WAIS Document Retrieval[Code of Federal Regulations]
[Title 24, Volume 2, Parts 200 to 499]
[Revised as of April 1, 2000]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR203.368]

[Page 192-193]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
PART 203--SINGLE FAMILY MORTGAGE INSURANCE--Table of Contents
 
               Subpart B--Contract Rights and Obligations
 
Sec. 203.368  Claims without conveyance procedure.

    (a)(1) The requirements of this section apply to any insured 
mortgage subject to this subpart which was either insured pursuant to:
    (i) A conditional commitment issued on or after November 30, 1983 
or, as appropriate,
    (ii) An application for mortgage insurance endorsement under the 
Single Family Direct Endorsement Program, as provided in 
Sec. 203.255(b), where the property appraisal report was signed by the 
mortgagee's underwriter on or after November 30, 1983.
    (2) The requirements of this section shall also apply to any other 
mortgages subject to this subpart where the mortgagee elects to provide 
the notice to HUD required by paragraph (d) of this section.
    (b) Notwithstanding the provisions of paragraph (a) of this section, 
the requirements of this section do not apply if the mortgaged property 
has been damaged as set out in Sec. 203.378.
    (c) Nothing in this section shall affect any rights or obligations 
arising under the procedures set forth in subpart C of this part.
    (d) After initiating proceedings to foreclose an insured mortgage 
within the coverage of paragraph (a)(1) of this section by judicial, 
statutory, or other means authorized by the mortgage instrument, the 
mortgagee shall furnish notice of the foreclosure to the Commissioner, 
containing such information as shall be prescribed by the Commissioner, 
together with a copy of the notice of sale, on or before the date of 
first publication, posting, or other notice. The mortgagee foreclosing 
an insured mortgage subject to this subpart and within the coverage of 
paragraph (a)(2) of this section may elect to become subject to this 
section by providing such notices to the Commissioner in accordance with 
the preceding sentence.
    (e) Where notice of the foreclosure sale is provided pursuant to 
paragraph (d) of this section, the Commissioner may elect to cause the 
mortgaged property to be appraised and to give written notice to the 
mortgagee, not less than five days prior to the date of the foreclosure 
sale, of the Commissioner's estimate of the fair market value of the 
mortgaged property, less adjustments as the Commissioner may deem 
appropriate (which may include, without limitation, the Commissioner's 
estimate of holding costs and resale costs that would be incurred if 
title to the mortgaged property were conveyed to the Commissioner). Such 
amount is referred to hereafter as the ``Commissioner's adjusted fair 
market value.''
    (f) If the Commissioner fails to provide notice of the 
Commissioner's adjusted fair market value to the mortgagee not less than 
five days prior to the scheduled date of foreclosure sale, this section 
shall have no further application and Secs. 203.355 through 203.367 
shall apply: Provided, that a mortgagee which receives the 
Commissioner's notice at any time prior to the foreclosure sale may 
waive late receipt by so notifying the Commissioner, in which case this 
section shall apply.
    (g) If the Commissioner provides notice of the Commissioner's 
adjusted fair market value in accordance with paragraph (e) of this 
section the following shall be applicable:
    (1) The mortgagee shall tender a bid at the foreclosure sale in the 
amount of the Commissioner's adjusted fair market value.
    (2) If the mortgagee acquires title to the mortgaged property 
pursuant to a bid at foreclosure sale in an amount equal to the 
Commissioner's adjusted fair market value, the mortgagee may elect to 
retain title to the property and to file a claim for the insurance 
benefits computed as provided in Sec. 203.401(b).
    (3) If a party other than the mortgagee acquires title to the 
mortgaged property either pursuant to a bid at foreclosure sale or 
through the redemption of the property in an amount not less than the 
Commissioner's adjusted fair market value, the mortgagee may file a 
claim for the insurance benefits computed as provided in 
Sec. 203.401(b).
    (4) If the mortgagee acquires title to the mortgaged property 
pursuant to a bid at foreclosure sale in an amount in excess of the 
Commissioner's adjusted fair market value, the mortgagee is deemed to 
have elected to retain title

[[Page 193]]

to the property and is limited to filing a claim for the insurance 
benefits computed as provided in Sec. 203.401(b). In the event the 
mortgagee can show good cause for having bid an amount in excess of the 
Commissioner's adjusted fair market value, the Commissioner may, at his 
discretion, waive the provisions of this subparagraph and allow the 
mortgagee to convey title to the Commissioner and file a claim for the 
insurance benefits computed as provided in Sec. 203.401(a). A mortgagee 
which has elected to follow the provisions of this section pursuant to 
paragraph (a)(2) of this section and bids an amount in excess of the 
Commissioner's adjusted fair market value shall not be subject to the 
provisions of this subparagraph, and may elect to retain or convey title 
in filing a claim for the insurance benefits.
    (5) In any other case, the mortgagee may file a claim for insurance 
benefits only upon conveyance of title to the mortgaged property to the 
Commissioner.
    (h) If the Commissioner provides timely notice of the Commissioner's 
adjusted fair market value in accordance with paragraph (e), the 
Commissioner may require the mortgagee to advertise the upcoming sale in 
addition to the standard legal notices which may be required by state 
law.
    (i) Where a mortgagee files a claim for the insurance benefits 
without conveying title to the property to the Commissioner, as 
authorized by this section:
    (1) Sections 203.358 through 203.367 shall not be applicable.
    (2) The mortgagee shall assign to the Commissioner, without recourse 
or warranty, any or all claims which the mortgagee has acquired in 
connection with the mortgage transaction and as a result of the 
foreclosure proceedings or other means by which the mortgagee or party 
other than the mortgagee acquired such property, except such claims as 
may have been released with the approval of the Commissioner.
    (3) The mortgagee shall forward to the Commissioner:
    (i) Fiscal data pertaining to the mortgage transaction;
    (ii) The original credit and security instruments, if available, or 
a deficiency judgment, if any, duly assigned or endorsed by the 
mortgagee, without recourse, to the Commissioner; and
    (iii) Any additional information or data which the Commissioner may 
require.
    (4) The mortgagee shall retain all cash amounts held or deposited 
for the account of the mortgagor or to which the mortgagee is entitled 
under the mortgage transaction that have not been applied in reduction 
of the principal mortgage indebtedness. Cash amounts shall be itemized 
and deducted from the claim pursuant to Sec. 203.403. Receipts for 
disbursements are to be retained by the mortgagee and are to be made 
available upon request by the Commissioner.
    (5) The mortgagee shall file its claim:
    (i) Within 30 days after the mortgagee acquired good marketable 
title to the property; or
    (ii) Within 30 days after a party other than the mortgagee acquired 
good marketable title to the property; or
    (iii) In redemption States, within 30 days after the mortgagor or 
another party redeemed the property or the redemption period has 
expired; or
    (iv) Within such other time as may be determined by the 
Commissioner.
    (6) In any case in which the insurance benefits paid include, 
pursuant to Sec. 203.402(c), hazard insurance premiums paid by the 
mortgagee, the portion of the hazard insurance premium allocable to the 
period after acquisition of title by the mortgagee or a third party 
shall be deducted from the mortgage insurance benefits otherwise 
payable.

(Approved by the Office of Management and Budget under control number 
2502-0347)

[52 FR 1327, Jan. 13, 1987, as amended at 61 FR 36453, July 10, 1996]



