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b. Responsibility for Servicing Actions (04/29/2024)
Holders are responsible for all servicing actions, including the acts of its Servicers.
Servicers are responsible for their actions in servicing FHA-insured HECMs, including actions taken on behalf, or at the direction, of the Holder.
The costs associated with servicing must not be imposed on the Borrower or passed along to HUD in a claim for mortgage insurance benefits, except for a servicing fee if agreed upon by the Borrower at origination.
i. Responsibility during Transfers of Servicing Rights
(A) Definitions
The Transferor Servicing Mortgagee refers to the Mortgagee that transfers servicing responsibilities.
The Transferee Servicing Mortgagee refers to the Mortgagee to which the servicing responsibilities have been transferred.
The Transfer Date refers to the effective date the servicing of any HECM is transferred from one servicing Mortgagee to another.
(B) Standard
The Transferor Servicing Mortgagee remains responsible for the servicing of an FHA-insured HECM until the Transfer Date. The Transferor Servicing Mortgagee must verify that the change of legal rights to service has been accurately reported to HUD.
On the Transfer Date, the Transferee Servicing Mortgagee assumes responsibility for:
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III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages
1. Servicing of FHA-Insured HECMs
• all servicing actions, including ensuring resolution of any servicing errors that were, and remain, the responsibility of the Transferor Servicing Mortgagee;
• obtaining the complete HECM file, including origination and servicing records; and
• ensuring that the original Note and Mortgage are preserved.
(C) Required Documentation
The Transferor Servicing Mortgagee must report the Transfer Date and update the mortgage record in Home Equity Reverse Mortgage Information Technology (HERMIT) within 15 Days of the Transfer Date.
ii. Responsibility for Servicing when the Mortgage is Sold
(A) Definitions
A Mortgage Sale refers to a transaction in which a Holder sells the Mortgage to another FHA-approved Mortgagee.
The Purchasing Mortgage Holder or Purchasing Mortgagee is the Mortgagee that purchases the Mortgage and thereby succeeds to all rights and obligations of the Selling Mortgage Holder under the contract for mortgage insurance.
The Selling Mortgage Holder or Selling Mortgagee is the Mortgagee that sells the Mortgage and thereby relinquishes all rights and obligations under the contract for mortgage insurance.
(B) Standard
The Selling Mortgagee remains responsible for Mortgage Insurance Premiums (MIP) until notice of the sale is received by HUD via HERMIT.
As of the effective date of the sale, the Purchasing Mortgagee becomes responsible for outstanding MIP obligations, regardless of the date of accrual, and must confirm that the details of the mortgage sale have been reported accurately.
(C) Required Documentation
The Selling Mortgagee must report the date of the sale of the Mortgage as the “Transfer Date” and update the mortgage record in HERMIT within 15 Days of the date of the sale.
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III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages
1. Servicing of FHA-Insured HECMs
iii. Registration with Mortgage Electronic Registration System, Inc.
(A) Definition
The Mortgage Electronic Registration System (MERS) is an electronic tracking system identified as the nominee for a Holder of a Mortgage.
(B) Standard
Mortgagees may voluntarily register FHA-insured HECMs with MERS.