source:
  type: guide
  id: hud-4000-1-iv-a-lender-option-to-proceed-against-the-security
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part IV — a. Lender
    Option to Proceed Against the Security (05/09/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part IV — a. Lender
    Option to Proceed Against the Security (05/09/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iv-a-lender-option-to-proceed-against-the-security-full
  canonical_id: hud-4000-1-iv-a-lender-option-to-proceed-against-the-security-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part IV — a. Lender Option
    to Proceed Against the Security (05/09/2022)
  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 — a. Lender
      Option to Proceed Against the Security (05/09/2022)
    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: 'a. Lender Option to Proceed Against the Security (05/09/2022)
      After acceleration of the maturity on a Defaulted Loan, the Lender may file
      a claim under its Contract of Insurance. If the Loan is secured, the Lender
      may opt instead to collect the Loan by proceeding against the loan security
      rather than via claim submission to HUD. The Lender might opt to collect via
      the security (rather than via its Title I insurance) if the Lender determines
      that it will likely recover more than the 90 percent insurance payment it will
      receive from HUD and/or if the Lender wishes to avoid a reduction in its Title
      I insurance coverage reserve account. i. Prior Approval Required If the Lender
      wants to proceed against the loan security and later file a Title I insurance
      claim for any remaining loss, the Lender must obtain prior approval from HUD.
      The Lender must submit a written request for prior approval to the Home Mortgage
      Insurance Division. The request should include: • the status of the Title I
      Loan, and an appraisal of the Property; • the amount and position of all unpaid
      liens against the Property; • estimated costs of foreclosure and disposition;
      and • the anticipated time to acquire and dispose of the Property. ii. Deficiency
      Judgment Required In proceeding against the security, the Lender must comply
      with all applicable state and local laws, and must take all actions necessary
      to preserve its rights to obtain a valid and enforceable deficiency Judgment
      against the Borrower.'
  judgment: false
