FHA Proposes New Deadline for Lenders to File Claims
July 7, 2015
The Federal Housing Administration (FHA) on July 6 issued a proposed rule that would establish the maximum period for lenders to file insurance claims. The proposed rule also would revise HUD’s policy on reimbursement of eligible expenses and debenture interest when foreclosure and claim filing deadlines are missed.
The proposed rule published in the Federal Register would establish clear timetables for claim payments. HUD’s current regulations are “silent” with respect to a deadline by which a claim for insurance benefits must be filed with FHA.
“Due to the downturn in the housing market, which resulted in a significant increase in mortgage defaults, some mortgagees have refrained from promptly filing claims for insurance benefits and instead have opted to wait and file multiple claims with FHA at a single point in time,” the FHA said in the proposal. “The uncertainty regarding a deadline by which a claim must be filed, and the number of claims currently being filed at a single point in time strain FHA resources.”
According to the FHA, the proposal would require lenders to submit claims three months after they gain marketable title to the property or sell the property. A lender’s insurance contract would be terminated if it fails to file a claim within the maximum time periods established in the rule.
The proposed rule has a comment period for 60 days, which ends Sept. 4.
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