Why do I have a HUD Partial Claim against my home?
You may have a HUD partial claim against your Florida home if you have a mortgage backed by FHA and you’ve ever had any type of loan workout – including a forbearance or loan modification, including those resulting from covid-19 forbearances.
What is a HUD partial claim?
A partial claim is an interest-free loan from HUD to help make a loan modification possible, or to get you caught up on overdue payments on an FHA loan. The partial claim mortgage is interest free and does not need to be paid off until the property is sold or the first mortgage is paid off.
As of February 1, 2023, the HUD partial claim limit has been raised from 25% to 30% of the unpaid principal balance as of the date of default.
How do I get rid of the HUD partial claim?
The claim must be paid off in full if you sell the home or refinance. The only option to full payment is foreclosure. In some cases of refinance HUD may agree to subrogate your partial claim.
Am I eligible for FHA partial claim forgiveness, or can I settle the claim for less than I owe?
No. HUD requires all partial claims to be paid in full, with no exceptions.
What happens if I sell my Florida home and I can’t sell for enough to satisfy the mortgage and the partial claim?
If the proceeds of the home sale are insufficient to pay off both the mortgage and the partial claim, you will need to pay the remainder out of pocket or pursue a short sale. FHA has their own short sale process (FHA PFS Program).
In an FHA short sale, the first position mortgage lien holder agrees to take a short payoff on its balance so that the FHA partial claim can be paid in full. If you qualify for the program, you can sell the property for less than you owe and have the remainder of the mortgage debt forgiven.
The amount owed on my partial claim is much higher than I expected! What do I do?
The problem with partial claims is that they include back payments, interest, fees, and in some instances, a portion of the principal balance of the loan. The total amount of the claim therefore frequently ends up being far larger than expected by the homeowner. This additional debt against the home may land the homeowner in a position where they are underwater and must consider a short sale.
*Effective October 8, 2021, ISN is servicing all HUD partial claims:
ISN Corporation – Western Operations Center
Attention: Secretary Held Loan Servicing
2000 N Classen Blvd Suite #3200
Oklahoma City, Ok 73106
Phone: 1-800-225-5342
Fax: 1-405-724-7800
Contact by email:
- Questions: PCServicing@hud.gov
- Payoff Requests: PCPayoffs@hud.gov
- Subordination Requests: PCSubordinations@hud.gov
- Release Requests: PCReleases@hud.gov
- Mortgagee Partial Claim document submittal: PCDocs@hud.gov
7:00 A.M. – 7:00 P.M. Central Time
If requesting a payoff statement, include the FHA Case number, property address, names of the parties on mortgage and if you are not authorized on the account, send a third party authorization form.
IF YOUR PARTIAL CLAIM IS COVID RELATED OR VERY RECENT, INCLUDE A COPY OF YOUR PROMISSORY NOTE.
Minna has been a fantastic partner in selling our home. She was patient with us in explaining the differences between a short sale and conventional sale and helped us think through the pros and cons of each. During the process of the sale she was strategic and got us the best price for our sale. The process was painless and quick and every step of the way she managed each and every detail flawlessly.
Dan Ling
SELLER
Minna was the best thing that happened to us in a very long time. We’ve been planning on moving from on house and on with our lives and the house was simply an anchor. We’ve had two liens on the house that would take a long time to cure and we were forced to sell the house to settle with the bank. I’ve looked around for someone who specializes in short sales, not just an agent that did 2-3. The process took a while, but Minna was super persistent, and her strategic approach was close to none. We have lost two buyers, got a push backs from the back and lien holders and she was able to stay on top of it and at the same time, she kept us afloat emotionally. Warm thank you to Minna and her team for doing what they do best.
MARCIN& family
SELLER
Last Updated on February 1, 2023 by Minna Reid