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 (usually resulting from a forbearance). 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. HUD partial claims require a signed promissory note as well as a lien being recorded on the title of the home.
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 – such as a forbearance or loan modification, including those resulting from covid-19 forbearances.
How do I get rid of the HUD partial claim?
A HUD Partial Claim generally must be repaid when the property is sold, the FHA mortgage is paid off, title transfers, or certain refinances occur. If your home does not have enough equity to pay both the first mortgage and the Partial Claim, an FHA Pre-Foreclosure Sale (short sale) may be an option. In some cases of refinance HUD may agree to subordinate your partial claim, but don't count on it.
Am I eligible for FHA partial claim forgiveness, or can I settle the claim for less than I owe?
No. HUD partial claims are not forgivable. HUD requires all partial claims to be paid in full, with no exceptions. If there is not enough equity to satisfy both the FHA mortgage and the Partial Claim through a traditional sale, the homeowner may need to pursue an FHA Pre-Foreclosure Sale (short sale).
Can I sell my Florida home with a HUD Partial Claim?
Yes! As long as the proceeds of the sale satisfy the mortgage and the Partial Claim, you can sell the home like any other in a traditional sale
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 HUD partial claim, you will need to pay the remaining funds out of pocket or pursue a short sale. FHA has their own short sale process (FHA PFS Program).
How is a HUD Partial Claim handled in an FHA PFS (short sale)?
In an FHA short sale, the first position mortgage lien holder agrees to take a short payoff on its balance so that the HUD 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.
Will you qualify for an FHA short sale? Find out now!
The amount owed on my partial claim is much higher than I expected! What do I do?
The problem with HUD 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 problem has far worsened in recent years as lenders attempt to do loan modifications into the current higher interest rates. Over a million new partial claims have been written since 2020.
Because a Partial Claim becomes an additional lien against the property, it can significantly reduce the homeowner’s available equity. In many cases Partial Claims leave the property underwater when it is time to sell, and the homeowner must consider a short sale.
How do I request a HUD Partial Claim payoff?
*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
Requests for Partial Claim Payoffs and Subordination Checklists:
SMART Integrated Portal - Borrowers, Lenders, and other third parties such as Title Companies and Attorneys with third party authorization may create accounts to request and to receive their documentation online, often with a very short turnaround.
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.
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Last Updated on September 9, 2026 by Minna Reid
