HUD proposes a revision to single-family mortgage insurancemortgagepress.commortgage insurance, mortgagor fees, proposed rule
The U.S. Department of Housing and Urban Development has
introduced a proposed rule that would revise a portion of the
single-family mortgage insurance program. The current program,
among other things, permits the payment of taxes and insurance on
behalf of the mortgagor for ground rents, taxes, special
assessments, flood insurance premiums, fire and other hazard
insurance premiums, if any (24 CFR § 203.23(a)). HUD's
proposed rule would, among other things, amend 24 CFR §
203.23(a) and 24 CFR § 203.359(b)(2) to require a provision in
the mortgage for the payment of homeowners or condominium
association fees among the other payments that the mortgagor is
required to make under the mortgage.
In the event of non-payment of such fees by the mortgagor, HUD
proposes that the mortgagee shall present the deed to the Secretary
for recording within 30 days after either the acquisition of
possession of the property by the mortgagee or expiration of the
redemption period (24 CFR § 203.359(b)(2)). The proposed rule
was designed to reduce the amount of expenses incurred by HUD for
delays by the mortgagee in presenting the deed for recording.
The proposed rule, if finalized, would require mortgagees of
FHA-insured mortgages endorsed on or after the effective date of
this rule to collect, as part of the monthly mortgage payment, an
escrow of the amounts necessary for the payment of these fees when
they become due. HUD asserts that this proposed rule, if finalized,
would help protect HUD's mortgage insurance fund, and would also
afford greater protection to those homeowners who do pay their fees
from being assessed for maintenance costs and other expenses
because other homeowners do not pay their fees.
For a copy of the proposed rule, visit www.hud.gov.