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APPENDIX 4.0 – FHA HOME RETENTION OPTIONS CALCULATIONS (APPLIES TO SERVICING ONLY) (12/30/2025)
UPB refers to the unpaid principal balance on the Mortgage.
SIP refers to HUD’s Single Family Mortgage Asset Recovery Technology (SMART) Integrated Portal.
Part A: Arrearages
Step 1 – Calculate the Items to Include in Arrearages Result
a. Only applicable for Repayment Plans, Partial Claims, and
$
Payment Supplements, calculate the principal amounts that are past due.
b. Calculate accrued interest amounts that are past due. $
c. Calculate past due escrow amounts and/or Mortgagee advances
$
for escrow items.
d. Calculate projected escrow shortage amount after completion of
$
an escrow analysis, except for Repayment Plans.
e. Calculate allowable legal fees and foreclosure and bankruptcy
$
costs for work performed for the current Default episode as of the date of the foreclosure cancellation and not higher than the fees and costs HUD has identified as customary and reasonable.
Step 2 – Calculate Total Arrearages for Repayment Plans, Partial Claims, and Payment Supplements Result
Add amounts in Steps 1.a-e. $
Step 3 – Calculate Total Arrearages for Loan Modifications or Combination Loan Modifications and Partial Claims Result
Add amounts in Steps 1.b-e. $
Part B: Partial Claim Availability
For the purposes of calculating available Partial Claim funds, any Payment Supplement is treated the same as a Partial Claim, and initial or previous Partial Claims include Payment Supplements.
Step 1 – Result Verify if the Borrower has previously received a Partial Claim in SIP. Enter the UPB at the time of the initial Partial Claim or, if the Borrower did not receive any previous Partial Claim(s), enter the UPB as of the date of Default for this episode.
$
Step 2 – Result Multiply the result in Step 1 by 30%. $ Step 3 – Result Did the Borrower previously receive a Partial Claim as reported in SIP?
If yes, proceed to Step 4.
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Appendix 4.0 – FHA Home Retention Options Calculations (Applies to Servicing Only) (12/30/2025)
If no, the result in Step 2 is the maximum Partial Claim amount available for the current Default episode. Step 4 – Result Subtract the total amount of all Partial Claim(s) paid on the Mortgage, as reported in SIP, from the 30% statutory maximum funds available established in Step 2.
$ This is the maximum Partial Claim amount available for the current Default episode.
Part C: Borrower Attests They Can Resume Mortgage Payments
Step 1 – Determine the Arrearages, Partial Claim Availability, and Monthly Principal and Interest (P&I) Payment for a Standalone Partial Claim
Result
a. Enter the Arrearages (Part A, Step 2). $ Proceed to Step 1.b.
b. Enter the Partial Claim Availability (Part B). $ Proceed to Step 1.c.
c. Enter the monthly P&I payment under a Standalone Partial
$ Proceed to Step 2. Step 2 – Calculate Monthly P&I Payment under Standalone Loan Modification Result
Claim.
a. Add Arrearages (calculated in Part A, Step 3) to the UPB to
$ Proceed to Step 2.b.
b. Re-amortize the total amount to be resolved (Step 2.a) for a 30-
determine the total amount to be resolved.
$ Proceed to Step 3.
year term at the Market Rate to determine the modified monthly P&I payment.
Step 3 – Compare Monthly P&I for Standalone Partial Claim and Standalone Loan Modification Result
Is the monthly P&I payment for a Standalone Loan Modification at least $1 less than the P&I payment for a Standalone Partial Claim?
If yes, offer the Borrower a Standalone Loan Modification (calculated in Step 2). If no, proceed to Step 4. Step 4 – Determine if the Borrower has Sufficient Partial Claim Funds for a Standalone Partial Claim Result
Are the Arrearages (Step 1.a) less than or equal to the Partial Claim Availability (calculated in Part B)?
If yes, offer the Borrower a Standalone Partial Claim. If no, evaluate the Borrower for a Permanent Home Retention Option with payment reduction starting with the Standalone Loan Modification in Part D.
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Appendix 4.0 – FHA Home Retention Options Calculations (Applies to Servicing Only) (12/30/2025)
Part D: Calculate Standalone Loan Modification
Step 1 – Calculate 25% P&I Reduction Result Multiply the current P&I by 0.75 to determine the target payment with a 25% P&I reduction.
$ Proceed to Step 2.
Step 2 – Determine Total Amount to be Resolved Result
Add Arrearages (calculated in Part A, Step 3) to the UPB to determine the total amount to be resolved.
$ Proceed to Step 3. Step 3 – Determine if a 30-Year Modification can Achieve a 25% P&I Reduction Result
a. Re-amortize the total amount to be resolved (Step 2) for a 30-
$ Proceed to Step 3.b.
year term at the Market Rate to determine the modified monthly P&I payment.
b. Determine if the result in Step 3.a is equal to or less than the
If yes, offer the Borrower a Standalone Loan Modification for a term of 30 years. If no, proceed to Step 4. Step 4 – Determine if a 40-Year Modification can Achieve a 25% P&I Reduction Result
target payment calculated in Step 1.
a. Re-amortize the total amount to be resolved (Step 2) for a 40-
$ Proceed to Step 4.b.
year term at the Market Rate to determine the modified monthly P&I payment.
b. Determine if the result in Step 4.a is equal to or less than the
If yes, offer the Borrower a Standalone Loan Modification for a term of 40 years. If no, proceed to Step 5. Step 5 – Consider if the Borrower is Eligible for Other Permanent Home Retention Options Result
target payment calculated in Step 1.
Does the Borrower have a minimum of $1,000 in Partial Claim Availability (calculated in Part B)?
If yes, review the Borrower for a Combination Loan Modification and Partial Claim. If no, offer the Borrower a Standalone Loan Modification that is modified to a term of 40 years, even if the payment increases.
Part E: Combination Loan Modification and Partial Claim Calculations
Step 1 – Calculate 25% P&I Reduction Result
Enter the target payment with a 25% P&I reduction (calculated in Part D, Step 1).
$ Proceed to Step 2.
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Appendix 4.0 – FHA Home Retention Options Calculations (Applies to Servicing Only) (12/30/2025)
Step 2 – Determine Total Amount to be Resolved Result
Add Arrearages (calculated in Part A, Step 3) to the UPB to determine the total amount to be resolved.
$ Proceed to Step 3. Step 3 - Determine if a 30-Year Combination Loan Modification and Partial Claim can Achieve a 25% P&I Reduction
Result
a. Calculate the loan amount needed to achieve the target payment
$
(Step 1) on a 30-year term at the Market Rate.
b. Subtract the target loan amount (Step 3.a) from the total amount
$
to be resolved (Step 2) to determine the amount of Partial Claim funds required.
c. Is the Partial Claim Availability (calculated in Part B) greater
If yes, offer the Borrower a 30- Year Combination Loan Modification and Partial Claim. If no, proceed to Step 4. Step 4 - Determine if a 40-Year Combination Modification and Partial Claim can Achieve a 25% P&I Reduction Result
than or equal to the amount of Partial Claim funds required (Step 3.b)?
a. Calculate the loan amount needed to achieve the target payment
$
(Step 1) on a 40-year term at the Market Rate.
b. Subtract the target loan amount (Step 4.a) from the total amount
$
to be resolved (Step 2) to determine the amount of Partial Claim funds required.
c. Is the Partial Claim Availability (calculated in Part B) greater
If yes, offer the Borrower a 40- Year Combination Loan Modification and Partial Claim. If no, proceed to Step 5. Step 5 - Determine if a 40-Year Combination Loan Modification and Partial Claim can Achieve a Minimum 15% P&I Reduction
than or equal to the amount of Partial Claim funds required (Step 4.b)?
Result
a. Multiply the current P&I by 0.85 to determine the target payment
$
with a 15% P&I reduction.
b. Subtract the Partial Claim Availability (calculated in Part B)
$
from the total amount to be resolved (calculated in Step 2) to determine the maximum modified amount.
c. Calculate the P&I for a modified Mortgage amount (calculated in
$
Step 5.b) with a 40-year term at the Market Rate.
d. Is the P&I of the modified Mortgage (calculated in Step 5.c) less
If yes, offer the Borrower a 40- Year Combination Loan Modification and Partial Claim. If no, proceed to Payment Supplement.
than or equal to the amount calculated in Step 5.a?
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Appendix 4.0 – FHA Home Retention Options Calculations (Applies to Servicing Only) (12/30/2025)
Step 6 - Re-Review Borrowers Not Eligible for Payment Supplement Result
a. Is the Borrower ineligible for a Payment Supplement or does the Borrower not have sufficient Partial Claim Availability to receive a Payment Supplement for the Minimum Monthly Principal Reduction (Minimum MoPR), and the Combination Loan Modification and Partial Claim for 40 years will provide a payment reduction to the P&I?
If yes, offer the Borrower a Combination Loan Modification and Partial Claim for 40 years. If no, proceed to Step 6.b.
b. Does the Borrower have sufficient Partial Claim Availability to receive a Standalone Partial Claim (calculated in Part C)?
If yes, proceed to Standalone Partial Claim. If no, offer the Borrower a Combination Loan Modification and Partial Claim for 40 years, even if the payment increases.
Part F: Payment Supplement Calculations
Step 1 – Determine Partial Claim Availability Result Enter the Partial Claim Availability (calculated in Part B). $ If the result is greater than 0, proceed to Step 2. If no Partial Claim funds are available, the Borrower is not eligible for the Payment Supplement. Step 2 – Calculate Amount Required to Reinstate the Mortgage Using a Payment Supplement Result
Enter Arrearages (calculated in Part A, Step 2) to bring Mortgage current.
$ Proceed to Step 3. Step 3 – Calculate Partial Claim Funds Available for MoPR Result
a. Subtract the amount in Step 2 from the amount in Step 1 to
$
determine the amount of Partial Claim funds available for the MoPR.
b. Is the amount in Step 3.a greater than 0? If yes, proceed to Step 4. If no, the Borrower is not eligible for the Payment Supplement. Step 4 – Calculate Maximum MoPR Result Step 4.a – Calculate 25% P&I Reduction:
1. Enter the P&I portion of the Borrower’s monthly Mortgage Payment as of the date the Payment Supplement Period begins.
$
2. Multiply Step 4.a.1 by 25%. $
3. Enter the principal portion only of the monthly Mortgage Payment as of the date the Payment Supplement Period begins.
$
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Appendix 4.0 – FHA Home Retention Options Calculations (Applies to Servicing Only) (12/30/2025)
Step 4.b – Determine Maximum MoPR Enter the lesser of Step 4.a.2 or Step 4.a.3 to determine the maximum MoPR.
$ Proceed to Step 5. Step 5 – Calculate the MoPR Result Step 5.a – Determine if the Borrower has Sufficient Partial Claim Funds Available to Achieve the Maximum MoPR for 36 Months
1. Multiply the result of Step 4.b by 36 months to determine the amount needed to provide 36 months of the maximum MoPR.
$
2. Is the amount of Partial Claim funds available for the MoPR in Step 3.a greater than or equal to the maximum MoPR for 36 months?
If yes, the maximum MoPR calculated in Step 4.b is the MoPR for the Payment Supplement Period. Proceed to Step 6. If no, proceed to Step 5. Step 5.b – If the Borrower does not have Sufficient Partial Claim Funds Available for a Maximum MoPR for 36 Months (as Calculated in Step 5.A.), Calculate the MoPR Divide the amount of Partial Claim funds available for the MoPR in Step 3.a by 36.
$ This is the MoPR for the Payment Supplement Period. Proceed to Step 6. Step 6 – Payment Reduction Test: Determine if a MoPR of no less than 5% and no less than $20 can be Achieved for 36 Months
Result
a. Divide the MoPR as determined in Step 5 by the current P&I
%
payment in Step 4.a.1.
b. Is the result in Step 6.a greater than or equal to 5%? Yes/No
c. Is the amount of the MoPR as determined in Step 5 equal to or
Yes/No
greater than $20?
d. Are the results in both Step 6.b and Step 6.c “Yes”? Yes/No
If yes, the Borrower is eligible for the MoPR calculated in Step 5 for the 36 months of the Payment Supplement Period. Proceed to Step 7. If no, the Borrower is not eligible for the Payment Supplement. The Mortgagee must offer the Borrower the lowest monthly P&I payment achieved under either a 40-Year Combination Loan Modification and Partial Claim or a Standalone Partial Claim, if sufficient funds are available.
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Appendix 4.0 – FHA Home Retention Options Calculations (Applies to Servicing Only) (12/30/2025)
Step 7 – Compare Savings with Available Permanent Home Retention Options Compare the Borrower’s proposed P&I monthly payment under the Payment Supplement with the Borrower’s proposed P&I monthly payment under a 40-Year Combination Loan Modification and Partial Claim to determine the greater payment reduction.
• If the Borrower is able to achieve a lower monthly P&I payment with the 40-Year Combination Loan Modification and Partial Claim, the Mortgagee must offer the Borrower the 40-Year Combination Loan Modification and Partial Claim. • If the Borrower is not able to achieve a lower monthly P&I payment utilizing the 40-Year Combination Loan Modification and Partial Claim, the Mortgagee must offer the Borrower the Payment Supplement.
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Appendix 5.0 – HUD Schedule of Standard Possessory Action and Deed-In-Lieu of Foreclosure Attorney Fees (Applies to Servicing Only) (03/31/2022)