HUD Handbook 4000.1 Part III.A.2 — Default Servicing (Forward Mortgages)

HUD Handbook 4000.1 Part III.A.2

a. Mortgages in Delinquency or Default (03/31/2022) A Mortgage is Delinquent any time a Mortgage Payment is due and not paid. A Mortgage is in Default when the Borrower fails to make any payment or perform any other obligation under the Mortgage, and such failure continues for a period of 30 Days. The date of Default is 30 Days after: • the first uncorrected failure to perform any obligation under the Mortgage; or • the first failure to make a monthly payment which subsequent payments by the Borrower are insufficient to cover when applied to the overdue monthly payment in the order in which they become due. The Mortgagee must ensure FHA-insured Mortgages in Delinquency or Default are serviced in accordance with FHA requirements and applicable laws. For the purpose of determining the date of Default and timelines related to Default, HUD considers all months to have 30 Days. b. Reporting to Consumer Reporting Agencies and the IRS (03/31/2022) The Mortgagee is responsible for: • complying with applicable law and federal regulations relating to reporting to consumer reporting agencies; and • ensuring that all reported information is accurate. The Mortgagee is also responsible for any required IRS reporting regarding acquisition of secured Property or cancellation of mortgage debt, in accordance with the Internal Revenue Code (IRC). c. Late Charges (10/01/2025) Late Charges are charges assessed if a Mortgage Payment is received more than 15 Days after the due date. The Mortgagee may consider a Borrower’s Mortgage Payment late if the payment is received by the Mortgagee more than 15 Days after the due date, except for payments received from Borrowers in accordance with a Trial Payment Plan Agreement. The Mortgagee may assess a late charge on the 17th Day of the month. For Mortgages assigned a case number on or after March 14, 2016, the Mortgagee may assess a Late Charge, not to exceed 4 percent of the overdue payment of P&I and in accordance with applicable state and federal laws. For Mortgages assigned a case number before March 14, 2016, the Mortgagee may assess a Late Charge calculated based on overdue PITI if permitted under the terms of the mortgage Note and under applicable state and federal laws. (A) Notifying the Borrower of the Late Charge Before collecting the Late Charge or returning a Mortgage Payment to the Borrower for failing to pay the Late Charge, the Mortgagee must provide the Borrower with an advance written notice of the charge.

Source: HUD Handbook 4000.1 III.A.2.a.i — Definitions · source URL · snapshot 3bf33edadcf6461d