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e. Sale of Property Acquired through Foreclosure or DIL (04/29/2024)
Where the Mortgagee intends to submit an Acquired Property Claim (Claim Type 21), the Mortgagee must:
• take possession of the Property;
• preserve and protect the Property in accordance with Appendix 7.0 – Property Preservation Allowances and Schedules; and
• make a diligent effort to sell the Property within six months from the date the Mortgagee acquired the Property, or within such additional time as provided by HUD.
The Mortgagee must sell the Property for an amount no less than the current appraised value unless the Mortgagee obtains written permission from HUD authorizing a sale at a lower price.
i. Repairs
The Mortgagee must repair the Property only to the extent the repairs do not exceed those required:
• by local law; or
• by HUD or the Department of Veterans Affairs (VA), if the sale of the Property is being financed using an FHA-insured or VA-guaranteed mortgage.
The Mortgagee must not make any other repairs without specific advance approval from HUD. The Mortgagee must submit an over-allowable request using the appropriate timeline in HERMIT.
ii. Closing Costs
For case numbers assigned on or after September 19, 2017, the Mortgagee may be reimbursed for allowable closing costs associated with the sale of the Property in an amount not to exceed 11 percent of the sales price.
Allowable closing costs may include:
• a sales commission at a rate customarily paid in the community; and
• other reasonable and customary expenses incurred in connection with the sale of the Property.
iii. Prohibited Conflicts of Interest
The Mortgagee must not enter into a contract for the preservation, repair, or sale of the Property with any:
• officer, employee, or owner of 10 percent or more interest in the Mortgagee;
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III. SERVICING AND LOSS MITIGATION B. Title II Insured Housing Programs Reverse Mortgages
2. Default Servicing
• other person or organization having an Identity of Interest with the Mortgagee; or
• Family Member of such officer, employee, owner, or person.