Investor Guidelines Compliance

FHA Insured Loans

Generally, servicers are not permitted to convey a property back to HUD if the property has sustained damage due to fire, flood, earthquake, hurricane, tornado, or mortgagee neglect (for mortgages insured on or after January 1, 1977) without securing prior approval from HUD. If permission is not granted to convey the property with damages, then the mortgagee is responsible for repairing the property, with or without insurance proceeds.

In many instances, for the sake of expediency and to eliminate or minimize the costs of debenture interest, HUD will allow the conveyance of a property with damages and deduct the amount of insurance proceeds (if any) or the estimate to repair, from the mortgagee's insurance benefit. While this method may be expedient, it poses substantial costs to both mortgage servicers and HUD, because it prevents either party from obtaining recoverable depreciation from the insurance carrier and other benefits of obtaining insurance funds and repairing properties. In most cases, it is not cost-effective to convey properties in a damaged condition.

Because of our presence in several distinct niches within the mortgage field services industry, Safeguard is uniquely positioned to effectively assist its clients in the hazard claims administration process and obtain maximum recovery. We typically can coordinate reputable contractors to repair properties for the amount of funds received without contribution from the servicer.