FHA released Mortgagee Letter 2012-11 yesterday, which amends ML 2002-19.  The Mortgagee Letter clarifies certain things that must be done by the mortgagee of a FHA insured loan.  Those affecting associations are:

  • Upon completion of a foreclosure sale, mortgagees must notify the association of the mortgagee’s interest in the property and, prior to conveyance to HUD, the assessments not extinguished by the foreclosure (i.e. the super lien).
  • Mortgagees must ensure that any pre-foreclosure condo/HOA fees/liens are removed from the property prior to conveyance to HUD (may now be requesting a release of lien).
  • If the mortgaged property is in a jurisdiction where pre-foreclosure unpaid condo/HOA fees are extinguished by foreclosure, then the mortgagee must ensure that any pre-foreclosure condo/HOA fees/liens that the condo/HOA claims are due are resolved.
  • HUD will reimburse mortgagees 100% of payments of fees (excluding penalties, late fees and interest) incurred between the date of foreclosure the date of transfer of title to HUD.
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