THIS IS A FOLLOW-UP TO A PRIOR MEMORANDUM DATED AUGUST 3, 2017
We continue to see an increase in claims associated with the payoff of subordinate mortgages made by the United States Department of Housing and Urban Development ("HUD") under various lending programs including the Home Affordable Modification Program ("HAMP"). The Federal government initiated the HAMP and other similar programs to assist homeowners by reducing their monthly mortgage payments. Typically the parties to the transaction will enter into a loan modification with their primary lender and then execute a subordinate mortgage to HUD. Both the modification and subordinate mortgage typically are recorded simultaneously, but there are occasions when the modification is not recorded. In some cases the original mortgage (now modified) and the subordinate mortgage may contain the same FHA Case Number and same loan number, but these are two separate stand-alone mortgages which necessitate two payoff statements and payments.
UNDERWRITING GUIDELINES:
When underwriting a file where a subordinate HUD mortgage appears on record or a HUD mortgage is reported by an institutional lender, separate payoff statements for both the original mortgage and the HUD mortgage must be obtained. The original lender may claim that their payoff includes the payment to HUD, but this cannot be relied upon. A separate payoff must be made directly to HUD or to their designee. The following entity handles the payoff information for HUD and should be contacted in order to obtain these payoffs:
Novad Management Consulting
Shepherd's Mall
2401 NW 23rd Street
Suite 1A1
Oklahoma City, OK 73107
Phone: 877-622-8525
Fax: 800-489-1733
If you have any questions, please contact Eric McNeese, underwriting support for National Investors.
