      of outstanding HOA/Condominium Fees; • obtain a release of outstanding HOA/Condominium
      Fees; • ensure that the HOA/condominium lien, if any, is removed from the title
      to the Property prior to conveying the Property to HUD; and • pay the HOA/Condominium
      Assessment required under applicable law before conveyance to HUD, where HOA/Condominium
      Fees do not survive foreclosure or result in a lien on the Property. (3) Required
      Documentation The Mortgagee must document the payment of all final bills and
      pre- and post- foreclosure liens for HOA/Condominium Fees in the “Mortgagee’s
      Comments” section of form HUD-27011, Part A. Within 15 Days of conveyance, the
      Mortgagee must upload to P260 the paid HOA/condominium invoice and any other
      documentation necessary to verify that the Mortgagee made such payments prior
      to conveyance, and, if applicable, document any common area requirements associated
      with gaining access to the Property. III. SERVICING AND LOSS MITIGATION A. Title
      II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook
      4000.1 1332 Last Revised: 11/26/2025 (4) Lack of Information on HOA or Condominium
      Association Assessments and Fees (a) Standard On a case-by-case-basis, at its
      sole discretion, HUD may accept conveyances where the Mortgagee has requested
      and has been unable to obtain sufficient information on HOA/Condominium Fees
      to resolve them prior to conveyance. (b) Required Documentation The Mortgagee
      must request a variance through HUD’s MCM by submitting: • a certification stating
      that the Mortgagee has exhausted all methods of obtaining and paying the outstanding
      HOA/Condominium Assessments; and • evidence documenting its attempts to obtain
      and pay these assessments and fees as follows: o at least three phone calls;
      o certified mail notices to HOA/condominium contacts from the Mortgagee’s attorneys;
      and o documentation validating the pursuit of available legal remedies and evidencing
      the resolution or final decisions resulting from arbitration or court proceedings.
      (D) Payment of Water and Sewer Bills and Other Assessments (1) Standard The
      Mortgagee must retain utilities, including electricity, gas, home heating oil,
      water, and sewer, in its name until conveyance of the Property to HUD. Prior
      to the conveyance of a Property to HUD, Mortgagees must research, obtain, and
      pay all available utility bills that may become a lien attached to a Property
      after foreclosure as follows: • In states where utilities are not required to
      remain on to protect the Property, Mortgagees must obtain and pay a final bill
      up to the date of conveyance; and • In states where utilities are required to
      remain on, Mortgagees must pay: o all available bills that are due prior to
      conveyance; and o within 60 Days after the date of conveyance, the final bill
      calculated to the Day on which utilities are transferred to HUD. (2) Required
      Documentation For Properties in states where utilities are not required to remain
      on to protect the Property, no later than 60 Days after conveyance, the Mortgagee
      must upload to III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing
      Programs Forward Mortgages 2. Default Servicing Handbook 4000.1 1333 Last Revised:
      11/26/2025 P260 the paid invoice and any other documentation necessary to verify
      that the Mortgagee made such payments. For Properties in states where utilities
      are required to remain on, the Mortgagee must upload to P260 the paid invoices
      and any other documentation necessary to verify that the Mortgagee made the
      payment for the final bill. (3) Failure to Pay Utility Bills If the Mortgagee
      fails to pay utility bills, HUD, at its sole discretion, may: • issue a Notice
      of Noncompliance and demand payment from the Mortgagee in an amount that sufficiently
      satisfies any liens or encumbrances, including penalties and interest, which
      prevent or delay a sale; or • Reconvey the Property to the Mortgagee. v. Notice
      of Property Transfer The Mortgagee must notify the Commissioner on the date
      the deed to the Secretary is filed for recording by: • filing form HUD-27011
      in FHAC; and • submitting a copy to HUD’s MCM. The Mortgagee must prepare conveyance
      deeds to the Secretary of HUD. Deeds must be recorded in the name of the “Secretary
      of Housing and Urban Development, their successors and assigns,” hereinafter
      referred to as “Grantee,” whose address is HUD’s MCM. vi. Submission of Title
      Evidence for Conveyance to HUD (A) Submission of Title Evidence to the Mortgagee
      Compliance Manager (1) Standard The Mortgagee must submit to HUD’s MCM via P260
      the following documentation reflecting ownership vested in the name of the Secretary
      no more than 45 Days after the date the deed is filed for record: • original
      title evidence; • a copy of form HUD-27011, Part A; • a copy of the mortgage
      instrument, containing a complete legal description of the Property; and • a
      copy of the recorded deed. (2) Extension to the Deadline to Submit Title Evidence
      To request an extension to the deadline to submit title evidence, the Mortgagee
      must: III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs
      Forward Mortgages 2. Default Servicing Handbook 4000.1 1334 Last Revised: 11/26/2025
      • submit a request for an extension via P260 before the expiration of the 45-
      Day time frame; and • provide documentation supporting the reason for the request.
      (B) Title Evidence The Mortgagee must provide one of the following types of
      title evidence of recorded title to the Secretary. The Mortgagee may also submit
      similar evidence of title that conforms to the standards of a supervising branch
      of the federal, state, or territory government. (1) Fee or Owner’s Title Policy
      The Mortgagee may submit: • a fee or owner’s policy of title insurance in the
      name of the Secretary, inuring the benefit of the Secretary’s successors in
      office; • a guaranty or guarantee of title; or • a certificate of title, issued
      by a title company, duly authorized by law and qualified by experience to issue
      such instruments. When the Mortgagee submits a title policy as evidence of good
      and marketable title, the amount of title insurance coverage must be equal to
      the unpaid principal balance of the Mortgage. The Mortgagee must upload to P260
      and include in its original title evidence package a copy of the appraisal used
      to determine the CAFMV when: • the Mortgagee is the successful bidder for an
      amount equal to the CAFMV for sales conducted under CWCOT procedures; and •
      the Mortgagee elects to convey the Property’s title to HUD. (2) Mortgagee Policy
      of Title Insurance The Mortgagee may submit a Mortgagee’s policy of title insurance
      supplemented by an abstract and an attorney’s certificate of title covering
      the period after the Closing Date. The Mortgagee must ensure that, under the
      terms of the policy, the liability of the title company will continue in favor
      of the Secretary after title is conveyed to them. (3) Abstract and Legal Opinion
      The Mortgagee may submit: • an abstract of title, prepared by an abstract company
      or individual engaged in the business of preparing abstracts of title; and •
      a legal opinion as to the quality of the title. The Mortgagee must ensure that
      this legal opinion is prepared and signed by an attorney experienced in examination
      of titles. III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs
      Forward Mortgages 2. Default Servicing Handbook 4000.1 1335 Last Revised: 11/26/2025
      (4) A Torrens or Similar Title Certificate The Mortgagee may submit a Torrens
      or similar title certificate. (C) Title Evidence for Manufactured Housing (1)
      Standard For Manufactured Housing, the Mortgagee must include title evidence
      that: • the Manufactured Home is attached to the land; and • the Manufactured
      Home is classified and taxed as real estate. The Mortgagee must ensure that
      all state or local requirements for proper purging of the title have been met.
      (2) Required Documentation The Mortgagee must: • upload the title evidence into
      P260 on or before the filing date of form HUD-27011, Part A; and • certify in
      the “Mortgagee’s Comments” section of form HUD-27011, Part A, that the required
      additional title work has been completed and uploaded. (D) HUD Review of Title
      Evidence The MCM will review the title evidence and notify the Mortgagee of
      its approval or denial or if additional information is needed. (E) HUD Requests
      for Additional Title Information If HUD requests additional title information,
      the Mortgagee must provide this information within 10 Days of the request to
      avoid rejection of the title evidence. If title evidence is later approved after
      the submission of additional information, HUD will provide the Mortgagee with
      a title approval letter showing the “Date Title Received” as the date the Mortgagee
      resubmitted the complete title evidence. vii. Responsibility for Property at
      Conveyance The Mortgagee is responsible for the Property until all HUD regulatory
      requirements leading to conveyance have been complied with, including: • filing
      to record the deed to the Secretary of HUD; and • filing form HUD-27011 in FHAC
      for claim processing and payment. III. SERVICING AND LOSS MITIGATION A. Title
      II Insured Housing Programs Forward Mortgages 2. Default Servicing Handbook
      4000.1 1336 Last Revised: 11/26/2025 The Mortgagee remains responsible for the
      Property and any loss or damage thereto should the claim be suspended due to
      the need for review or correction of a hard edit error, notwithstanding the
      filing of the deed to the Secretary. (A) Damage at Inspection at or after Conveyance
      HUD will presume that any damage discovered during HUD''s first inspection of
      the Property after conveyance occurred while the Mortgagee had possession, unless
      the Mortgagee is able to provide evidence to the contrary. (B) Expenses Incurred
      at or after Conveyance Without the express written approval of the MCM, the
      Mortgagee must not incur expenses for P&P of the Property or for eviction of
      the occupant on or after the date the deed is filed for record. HUD will not
      reimburse P&P or property-related expenses incurred after the deed has been
      recorded in HUD’s name, other than payment of certain utility bills or HOA payments.
      (C) Cancellation of Hazard Insurance The Mortgagee must request Hazard Insurance
      be canceled as of the date the deed is filed for record. The Mortgagee may calculate
      the amount of the return premium due on a short-rate basis. viii. Extension
      of Time for Conveyance (A) Standard To request an extension to the deadline
      to convey the Property to HUD, the Mortgagee must: • submit a request for an
      extension via P260 before the expiration of the time frame; and • provide documentation
      supporting the reason for the request. (B) Required Documentation The Mortgagee
      must maintain a copy of the written response from the HUD representative in
      the Mortgagee’s Servicing File and the Claim File. (C) Appeal of Extension Decision
      The Mortgagee may appeal a decision on a request for an extension via P260 for
      review by the MCM. The Mortgagee may submit a second appeal via P260. The MCM
      will review and approve or deny the appeal or determine if further review by
      III. SERVICING AND LOSS MITIGATION A. Title II Insured Housing Programs Forward
      Mortgages 2. Default Servicing Handbook 4000.1 1337 Last Revised: 11/26/2025
      HUD is needed. The decision on the second appeal is final and no further appeals
      will be accepted. ix. HUD Acceptance of Conveyance HUD considers a Property
      conveyed by the Mortgagee to HUD when: • the Mortgagee has deeded the Property
      to HUD; and • HUD accepts conveyance of the Property, as evidenced by the payment
      of Part A of the claim from HUD to the Mortgagee; or • For suspended claims,
      notwithstanding the filing of the deed to the Secretary for record, the Mortgagee
      remains responsible for the Property, and any loss or damage thereto, and such
      responsibility is retained by the Mortgagee until HUD regulations have been
      fully complied with. x. Reconveyance (A) Definition A Reconveyance is a conveyance
      of a Property from HUD back to the Mortgagee due to the Mortgagee’s failure
      to comply with HUD’s conveyance requirements. (B) Standard If a Mortgagee fails
      to fully comply with the terms of the insurance contract, including HUD’s conveyance
      requirements, HUD may: • Reconvey title to the Mortgagee; and o cancel the Mortgagee’s
      claim for insurance benefits; and o request reimbursement for expenses incurred
      for acquisition, holding and Reconveyance, less any income received from the
      Property, from the date the deed to HUD was filed for record to the date of
      Reconveyance; or • enter into a Reconveyance Bypass Agreement with the Mortgagee.
      The Mortgagee may re-apply for insurance benefits.'
  judgment: false
