source:
  type: guide
  id: hud-4000-1-iv-c-calculation-of-insurance-claim-payment
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part IV — c. Calculation
    of Insurance Claim Payment (12/21/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part IV — c. Calculation
    of Insurance Claim Payment (12/21/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iv-c-calculation-of-insurance-claim-payment-full
  canonical_id: hud-4000-1-iv-c-calculation-of-insurance-claim-payment-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part IV — c. Calculation
    of Insurance Claim Payment (12/21/2022)
  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 — c. Calculation
      of Insurance Claim Payment (12/21/2022)
    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: 'c. Calculation of Insurance Claim Payment (12/21/2022) i. Reserve
      Account Reserve Account refers to 10 percent of the amount disbursed, advanced,
      or expended by the Lender in originating or purchasing eligible Loans registered
      for insurance under Title I, less the amount of all insurance claims approved
      for payment in connection with losses on such Loans. The claim payment is calculated
      as 90 percent of the valid claim amount, not to exceed the amount remaining
      in a Lender’s insurance reserve account. A valid claim includes: • the unpaid
      loan obligation; • interest on the unpaid loan obligation; • uncollected court
      costs; • attorney’s fees; • expenses for recording assignments; and • the cost
      of force-placed Flood Insurance where required. ii. Unpaid Amount of the Loan
      Obligation (A) Definition The Unpaid Amount of the Loan Obligation refers to
      the net unpaid principal and the uncollected interest earned to the date of
      Default, calculated according to the Actuarial Method. Actuarial Method refers
      to the method of allocating payments made on a Loan between the outstanding
      balance of the principal amount borrowed and the interest due on a loan obligation,
      under which a payment is applied first to the accrued interest, and any remainder
      is subtracted from, or any deficiency is added to, the unpaid balance of the
      obligation. (B) Standard If the Lender obtained HUD’s prior approval to proceed
      against the loan security and later files a claim for any remaining loss, the
      unpaid amount of the Title I loan obligation must be reduced by the proceeds
      received from the Property’s sales or disposition, after deducting the following:
      • the balances due on any obligations senior to the Title I obligation; • customary
      and reasonable expenses for foreclosure and disposition, as determined by HUD;
      IV. CLAIMS AND DISPOSITION C. Title I Claims 1. Title I Claims for Property
      Improvement Handbook 4000.1 1667 Last Revised: 11/26/2025 • the interest on
      the unpaid amount of the loan obligation from the date of Default to the date
      of the claim’s initial submission for payment plus 15 Days, calculated at the
      rate of 7 percent per annum. Interest will not be paid for any period greater
      than nine months from the date of Default; • uncollected court costs, including
      fees paid for issuing, serving, and filing a summons; • attorney’s fees on an
      hourly or other basis for time actually expended and billed, not to exceed $500;
      and • expenses for recording an assignment of security to the United States,
      if applicable.'
  judgment: false
