HUD to Modify Procedures for Partial Claim Payoffs, Extend Recording Time

January 16, 2025

In a draft Mortgagee Letter, the U.S. Department of Housing and Urban Development announced it will extend the time allowed to record partial claim security instruments and establish a new procedure for mortgagees to obtain and provide partial claim payoff statements.

The changes will apply to all FHFA Title II single-family forward mortgage programs.

According to the draft letter, mortgagees will need to submit executed partial claim security instruments for recordation within 15 business days from:

  • the date of receipt from the borrower, or
  • bankruptcy court approval, if required; or
  • where HUD execution is required, receipt from HUD

If there are any outstanding partial claims or payment supplements associated with a mortgage when a mortgagee receives a payoff request for an FHA-insured mortgage, the mortgagee will need to:

  • include a letter with the payoff statement for the FHA-insured mortgage that indicates the borrower has one or more outstanding partial claim(s) or payment supplement(s) and information about how to obtain a payoff statement from HUD
  • submit the email address and/or fax number where the partial claim payoff statement should be sent in HUD’s SMART Integrated Portal (SIP) – Partial Claim Payoff Dashboard.

Mortgagees will be responsible for ensuring the accuracy of the data entered into SIP. Mortgagees must confirm payoff statements have been successfully delivered by verifying the status of the partial claim payoff statements in the Partial Claim Payoff Dashboard in SIP. When a payoff statement has not been successfully delivered, as indicated in SIP, mortgagees must obtain the partial claim payoff statement from the dashboard in SIP and provide it directly to the requestor. Where partial claims have not been legally recorded and delivered to HUD or a claim has not been filed, mortgagees must produce and provide a payoff statement for any partial claims to the requestor.

In addition, mortgagees will need to retained in the servicing files, documentation of any payoff statement for partial claim(s) that were provided by the mortgagee.

Last year, HUD reported persistent instances in all areas of the country where the lien is successfully recorded but not detected by title agents.


Contact ALTA at 202-296-3671 or [email protected].