GENERAL SERVICING RESPONSIBILITIES
- Objectives. All servicing policies are directed toward achieving the following basic objectives:
- Implementing the national housing goal of a decent home and a suitable living environment for every American family ;
- Protecting HUD s interest in the guaranteed loan by minimizing the probability of the mortgage terminating in default and foreclosure and by minimizing HUD s loss where claims cannot be avoided;
- Encouraging private investment in HUD guaranteed home mortgages at the lowest effective cost to mortgagors; and
- Assuring an adequate standard of fair dealing among all participants in a HUD guaranteed mortgage transaction.
- Mortgagee responsibilities. Mortgagees must consider the comparative effects of their various actions, and must take those actions, which can reasonably be expected to generate the smallest financial loss to the Department. Many complex servicing problems arise from irregular employment, low income, and a general lack of financial management experience. Mortgagees are expected to adopt a flexible servicing program that recognizes differences in mortgagors individual characteristics and circumstances in order to minimize any adverse effects of these problems.
- File Retention. Servicing Mortgagee. All servicing files (including the loan origination documents) must be retained for a minimum of the life of the mortgage plus three years. Upon verbal or written request, the mortgagee shall make available to HUD staff legible hard copies of all servicing information as well as the entire loan origination file within 24 hours.
Documents that must be kept in their original form include:
- The mortgage note.
- The mortgage instrument and riders.
- The loan guarantee certificate.
All other documents can be stored in whatever manner the servicing lender determines. However, all documents must be able to be reproduced into a legible hard copy.
- Transferring Loan Files. Upon the transfer of servicing and/or the sale of a mortgage, all servicing records are to be transferred to the new servicer or mortgagee. It is the responsibility of the acquiring mortgagee to obtain the complete loan file including all loan origination and servicing records.
Whenever servicing is transferred, the transferring servicer shall notify or arrange to notify the mortgagor in a mailing that reaches the mortgagor no later than 10 days before the due date of the first payment to the new servicer. This notice shall include the name, address, and telephone number of the new servicer and include any special instructions for handling payments during the conversion period.
The mortgagee transferring the servicing of a 184 loan is to notify the Program ONAP of the change in servicer no later than 30 days after the due date of the first payment to the new servicer. A sample format for this notification and the information needed is in Appendix 4. Change in Servicing Lender.
- Location and Staffing. Servicers are not restricted to geographic areas when servicing Section 184 loans. They must, however, establish adequate facilities to assure that mortgage loan information is promptly made available to mortgagors and HUD staff when needed. The office must be sufficiently staffed with trained personnel competent in all aspects of mortgage servicing. Mortgagors must have access to a toll-free telephone number and/or a collect-calling service.